This is the Timor-Leste EITI 2019 work plan (in accordance with Requirement 1.5).
Timor-Leste’s economy is heavily dependent on oil and gas. According to the latest EITI Report, the oil sector accounted for 48% of the country’s GDP, 97% of exports and 46% of total imports in 2015. Production is rapidly declining and exploration activities are limited, giving rise to discussions on the need for economic diversification.
Timor-Leste’s revenues are currently under pressure by low oil prices, but the impact on the budget may not be that dramatic in the short-term as returns on petroleum fund investments can cover the budget deficit. Nonetheless, there is considerable public debate about expenditure exceeding the annual allowable amount that can be withdrawn from the Petroleum Fund.
All of Timor-Leste's revenue from the oil sector – USD979 million in 2015 according to the 2015 TL-EITI Report - is deposited in the Petroleum Fund, which has a balance of USD17.1 billion in September 2018 (www.eiti.tl). The EITI Reports track how much of the Petroleum Fund is transferred annually to Timor-Leste's budget.
Petroleum activities take place both in the Joint Petroleum Development Area (JPDA) and in the Timor-Leste Exclusive Area (TLEA). Both JPDA and TLEA are governed under Production Sharing Contracts (PSCs) signed between the oil companies and the National Petroleum and Mineral Authority (Autoridade Nacional do Petróleo e Minerais – ANPM). ANPM is responsible for managing and regulating petroleum and mining activities in Timor-Leste. This agency was created under Decree Law No. 1/2016 on 9 February 2016.
The tax regime applicable to petroleum activities depends on the jurisdiction area, but profit oil, first tranche petroleum, royalties and corporate income tax are the main levies. FTP is a form of royalty collected for Bayu-Undan only. Royalty was paid in relation to Kitan until it ceased operations in 2015. Profit oil and gas is applicable to both Bayu-Undan and Kitan fields. The Timor Sea Treaty, which covers Bayu-Undan and Greater Sunrise field project, stipulates that Australia is entitled to 10% of the revenue from the JPDA while 90% belongs to Timor-Leste.
A state-owned company, TIMOR GAP represents the State’s interests in petroleum activities. This company receives government funds in the form of an annual public transfer for the purpose of supporting its operational activities in accordance with the State Budget Law. All revenues from the oil and gas sector go directly to the Petroleum Fund.
PSCs in both the JPDA and the TLEA are awarded on the basis of competitive bidding. The two main projects are the Bayu-Undan field and, until recently, the Kitan field which closed in 2015. Based on the latest TL-EITI Report, there are currently ten active PSCs with two in TLEA and 8 in JPDA. In 2015, TIMOR GAP started a participation in the exploration activities within the TLEA.
Timor-Leste’s EITI Reports state that most extractive companies operating in the country are publicly listed. While there is no publicly available register of beneficial owners of corporate entities in the Timor-Leste, the 2015 TL-EITI Report lists the beneficial owners of companies covered by the Report including a link to investor information for each company.
In March 2017, the Multi-Stakeholder Working Group (MSWG) published a beneficial ownership roadmap, which documents activities and actions toward full beneficial ownership disclosures of extractive companies in the country.
Oil and gas production in Timor-Leste has declined since 2012 mainly due to natural depletion of the Bayu-Undan field and the closure of Kitan field in December 2015. There is limited exploration activity. According to the National Petroleum and Mineral Authority, five development wells were drilled in 2014. Whilst some wells were immediately brought on-stream, others were unsuccessful. On 23 December 2015, TIMOR GAP signed its second PSC to begin exploration offshore.
In 2015, all of Timor-Leste's oil and gas was produced in Bayu Undan and Kitan oil fields, which are located in the JPDA. The oil sector accounts for 97% of the country’s total exports and 46% of total imports.
Timor-Leste’s main resources are oil and gas. To date, all exploration and production have taken place offshore in the Timor Sea. One of the major discoveries in the Timor Sea is the Greater Sunrise field, which is partly located within the JPDA and partly outside the JPDA within Australia’s exclusive jurisdiction.
Timor-Leste also has undeveloped mineral resources including copper, gold, silver and chromite. These minerals have been difficult to access given the poor infrastructure in the country. On 19 February 2014, the government improved the mining licensing process through the amendment of the Ministerial Diploma No. 1/2008. This resulted in a significant increase in the number of mining licenses in 2015.
The latest EITI disclosures show that in 2015, Timor Leste received a total of USD1,042 million revenue from the oil and gas sector, including subcontractors. Compared to the revenue generated by the oil and gas sector in 2014, this figure represents a decrease of USD854 million. The decrease in revenue was mainly due to the fall in oil prices and a decrease in production. Revenues were mainly collected by Autoridade Nacional do Petróleo e Minerais (57.6%) and Direção Nacional de Receitas Petrolíferas (41.8%).
All of Timor-Leste’s oil and gas revenue is deposited in the Petroleum Fund. Majority of the funds are invested abroad in financial assets. Of the total Petroleum Fund receipts of USD1,279 million in 2015, USD979 million was transferred to the State General Budget. The latest TL-EITI Report states that there was a USD321 million decrease in the Fund’s balance in 2015, which is the first annual decline since the Fund’s inception in 2005. The net investment loss of USD21 million contributed to the decline in the Fund’s balance for the year.
The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.
The EITI process in Timor-Leste has been useful in disclosing the status of the Petroleum Fund and how it is transferred to the national budget. Timor Leste is considering moving towards mainstreaming of EITI data and has worked with the International Secretariat in conducting a feasibility study for mainstreaming. The government maintains a Transparency Portal which links EITI implementation to wider transparency and accountability in the country. This includes a Budget Transparency Portal which gives oversight to budget expenditure. Up-to-date information on the legal framework, licensing, contracts, production, social expenditures and non-tax revenues is also available through the website of the ANPM. The Petroleum Fund website contains quarterly reports on revenues and the overall status of the fund, as well as annual reports that include budget allocations. Timor Gap’s website has information on the financial situation of the company as well as other activities.
In accordance with the EITI Standard, Timor-Leste was suspended on 1 March 2017 for failing to publish the 2014 EITI Report by 31 December 2016. After the publication of the said report, the suspension was lifted on 29 June 2017.
In January 2017, Timor-Leste was found to have achieved meaningful progress in implementing the EITI Standard and the MSWG was given until 11 April 2017 to submit an action to plan to address the corrective actions relating to industry engagement and civil society engagement. On 14 February 2018, the EITI Board found that Timor-Leste addressed all corrective actions and has made satisfactory progress in implementing the 2016 EITI Standard.
The MSWG published their 2018 work plan on 4 May 2018. The work plan contains the following objectives:
- to implement the recommendation from the last Validation in enhancing EITI principles in Timor-Leste;
- To ensure the publication of EITI Report in a timely manner and in accordance with EITI Standard 2016;
- To encourage discussions on transparency in public expenditures, including investment decisions focus on economic diversification;
- To encourage discussions on legal framework and maintain contract transparency within extractive industries and other revenues generated in Timor-Leste; and
- To enhance EITI institutional development include capacity building for MSWG and National Secretariat members
The Ministry of Petroleum and Mineral Resources oversees EITI implementation in Timor-Leste. Currently, the MSWG is composed of seven civil society representatives, four industry representatives, seven government representatives and two representatives of state-owned enterprises. A list of MSWG members is available in the 2017 annual progress report of Timor-Leste EITI. Minutes of all MSWG meetings since 2007 are available from the TL-EITI website. No changes in law were needed for EITI to take place in Timor-Leste, nor were special Memoranda of Understanding between stakeholders required for this purpose. Nevertheless, the MSWG recommends enacting an EITI law.
Timor-Leste was found to have made satisfactory progress in meeting the EITI Standard on 14 February 2018. The country was previously found to have made meaningful progress on 11 January 2017 during the First Validation. Timor-Leste took corrective actions on a number of requirements and achieved satisfactory progress during the Second Validation.
Timor-Leste's progress by requirement can be found in the scorecards below.
Scorecards show the outcomes of Validation. Arrows of progress indicate where the International Secretariat has re-assessed a requirement following a corrective action in a second or third Validation.
The Annual Progress Report provides an overview of all EITI Timor-Leste's activities during 2017.
This is the Timor-Leste EITI 2018 work plan (in accordance with Requirement 1.5).
On 14 February 2018, the EITI Board found that Timor-Leste addressed all corrective actions and had made satisfactory progress in implementing the 2016 EITI Standard. See decision 2018-15/BM-39/BP-39-5-H
In this second Validation the EITI International Secretariat has assessed the progress made in addressing the ten corrective actions established by the EITI Board following Timor Leste’s first Validation in 2016. See more under background below.
Timeline of Validation and related materials
This is the Timor-Leste EITI 2017 work plan (in accordance with Requirement 1.5).
This EITI Report covers Timor-Leste's extractive sector in 2015. It was published in December 2017.
This EITI Report covers Timor-Leste's extractive sector in 2014. It was published in June 2017.
The Annual Progress Report provides an overview of all EITI Timor-Leste's activities during 2016.
Timor-Leste's Validation commenced on 01 July 2016. On January 11 2017, the EITI Board found that Timor-Leste has made meaningful progress in implementing the 2016 EITI Standard
The following documentation laid the basis for the Board's decision, attached below:
Initial data collection by the International SecretariatComments by the multi-stakeholder group (MSG) on the initial data collectionValidation Report by the independent Validator SDSG (
Attached below is Timor-Leste's roadmap on how it intends to disclose the beneficial owners of the companies active in the extractives sector (requirement 2.5).
More information on beneficial ownership can be found at eiti.org/beneficial-ownership.
This is the Timor-Leste EITI 2016 work plan (in accordance with Requirement 1.5).
This EITI Report covers Timor-Leste's extractive sector in 2013. It was published in December 2015.
This is the Timor-Leste EITI 2015 work plan (in accordance with Requirement 1.5).
This EITI Report covers Timor-Leste's extractive sector in 2012. It was published in June 2015.
This is the Timor-Leste EITI 2014 Annual Progress Report (in accordance with Requirements 7.4 and 8.4).
This is the Timor-Leste EITI 2014 work plan (in accordance with Requirement 1.5).
This Timor-Leste EITI Validation report was published in March 2010.