A new nation invites international players to its oil and gas industry.

Timor-Leste (East Timor) opened its first licensing round as an independent nation.
The nation declared its independence from Indonesia on May 20, 2002, but only recently passed a hydrocarbon law that set parameters for licensing properties. In a further complication, it still is arguing with Australia over boundary lines and splits on borderline fields.
The 15 tracts currently offered by Timor-Leste off its southeast coast are not under dispute. They include 11 blocks totaling 11,580 sq miles (30,000 sq km) in Timor-Leste waters and another four blocks totaling 5,792 sq miles (15,000 sq km) in the joint petroleum development area shared with Australia. Details are available at www.gov.east-timor.org/emrd.
Licensing is based on 5,000 miles (6,600 km) of 2-D seismic run by China's BGP and Australia's GGS in 2004 over an 11,583-sq-mile (30,000-sq-km) area, and anyone who wants to participate in the licensing round must buy the survey. The nation supplemented the 2004 survey with a reprocessed 1974 survey off the southern coast. That survey is available at www.fugromcs.com.au.
Timor-Leste can point to ConocoPhillips' Bayu-Undan gas/condensate project (3.4 Tcf of gas and 400,000 bbl of liquids) in the joint petroleum development area with Australia and Woodside's Greater Sunrise gas field (8 Tcf of gas and 300,000 bbl of liquids) straddling the border between the joint development area and Australian water, depending on final establishment of a boundary line.
Bayu-Undan is about 124 miles (200 km) south of Timor-Leste in 262 ft (80 m) of water.
One complication arises from Timor-Leste's location. At one time Australians thought the Timor Trough marked the limit of the Australian plate and the beginning of the Asian plate. Now it appears the Australian plate extends north of East Timor. The Timor Trough is a trench with water depths to 9,843 ft (3,000 m) that plunges between the island of Timor-Leste and the prolific fields on the Australian side.
Woodside's Corallina/Laminaria production complex lies between Bayu-Undan and Timor-Leste about 74 miles (120 km) from the island. The floating production, storage and offloading vessel that produces those fields is in 1,263 ft (385 m) of water.
North of the trench on the Timor-Leste side are a series of overthrusted and folded sediments. South of the trench are more widely spaced horsts and grabens. Even with the meshing of the plates, Timor-Leste said it has correlated the formations between the joint development area and the island. It has found oil and gas potential in Jurassic formations, gas in Permian zones and potential for production from Tertiary carbonates.
The nation's geologists also have mapped light oil seeps onshore Timor-Leste.
For the licensing round, the country will divide the 11,582-sq-mile (30,000-sq-km) offshore area into quadrants and blocks. Each quadrant is 15 by 15 geological minutes or about 17 by 17 miles (27 by 27 km) with boundaries at 00, 15, 30 and 45 minutes.
Blocks are 5 by 5 minutes or about 5.6 by 5.6 miles (9 by 9 km) with boundaries every 5 geological minutes. A quadrant consists of a 3 by 3 square of blocks. As for block numbering, a company might bid on Block 26/2 (block 2 in quadrant 26).
East Timor will host a technical conference in the capital city of Dili in November to provide more details to prospective bidders. Bidding closes in mid-March next year, and the nation plans to issue licenses sometime in the second quarter.
Under terms, the country plans to levy a 5% royalty on gross production. It will allow cost recovery with an annual uplift of 11% plus the 30-year US bond rate for unrecovered costs.
It plans a 30% income tax on profits from the contractors' share of production. Contractors will retain 60% of profits while the state keeps 40%, after cost recovery and uplift.
There is an additional 22.5% supplementary petroleum tax when the contractor has earned a 16.5% after-tax return.
The nation also will ask contractors for a 6% withholding tax on gross payments to suppliers and subcontractors in place of an income tax on subcontractor profits.

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