Mateus da Costa, Executive Director for Exploration and Promotion at ANPM, Timor-Leste’s National Hydrocarbons Authority, sat down with IN-VR to discuss the country's recent Second Licensing Round updates. The Director commented on bidding companies, promotional methods, and the new opportunities available for IECs, investors and service providers in Timor-Leste.
Timor-Leste has been making headlines with the announcement of the bidding submissions of the 2nd Licensing Round. What can you share with us about the bidding announcement and the prequalified companies?
With regards to the announcements, after concluding the bid submission period on March 4th, we are happy to have received a total of nine bids to six blocks in onshore and offshore offered areas. These bids were submitted by seven different companies from all over the world - including two Timorese companies.
We have received four bid submissions for our offshore acreage:
Dubai-based Dravida Petroleum DMCC is bidding for block N
ENI, an Italian-based company that has operated in Timor-Leste in the past and currently has 3 blocks in Timor-Leste, is bidding for block P
Santos, an Australian-based company and big player in the country, currently operating the Bayu-Undan production fields, is bidding for block R
Finally, the Dutch-based Supernova Energy BV bidding for offshore block R
And five on our onshore acreage:
Timor GAP, Timor-Leste’s NOC is bidding for blocks A and F
Kazakhstan-based HTS Exploration is bidding for block F
Esperanca Timor Oan Lda, a Timor-Based downstream company is bidding for blocks F and B
With regards to the companies, there are a number of things worth highlighting about this round.
To start with, this is the first time that local companies are bidding for an exploration licensing round, so it is a great testament of how Timor Leste's energy industry has evolved the last 5 years. As well, this kind of involvement opens the door for further partnerships and investment. For instance, ETO is currently not prequalified as an operator, however, if their bid is successful, they will be looking to partner with an experienced company that can operate the field. This new JV could originate with the players already in the country or a completely new operator.
At the same time, we saw re-commitment from players who have been in the country for a long time, like Santos and ENI. This is always good news.
Finally, it is worth mentioning that this bidding phase has proven to be quite competitive. If you notice three companies bid for block F, and two companies for offshore block R. The ANPM will be carefully evaluating which company, among competitive bidders, possesses the highest level of qualifications and working plan to successfully obtain the blocks.
Seems like ANPM’s due diligence team has some interesting yet exciting task in their hands!! What can you tell us about the evaluating process?
Starting from 7th March, until mid April 2022, a designated evaluation committee will be examining all work programmes submitted. All bidding companies will be subjected to the exact same timeline, although slightly different evaluating criteria will be taken into consideration, depending on the number of bidders on the block.
For the blocks where only one company has expressed interest, we will look carefully at the submitted work program and all its parameters. Mainly to judge if it is suitable for that specific block and if it is encouraging more exploration in the area.
For the more competitive blocks, the next step is to examine and select the best work programs: we have established a specific very transparent matrix for it. For example, for onshore block F: We have allocated certain points for the number of wells to be drilled, and a total amount of line KMs to be acquired, and specific points for the amount of capital that they can commit for any technical work and local content.
Good luck to all bidding companies! What are the next steps after the evaluation process has concluded?
Following the announcement of the evaluation results by mid April, the companies will be given a period of one week to declare the acceptance or rejection of the result of the bid. Then, there will be a period of contract negotiations, and finally we expect to conclude the process with a signing ceremony in the context of the 4th Timor Leste Energy & Mining Summit happening in Dili on June 14th-16th, 2022.
One question that we have received very frequently when discussing this Licensing Round with IECs : Will the companies that have pre-qualified now have to prequalify again in the case of a Third Licensing Round or a future Open Round?
Companies that are operating in Timor-Leste, or will start operating in Timor-Leste following the conclusion of the 2nd Licensing Round, will be re-evaluated between the 2nd and 3rd Licensing Rounds, and all companies found to maintain prequalification criteria will be exempted from the prequalification process in the future.
However, they will still have to initiate their bidding process by sending a letter of interest in order to apply for acreage in future rounds.
For companies that have failed to prequalify, we have outlined all the points of the evaluation committee’s assessment, for future improvement, and to assist them in preparing for reapplying in the future as potential operators or non-operators. Moving to ANPM’s promotion of the 2nd Licensing Round, you succeeded in gathering interest in a round that was launched mere months before the pandemic began, and then you moved all of your promotion online. Following that, you had a very brief window of time to travel around the world and still you succeeded. Indeed, there have been a lot of challenges in the past 2 years, specifically due to the pandemic, industry restructuring and all of the travel restrictions. Of course, we did not back down. We actually managed to stay in tune with the industry, and maximized our use of technology, through online marketing, online events, and our partnership with IN-VR, which has been helping throughout this process.
During the second half of 2021, when the world started to open up - within limited travel allowances - we managed to take another promotional tour, and traveled around the US, Europe and Asia to promote the opportunities in Timor, something that worked really well for the 2nd Licensing Round.
Essentially, we made the best effort we could, not only through online promotion, but also through a Virtual Data Room, hosting our data online. Furthermore, we approached companies throughout various international conferences - although many companies during the second half of the 2021 and the beginning of 2022 were still skeptical of international travel.
According to industry feedback, the fiscal terms and benefits for the companies assisted as well, being some of the most competitive in the region right now.
Certainly, apart from the geological attractiveness that Timor-Leste has, one of our most attractive characteristics is our fiscal terms and their attractiveness.
With new companies entering Timor-Leste, what changes do you think we will see in the country’s upstream sector?
There will be a large positive impact for the development of the petroleum industry in the country, with the existing players continually expressing, seeing the attractiveness of the area, and with new players coming into the country, the industry will continue to develop.
Furthermore, we don't only have international companies and our National Oil Company coming in, we also have local companies expressing interest and getting involved in the industry, which means that there's also new opportunities for partnerships with local businesses looking into growing their Upstream sector business.
Speaking of growing the upstream industry, we have seen a lot of updates in onshore in recent months. During the first official Timor-Leste Oil & Gas Summit in 2019, Timor Resources stated that their onboarding operations were excellent, with minimal downtime, and that the people in Timor-Leste were very welcoming to the onshore operator. With the Feto Kmaus exploration well, and Liurai operations proceeding optimally, what measures are you taking to ensure that their success will be replicated?
Looking at our cooperation with Timor Resources, ANPM has been considering them as our partners that we work closely with. Apart from being a regulator, we view the operators as partners, especially by working with our communities to ensure smooth operations, and that the highest standards are being maintained, since the onshore sector is new to our community.
We go out and discuss with our communities, and make sure that onshore operations continue to maintain a strong social license. Even though the pandemic restricted the travels of key people involved in onshore operations, we actually managed to carry drilling very successfully. Overall there were no major hurdles and the drilling was very successful from an operational side point of view. This is a great sign of our local talent.
As for our communications, openness is at the heart of ANPM. This is the approach that we have been taking with the companies submitting the bids, we've been actually discussing with them quite often, and offering clarifications to all the questions they have had. We have been very supportive to the bidding companies, providing relevant information for them. In the near future we will also be extending the same level of support to all the companies beginning their operations in the country, and when they enter their production phase. Before we close, is there a message you would like to share with international energy companies all over the world?
Timor-Leste will stay open to newcomers even after closing the bid, and announcing the winners.
We are looking forward to starting business with new companies either through the Third Licensing Round, direct negotiations, joint venture partnerships or any new opportunities for technology and service providers. Certainly we are open to having more partners in the country!
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Interested in knowing more about the bidding companies and the opportunities created by the 2nd Licensing Round? Join the 4th Timor-Leste Energy & Mining Summit taking place in Dili on the 14th-16th June 2022, and meet ANPM, new and current operators, and international investors looking to get involved in Timor-Leste's latest oil, gas, energy and mining projects.