In October 2019 the Democratic Republic of Timor-Leste launched the county’s second licensing round, consisting of 18 new blocks, 7 onshore and 11 offshore, available in a public tender through production sharing contracts (PSCs). The onshore blocks cover an area of almost 10,000 square kilometres, while the offshore acreage surpasses 50,000 square kilometres, with available data for over 80 wells.
The licensing round is governed by the following pieces of legislation:
Resolution No. 15/2019 of 27th August which deals with the ratification of the maritime boundary between Timor-Leste and Australia;
Law No.1/2019 of 18th January governing petroleum activities in the country and is an amendment of Law no. 13/2005, of 2nd September;
Decree-Law No.27/2019 of 27th August 2nd Amendment of Decree-Law No 20/2008 of 19th June, which is the legal framework for the establishment of the Autoridade Nacional do Petróleo e Minerais de Timor-Leste (ANPM);
Decree Law No. 32/2016), which covers offshore petroleum operations in Timor Leste.
ANPM, the country’s national hydrocarbon agency, is responsible for the licensing round, detailing and overseeing every step of the process. The round originally launched on October 3rd 2019, during the first Timor-Leste Oil & Gas Summit. However, when Covid-19 began to cause worldwide disruptions, the country was proactive, publishing an updated schedule for the 2nd Licensing Round. The updated timeline took into account the challenges oil & gas companies and interested investors are facing during the pandemic.
The updated timeline for activities and submissions is as follows:
In order to begin the online application, interested parties must register on ANPM’s file transfer site and begin uploading the necessary files and documents, as detailed on pages 13-18 of ANPM’s official Pre-qualification Guidelines.
The necessary documents cover all core aspects of exploration and production, divided into Financial, Legal, Technical and Local Content. The prequalification criteria include measurements of financial stability, legal qualification, submissions of previous experience working in the oil and gas industry, as well as, providing evidence of having proper procedures for health, safety and environmental protection in place. Bidders should also detail their experience and future plans for local content development, including previous initiatives in other jurisdictions, and how they may be applicable for the company’s business in Timor-Leste. All of this information must be submitted in both English and Portuguese.
Two of the onshore blocks are reserved for Timor-GAP, Timor-Leste’s national oil company. For the PSCs available on the remaining blocks, state participation is non-mandatory, and up to 20%, with is a five percent royalty payable to ANPM, only after a company has completed its cost recovery from the exploration, capital and operational costs. Profit share is split 60% to operators, and 40% to the government. The PSCs themselves last for a period of seven years with the potential to extend, through an agile and efficient process.
Companies who want to bid for the available assets are free to form consortia, provided that that consortia nominate an individual company as an operator, should the bid be successful. Furthermore, companies must submit audited financial statements including the last three years balance sheets, income statements, statements of retained earnings, cash flow statements, notes to the accounts and Directors’ reports that they have shareholder equity equivalent or in excess of $25 million USD, if intending to operate offshore, and $8 million USD if looking for onshore activities in Timor Leste.
State-owned company exemptions
State-owned companies which may not be able to submit independent audit reports must provide a notarised opinion letter issued and signed by a public accountant, certifying that the statements accurately reflect the real financial status of the company at the date of the reports. Further information can be obtained from ANPM’s website.
Technical reports must also be submitted which show the company’s previous experience in the area they wish to enter, specifically previous operations in onshore and offshore, in shallow to deep waters, with high temperatures and high pressure, and in environmentally sensitive areas. Specific data includes the company’s exploration and production assets in the last three to five years, including its current ongoing activities; and lists of technical personnel and their technical competencies in the field of oil and gas exploration and production.
Companies who may wish to enter Timor-Leste as non-operators can do so and must submit to ANPM a technical summary which outlines their primary area of activities. Any non-operators can only form consortia provided one of the companies within the consortia intends to be an operator of the block.
In summary, all the ingredients are in place for successful exploration and production campaigns in Timor-Leste. ANPM has remained open and upfront with all the available information for the assets, legislation and long-term plans, with an attractive fiscal and economic regime.
During 2019, Timor-Leste made starting a business easier by reducing the paid-in minimum capital requirement while the calm political environment and stable fiscal terms remain appealing for big oil and agile medium-sized players to move in.
Interested in learning more about the available acreage and data? Read our interview with ANPM's Exploration Director here: https://www.in-vr.co/post/timor-leste-s-exploration-director-shares-updates-on-the-second-licensing-round.