Australia should consider East Timor energy projects: Senator

Australian senator proposes support for controversial Timor Sea oil and gas development, as China looms over region.

East Timor fuel
East Timor's leadership sees developing the Greater Sunrise oil and gas fields as a pathway to prosperity in a nation struggling with extreme poverty [File: Dimas Ardian/Bloomberg]

Perth, Australia: An Australian senator says he is concerned that the country may be missing out on opportunities to invest in neighbouring East Timor‘s energy sector, and in the process allowing China to exert growing influence in the geostrategically important Pacific region.

Speaking to Al Jazeera on Wednesday, Senator Rex Patrick of the minority Centre Alliance party said he will propose to Parliament an inquiry into investing in East Timor’s controversial proposed Tasi Mane oil and gas processing plant on the country’s southern coast.

“We want to be friends with East Timor. My motion seeks to look at what has been done to date, what we could do in the future, and what Australian industry could do to assist,” said Patrick.

East Timor (officially known as Timor-Leste) wants to build Tasi Mane to process oil and gas from its Greater Sunrise offshore fields, which could generate tens of billions of dollars in revenue for the small, poverty-stricken nation. The Timorese government rejected an alternative plan by several major oil companies to process the oil and gas in an existing facility in Darwin, Australia.

The Australian government has said it is “genuinely neutral” on the question of whether the resources should be processed in East Timor or in Australia.

But Patrick says the Australian government’s position amounts to a “strategic bungle”.

“I do raise a concern that, if indeed Timor wants to go and process on the south coast and we’re not involved in assisting, there are others that would come in and provide that assistance. One country is China. They already have a presence,” he said.

Patrick’s proposal comes amid growing concern within Australia about Chinese interference in the region.

East Timor development
The Tibar Bay Port, being built by China Harbour Engineering Co is seen here, one of many concrete symbols of China’s growing influence in funding infrastructure in the Pacific [File: Dimas Ardian/Bloomberg]

Michael Leach, a professor in Politics and International Relations at Australia’s Swinburne University of Technology says the senator’s proposal also reflects the difficulty that small Pacific nations have in raising funds from international organisations and governments.

“It’s one thing to express concerns about rising Chinese influence in the Pacific, but the truth is, a lot of these countries are not gaining access to alternative funds to further their nation-building projects from other sources,” Leach told Al Jazeera. “Senator Patrick is raising the issue that without alternative sources of funding, Chinese influence is going to proceed a lot more quickly and easily.”

A development priority

Development is a national priority for East Timor. About 42 percent of the country’s population lives below the poverty line, as defined by the United Nations Development Programme (UNDP). It ranks 132 out of 189 countries on the UNDP’s Human Development Index, which measures the health, access to knowledge and standard of living of a country’s people.

East Timor’s leadership sees developing the Greater Sunrise fields as a pathway to prosperity.

In 2017 the state-owned oil company TimorGAP commissioned a report from the consultancy firm ACIL Allen, which said Greater Sunrise could generate total revenues of more than $93bn over the life of the project, with the Timorese government receiving up to $49.2bn.

However, La’o Hamutuk, an independent Timorese economic monitoring body, is less certain. It says East Timor can expect to earn between $5bn and $20bn in taxes and royalties, and, as a joint owner, a portion of Greater Sunrise profits. However, considering capital outlays, it concludes that the benefits to East Timor may not exceed the cost of its investment.

East Timor containers
Containers port in Dili, East Timor [File: Dimas Ardian/Bloomberg]

Australia’s former foreign minister, Julie Bishop, played down Australia’s potential role in the Greater Sunrise project on a July 2018 visit to the Timorese capital Dili, saying the question of development was between East Timor and a consortium of energy companies.

East Timor secured majority ownership of the fields earlier this year after buying a combined 56.56 percent stake from ConocoPhillips and Shell – a key step in its plan to deliver on a long-held promise to process Greater Sunrise resources onshore.

Decades of fractious Timor Sea negotiations between Australia and East Timor were resolved in March 2018 with the signing of a permanent maritime boundary treaty, which confirmed East Timor’s jurisdiction over Greater Sunrise. The treaty was formally ratified in August, which appears to have prompted Patrick’s proposal.

He said Australia’s inaction could lead to China building a naval base or airbase on East Timor within the decade.

Betting on black

The Greater Sunrise development partners – now comprising Australia’s Woodside Energy and Japan’s Osaka Gas after the government’s buyout of ConocoPhillips’ and Shell’s stakes – consider piping resources to East Timor for processing a highly risky and financially unviable plan. The project will cost an estimated $14bn, according to La’o Hamutuk – four-fifths of the amount in East Timor’s sovereign wealth fund which contributes approximately 90 percent of the country’s annual budget.

But Patrick said that if building the processing plant on East Timor’s south coast is riskier than the alternative of piping crude oil and gas from the Greater Sunrise fields to Australia, then Australia should intervene.

“My motion is not necessarily to say: ‘Let’s do one or the other’. It says, if you think that processing onshore is more complicated and riskier, then what can Australia do to help deal with that complexity and mitigate some of that risk?”

Source: Al Jazeera