Timor-Leste: Legal Perspective by VdA
As part of the preparations of the Timor-Leste: The Energy Online Series, I had the pleasure of interviewing Joao Afonso Fialho. Joao Afonso Fialho is an Oil and Gas lawyer and Partner in Vieira de Almeida (VdA). He has been practicing law for 27 years now, having extensive experience in downstream, midstream and upstream. He has worked in major projects in a number of different African countries, Portuguese and French-speaking countries.
You have experienced the whole spectrum from downstream, midstream, and LNG to E&P. While working in Africa, which countries would you say stood out the most to you?
I must say Angola, for many different reasons. First, because I was lucky enough to be in Angola at the time that the Deep and Ultra-deep Exploitation started in the country. We brought a whole new world, not only to Angola and Africa, but in world-wide E&P.
I was lucky enough to start working on the large majority of the projects from their very inception. To summarize on why Angola was the most exciting country to work in in Africa: The people and the environment - It's not one of the easiest environments in the world, but, what they achieved in Angola, is only paralleled in Nigeria. I was fortunate enough to be there at the right time. What is “the right time” to enter a country’s oil and gas market?
The best time to enter a market is when the industry is starting, and when the industry is starting to grow. I'm a reliving this experience in Timor-Leste these days.
It may not be the beginning of the beginning, as they have a long successful history of production with the Bayu-Undan oil and gas field, but the oil and gas industry is very young in Timor-Leste.
VdA has been fortunate to be working very closely with and for ANPM, Timor-Leste’s oil and gas regulator, assisting them and advising them in all the layers of planning and operations of the country’s growing oil and gas industry.
In a way, I'm reliving the Angolan experience, but this time with an industry that is already on the path of growth. VdA has been able to use its full spectrum of experience to get a lot of work done in a significantly short amount of time in Timor-Leste, thanks to the very good and skilled people in the country.
Still, the industry in Timor-Leste is young, there a lot to build up on top of what was already there, and there is a lot of new opportunities.
VdA has been very active in the oil and gas sector, assisting in key operations in countries all over the world. What are VdA’s core activities?
VdA is one of the three largest firms in Portugal, operating in a broad spectrum of activities for more than 45 years now.
For the past 10 years VdA has been working on international markets, with a focus on the natural resources. We have been building a strong international presence, transitioning successfully from a full service firm in the domestic market to a full service firm with a huge international footprint.
We are now in 15 countries, sharing our unique expertise in natural resources, banking, telecommunications, and a huge variety of other industries.
In Timor-Leste specifically, in addition to ANPM and natural resources companies, we have a number of clients in the telecommunications, tax and banking sector, as well as, health and lifestyle.
As the main legal partner of ANPM, what has your experience been, working with Timor-Leste’s hydrocarbon regulator?
ANPM has a very strict and extremely dedicated team, attentive to detail. Their team works nights and days, weekends and holidays. They are very focused on their objectives, and the instructions that they receive from the government. They have a vision for the future of the oil and gas industry and the regulator itself.
There is a driving force behind everything ANPM does: they are a highly skilled, committed intelligent and highly motivated team.
On a personal level, working with ANPM has been one of the most rewarding experience of my professional life.
VdA has invested significantly in resources, time, and energy in Timor-Leste. What qualities did you identify that led you to this decision as a country?
We have been investing in Timor-Leste for a large variety of reasons, which I will explain now. Initially, we were invited to assist them: They acknowledged our expertise in the field and they trusted that we would be their advisor on fostering growth in their oil and gas industry. When we started working with them, we found very committed, trustworthy people that you can work very easily on long-term plans. When you have a country that is so committed in increasing its capabilities, and open to discussions, you know you have found the right partner. Especially if that partner is characterized by political stability and institutions that are result-oriented.
Timor-Leste is a rare, almost unique example of a young country with good governance, doing things by the book. Even when they make mistakes – an unavoidable reality for all countries - it is because they are very compliance-oriented in their approach. This is the kind of mistakes that lead to growth and adaptability.
What is the legal and fiscal regime in the country like? Is it investor-friendly? Do they have any particular incentives that stand out to you?
In relation to the incentives available in Timor-Leste, I would say that that are three main incentives for any company to decide to invest in the country:
First, a very friendly tax system with relatively low tax rates when compared with the average that we see not only in the region, but in the world. When compared with the rest of South-East Asia, the comparison becomes even more significant.
Secondly, the goodwill. What do I mean by goodwill? Timor-Leste has very flexible public entities that try to understand the needs of the investor. Then they try to do everything in their power, within limitations, to assist the investors to overcome any obstacles, and more than that, they are flexible to the point of trying to trigger changes. They take into account changes that may be needed in the regulatory framework in order to make the projects work. This is the top of Goodwill that you don't see very often, and when you see it, it may have a price to pay. However, in Timor-Leste it is right there for you. This is something almost unique in the business environment of the region. Finally, Timor-Leste has a very dedicated, fast-learning workforce, that is improving at a very fast pace. and more and more skilled people. You have a labor market that you see, they are still far from reaching. They are putting all their effort to reach a point where all operations are running at an optimal point.
So if you have dedicated employees, regulatory authorities that are always willing to help, and a good tax system - What else do you need to make your business grow? Nothing. Timor-Leste has all these features.
I highly encourage all investors, especially in oil and gas to take a look at the country, and see the large spectrum of opportunities there. Especially now, as in the short-term future there will be even more opportunities in the country. Thank you for the holistic overview of Timor-Leste, and sharing VdA’s experience in the country. What kind of companies are you looking forward to meeting in the Timor-Leste Oil & Gas Online Series and the 2nd Timor-Leste Oil & Gas Summit? I would say newcomers. The industry is very small in the country still, so, newcomers will help it grow even faster.
There is a tender for 18 new blocks, the Greater Sunrise Project is kicking off and the government will announce even more projects, as things are progressing.
First-movers, not only companies willing to build a project, but also a reputation in the region. Investors willing to engage with all shareholders.
Finally, it is always helpful for investors to hear the government’s and ANPM’s updates, and understand their key message and principle: “We are here to assist.”