Assistance in developing the management of the petroleum sector in

Transcription

Final report of Phase 1 of the project:
Assistance in developing the management of
the petroleum sector in Timor-Leste
2002 – 2008.
May 2009
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Index
List of abbreviations ................................................................................................................... 7
1. Introduction ........................................................................................................................ 9
2. Summary of results and recommendations ...................................................................... 10
3. Goals and objectives ......................................................................................................... 11
3.1 Indicators ................................................................................................................... 12
3.2 Planned outputs.......................................................................................................... 12
4. Input ................................................................................................................................. 12
5. Organisation of the Project ............................................................................................... 13
5.1 The structure ................................................................................................................... 13
5.1.1 The Annual Meeting........................................................................................... 13
5.1.2 Steering Committee ............................................................................................ 13
5.1.3 Project Management Committee ........................................................................ 13
5.1.4 Project Manager ................................................................................................. 14
5.1.5 Project Implementer ........................................................................................... 14
5.1.6 NPD Project Coordinator ................................................................................... 14
5.2 Assessment of the project organisation .......................................................................... 14
6. The Project history and activities ..................................................................................... 15
6.1 Cooperation partners and important stakeholders .......................................................... 15
6.1.1 Timorese cooperation partners ........................................................................... 15
6.1.2 Norwegian cooperation partners ........................................................................ 17
6.2 History of the project ...................................................................................................... 19
6.2.1 Discussions, 2001-2002 .......................................................................................... 19
6.2.2 The planning phase, 2002-2003 .............................................................................. 19
6.2.3 Project start-up, 2003 .............................................................................................. 20
6.2.4 2004 ......................................................................................................................... 21
6.2.5 2005 ......................................................................................................................... 24
6.2.6 2006 ......................................................................................................................... 27
6.2.7 2007 ......................................................................................................................... 29
6.2.8 The final year, 2008 ................................................................................................ 31
7. Accounts ............................................................................................................................... 33
8. Interim reviews ..................................................................................................................... 35
9. Project results ....................................................................................................................... 36
9.1 Resource management.................................................................................................... 36
9.2 Data management .......................................................................................................... 38
9.3 Finance management ..................................................................................................... 39
9.4 Environment management............................................................................................. 40
9.5 Education and training ................................................................................................... 40
9.6 Planned outputs and indicators vs. Results .................................................................... 42
9.7 Problems encountered ................................................................................................... 43
9.7.1 Lack of cooperation partner in the planning phase ................................................. 43
9.7.2 Lack of coordination between advisers ................................................................... 43
9.7.3 Lack of clarity on the roles and responsibility of the advisers ................................ 44
9.7.4 Insufficient emergency preparedness in connection with the civil unrest .............. 44
10.
List of Appendixes ....................................................................................................... 47
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List of abbreviations
ANP
BPA
DNPG
EIA
EITI
EMRD
FIN
GIS
HRD
IAB
IMF
JPDA
LNG
MDE
MNRMEP
MOF
MoPF
MoU
MTPU
Norad
NPD
OfD
OGED
PMC
PSC
PTD
SC
SERN
TOR
TSDA
TSO
UNDP
UNTAET
USAID
National Petroleum Authority (Autoridade Nacional do Petróleo)
Banking and Payments’ Authority
National Directorate for Oil and Gas (Direcção Nacional de Petróleo e Gás)
Environment impact assessment
Extractive Industries’ Transparency Initiative
Energy and Mineral Resources Directorate
Ministry of Finance (Norway)
Graphic Information System
Human resource development
Investment Advisory Board
International Monetary Fund
Joint Petroleum Development Area
Liquefied Natural Gas
Ministry of Development and Environment
Ministry of Natural Resources, Minerals and Energy Policy
Ministry of Finance
Ministry of Planning and Finance
Memorandum of understanding
Macroeconomic and Tax Policy Unit
Norwegian Agency for Development Cooperation
Norwegian Petroleum Directorate
Oil for Development
Oil, Gas and Energy Directorate
Project Management Committee
Petroleum Sharing Contract
Petroleum Tax Division
Steering Committee
State Secretariat for Natural Resources (Secretariado de Estado dos Recursos
Naturais)
Terms of reference
Timor Sea Designated Authority
Timor Sea Office
United Nations Development Program
United Nations Transitional Administration for East Timor
United States Agency for International Development
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1. Introduction
This is the final report for the project: “Assistance in developing the management of the
petroleum sector in Timor-Leste”.
This is an institutional cooperation programme between the Norwegian Petroleum Directorate
and The Ministry of Natural Resources, Minerals and Energy Policy in Timor-Leste, funded
by the Oil for Development programme from the Norwegian Agency for Development
Cooperation (NORAD).
This final report is required according to the Country Agreement (Appendix 1), Article VII,
Section 5:“East Timor shall submit to Norway a final report within 6 months after the
completion of the Project. The report shall give a summary of outputs and activities
undertaken, achievements compared to Goal and Objective and an assessment of the
efficiency of the Project.”
This report summarizes the planning of the Project, the activities and outputs, shows how
project funds have been spent and discusses the results of the project. It is hoped that it also
functions as a history book for an important factor in the early development of Timor-Leste’s
petroleum sector and for this long and high profiled Norwegian Development project.
For the period 2003-2006, the Implementing institution in Timor-Leste was The Ministry of
Natural Resources, Minerals and Energy Policy. From 2007 and for the rest of the projectperiod, the implementing institution was changed to the Secretariat of State for Natural
Resources.
The main tasks for the cooperation project were:
Training on petroleum tax, accounting and basic finance topics for staff in the
Petroleum Tax Division, MOPF
Analyze and give advice on possible tax effects and revenue effects regarding PSA
agreements, gas pipeline and the implementation of new consolidated tax law
Help establish regular meetings with DNPG/TSDA and MOF to discuss current issues
and improve flow of information between the different Timor-Leste petroleum
authorities.
Conduct and give advice on tax audits and desk audits
Identify and give advice on current petroleum tax issues
Designed spreadsheets to facilitate overall monitoring of petroleum tax payments.
New tax return form designed for petroleum producers in order to improve ability to
monitor overall validity of tax liability and be able to make priorities on further
investigations.
Information to taxpayers
Design and give advice on long term plan to establish a professional petroleum tax
authority and address necessary key resource assumptions
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2. Summary of results and recommendations
The Project has contributed to the development of the public administration of the TimorLeste petroleum sector. Its activities have been anchored in the Timor-Leste Government and
the Project has worked with and involved a large number of Timor-Leste civil servants and
public units. It has focussed on building capacity within the public administration and at the
same time enabled the administration to handle an already ongoing petroleum activity. The
Project has made it possible for Timor-Leste to carry out a bidding round for offshore
exploration acreage, only few years after restoration of independence and in a manner that has
achieved international recognition for its professionalism and transparent process. The Project
has contributed to the development of a sustainable management of the petroleum revenue
through professional management of the petroleum revenue and the petroleum fund. It has
initiated and carried out significant education and training initiatives. The Project has
established the basis for a petroleum data management system that will be both efficient and
of high international standard.
Timor-Leste is a nation with significant challenges in terms of national competence and
petroleum sector experience. The Project has thus not met all its objectives in terms of
successful knowledge transfer. In several instances the Project’s advisers have acted as
experts rather than advisers in order for the activities to be handled within the necessary time
frames and in order to help meet Timor-Leste political and operational objectives.
It is recommended that the cooperation between Norway and Timor-Leste for the
development of the Timor-Leste petroleum sector is continued. This is already taking place
through a new project. It is recommended that more emphasis should be put on education and
knowledge transfer and that a realistic process for the withdrawal of the Norwegian advisers
should be erected.
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3. Goals and objectives
The initial goals, objective and indicators were stated in the Country Agreement (Appendix 1).
The Goal of the Project is to assist in developing the management of the petroleum sector in
Timor-Leste, such that the public sector petroleum administration in Timor-Leste will be
capable of managing the upstream petroleum activity without significant use of foreign
advisors.
The Objective of the Project is to provide institutional cooperation between the NPD and the
MDE and associated institutions in Timor-Leste performing petroleum sector management
functions for a period of six years at an estimated cost of NOK 30 million (ca 4.2 mill USD),
such that the Norwegian experience of developing a public sector petroleum administration
can benefit Timor-Leste, and such that NPD’s technical expertise and other Norwegian and
international expertise can be utilised in developing a well-functioning petroleum
administration in Timor-Leste.
The objective modified slightly as part of the expansion of the project in 2006:
Ministry and associated institutions in Timor-Leste performing petroleum sector management
functions for a period of six years at an estimated cost of NOK 44.5 million (ca 6.9 mill USD),
Figure 1. The future of Timor-Leste. Children playing in Vila, Atauro
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3.1 Indicators
The following indicators were defined at the outset of the Project:
Quantitative indicators include
At least 3 additional Timor-Leste staff in the public sector petroleum administration
should have a Master degree, or equivalent, in a petroleum related topic
At least 6 Timor-Leste nationals should have a Bachelor degree, or equivalent, in a
petroleum related topic.
All Timor-Leste staff in the public sector petroleum administration should have taken
part in workshops and courses within petroleum related topics.
At least 50 Timor Leste staff in the public sector petroleum administration and related
sectors should have gone through at least one technical English course
At least one lease sale/licensing round/establishment of a PSC should have been
carried out without significant help from external advisers
Qualitative indicators include
Well functioning administration with clear responsibilities and positive reputation in
the Timor-Leste government
International acknowledgement for a fit-for-purpose legal and contractual framework
for the petroleum industry
Well functioning management and fiscal system for petroleum revenues
Reliable, comprehensive and available petroleum data archive for use in promotion
and for administrative purposes
3.2 Planned outputs
The following outputs were formulated at the outset of the Project:
Project management and coordination with other donors
Analysis of education needs and training capacity within the relevant Timor-Leste
administration
Implementation of education and training programmes
Technical assistance by NPD within its fields of competence
Consultancy support in relevant topics
Workshops in relevant areas
Assistance in petroleum data management
Computer equipment, necessary software and other data handling equipment.
4. Input
The initial grant from Norway was NOK 30 million for the period 2002-2008. An additional
grant of NOK 14.5 million was agreed in 2006, adding up to a total grant of NOK 44.5
million for the period 2002-2008.
NPD should provide project assistance and management, coordination with other donors and
technical advice within its field of competence
The Timorese cooperating institution should provide project management and make available
personnel within the public administration to be trained and to take part in the activities of the
Project. It should further assist NPD and other external personnel taking part in activities in
Timor-Leste in providing office facilities and the necessary office services.
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5. Organisation of the Project
The Project was organised with the aim of enabling sufficient efficiency, quality, control and
Timorese ownership at the same time. This is a challenging aim in a situation with many
uncertainties, and flexibility in the organisation of the Project has proved to be very
important.
5.1 The structure
For further explanations of the various abbreviations, please see the list on page 4 of this
report.
5.1.1
The Annual Meeting
The Annual Meeting between the implementing organisation and the Embassy in Jakarta was
the Project’s highest authority. It discussed and approved the reports of past activities and it
approved budgets and work programs. Any significant changes in planned expenditures or
activities should be approved by the annual meeting. The meeting was conducted annually in
January/February, in Dili, from 2003 through to 2008. The minutes of the Annual Meetings
are shown in Appendices 4.4 – 4.4
5.1.2
Steering Committee
A Steering Committee (SC) was established for the overall management of the Project. The
SC consisted of two members, one from Timor-Leste and one from Norway. The
representative from Timor-Leste headed the SC.
- The representative from Timor-Leste should be the relevant Minister or his designate.
- The representative from Norway should be the NPD Director responsible for
international cooperation projects.
The SC should meet semi-annually in order to
- Assess the progress and results of the cooperation
- Discuss and agree on corrective actions if needed
- Agree on work plans and budgets for the following calendar year
- Agree on international travel
- Agree on disbursements for handling of local expenses etc.
- Prepare reports for the Annual Meeting
5.1.3
A Project Management Committee (PMC) was established for the implementation of the
Project. The purpose of the PMC was to enable good coordination between different
stakeholders and ensure that the implementation of the Project was in line with the needs in
the broader petroleum sector of Timor-Leste.
The PMC should consist of senior representatives of EMRD, TSO, TSDA, Environment
Directorate and NPD. The representative from the EMRD should head the PMC. The Project
Manager should act as secretary.
The PMC should prepare the documentation for the SC and implement the approved plans in
accordance with the allocated budgets. Any deviations from plans and budgets, any problems
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encountered or any suggestions for new priority activities should be reported to the SC. The
PMC should meet at least quarterly to assess and discuss the implementation of the Project.
5.1.4
Project Manager
The main advisor at EMRD acted as Project Manager. The NPD supported and gave advice to
the Project Manager as necessary. The role as Project Manager could be taken over by the
Director of Oil and Gas when the assignment of the first advisor ended. This option was not
executed, and the main adviser at EMRD/OGED/DNPG continued to act as Project Manager
throughout the Project period. The SC appointed new Project Managers.
5.1.5
Project Implementer
A project implementer, preferably a Timor-Leste national, should be appointed to assist in the
daily operation of the Project.
5.1.6
NPD Project Coordinator
NPD should appoint a Project Coordinator that will form the link between the NPD and the
Project Manager and be the NPD point of contact for contractors and other cooperation
partners in relation to the Project.
5.2 Assessment of the project organisation
The main elements of this structure remained unchanged throughout the Project. The PMC
ceased to function after a short while and was never re-established (see below).
The Timorese representative in the SC was initially the Minister of Development and
Environment, who was also the Prime Minister, Dr. Alkatiri. His tight schedule made
planning of SC meetings a big challenge. His top level political and strategic focus did not
match the, relatively speaking, detail and practical decisions that were necessary in the SC.
This meant that the SC meetings were more a formality than a discussion forum. There was
no shortage of decision power, though. There were, admittedly, few people to delegate this
task to in the beginning, but as a general remark the Prime Minister level is too high for this
kind of SC.
The PMC failed to function due to the fact that the people on the PMC all had very busy
schedules and because it was not felt that it had a relevant role. The necessary coordination
and information was taken care of in the day-to-day business and through other meetings. The
preparation of material for the SC was handled by NPD and EMRD anyway.
When the Project was expanded to include advisers in the finance sector, the overall
organisation of the Project was not changed. The SC continued to consist of representatives
from the Ministry/Secretary of State for Natural Resources and NPD. The units in the
Ministry of Planning and Finance that had Norwegian advisers under this program
coordinated their input to the SC through the Timorese representative. These advisers were
supported and backed up by a group of experts in the Norwegian Ministry of Finance. Figure
2 shows the layout of the Project organisation for most of the time period of the project.
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Ministry of Planning
and Finance
Embassy in Jakarta
Norad
Annual Meeting
Norwegian Ministry of
Finance
Steering Committee
NPD Project
coordinator
Project Management
Committee
Advisers
Norwegian Petroleum
Directorate
Ministry of Planning
and Finance
Ministry of
Development and
Environment
Ministry of Natural
Resources, Minerals
and Energy Policy
Project Manager
Advisers
State Secretariat of
Natural Resources
Timorese unit
Norwegian unit
Implementer
Figure 2. The Project organisation
6. The Project history and activities
This chapter contains a chronological description of the main events and activities in the
Project. A more detail description of the Project activities can be found in the annual reports
(Appendices 3.1 – 3.9). Further details can be found in monthly reports from advisers and
project managers. These are not included in this report but can be obtained from the relevant
Norwegian and Timorese organisations (NPD, FIN, SERN and MoPF/MOF).
6.1 Cooperation partners and important stakeholders
The names of some of the cooperation partners have changed during the life of the Project.
Some partners were involved for a limited period of time only, and others have been added at
a later stage. The following list shows the various cooperation partners and the most relevant
other stakeholders.
6.1.1
Timorese cooperation partners
The Prime Minister’s Office
The Prime Minister of Timor-Leste and the Prime Minister’s Office was the primary point of
contact for NPD and NORAD in the planning of this project, and in the initial phase of the
work. The Prime Minister was chairman of the Project Steering Committee from 2003-2006.
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Ministry of Planning and Finance (MoPF)
The Timor-Leste ministry responsible for the finance sector and for the coordination of donor
funds, among other things. The name was changed to Ministry of Finance (MoF) in 2007.
During 2002-2007 MoPF was the implementing institution for this Project.
Ministry of Development and Environment (MDE)
Timor-Leste ministry responsible for national development and environment issues.
Functioned from 2002 to a Government reorganisation in 2005. Minister for MDE was Dr.
Mari Alkatiri, who also was Prime Minister. MDE was the first institutional cooperation
partner for NPD in this Project, and the institutional cooperation contract for this Project was
signed between MDE and NPD. It was in part replaced by:
Ministry of Natural Resources, Minerals and Energy Policy (MNRMEP)
Timor-Leste ministry responsible for the petroleum sector (among other sectors). Established
in 2005. The Minister was initially Dr. Mari Alkatiri who also was Prime Minister. The dayto-day running of the Ministry was executed by Secretary of State Dr. Jose Teixeira. Dr.
Teixeira was appointed Minister for Natural Resources, Minerals and Energy Policy in 2006.
This ministry took over as institutional cooperation partner for NPD. Dr. Teixeira took over as
Chairman of the Project Steering Committee. The Ministry ceased to exist after the general
election in 2007, in part replaced by:
State Secretariat for Natural Resources (Secretariado de Estado dos Recursos Naturais SERN)
Timor-Leste state secretariat responsible for the petroleum sector (among other sectors).
Established in 2007. Headed by Secretary of State Mr. Alfredo Pires. SERN replaced
MNMREP as institutional cooperation partner for the Project until the Project was finished in
September 2008. It also replaced MoPF as implementing institution for the project. Mr. Pires
took over as Chairman of the Project Steering Committee.
Energy and Mineral Resource Directorate (EMRD)
Directorate under MDE, responsible for the sovereign Timor-Leste petroleum sector and the
mineral sector. The petroleum sector was initially lead by Acting Director for Oil and Gas,
Mr. Vicente Pinto, from 2004 by Director of Oil and Gas, Mr. Amandio Gusmao. EMRD was
the main day-to-day cooperation partner for NPD in the first part of the Project. The various
resource management advisers under this Project were located in EMRD. After the
reorganisation of the Government in 2005 the petroleum sector part was singled out and
formed.
Oil Gas and Energy Directorate (OGED)
Directorate under MNRMEP, responsible for the sovereign Timor-Leste petroleum sector.
Led by Director of Oil, Gas and Energy, Mr. Amandio Gusmao. Continued to be the main
cooperation partner for NPD on a day-to-day basis. It was replaced in 2006 by:
National Directorate for Oil and Gas (Direcção Nacional de Petróleo e Gás – DNPG)
Directorate under MNRMEP, responsible for the sovereign Timor-Leste petroleum sector.
Led by Director of Oil, Gas and Energy, Mr. Amandio Gusmao. Continued to be the main
cooperation partner for NPD on a day-to-day basis. After the change of Government in 2007
DNPG ceased to exist as a formal unit and became an integral part of the new Secretariat of
State for Natural Resources (SERN).
National Petroleum Authority (Autoridade Nacional do Petróleo – ANP)
Authority formed on 1 July 2008, in order to “supervise compliance with the enacted rules
and regulations covering the exploration, development, production, transportation and
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distribution of petroleum and natural gas resources.” NPA is responsible for petroleum
activities in JPDA, Timor-Leste sovereign waters and Timor-Leste onshore. ANP was a main
cooperation partner for the Project after the shutting down of TSDA.
Macroeconomic and Tax Policy Unit, MoPF
Unit within the MoPF responsible for macroeconomic planning and policy, including the
investment strategies for the petroleum fund. One of the Project’s cooperation partners in
MoPF. The Unit was led by Mr. Cristino Gusmao throughout the period of the Project. The
macro economy and petroleum fund advisers of the Project were located in this Unit.
Petroleum Tax Division, MoPF
Unit within MoPF responsible for the petroleum taxation. One of the Project’s cooperation
partners in MoPF. The Unit was led by Mr. Agosthino Ramos throughout the period of the
Project. The petroleum tax advisers of the Project were located in this Unit.
Environment Directorate (Direcção do Ambiente)
Directorate under MDE, later independent directorate reporting directly to the Prime Minister.
This unit was a discussion partner for NPD and the Project in the planning of various
initiatives in relation to the environmental aspects of the petroleum activities.
Timor Sea Office (TSO)
Unit under the Prime Minister’s Office. It was established in order to support the Prime
Minister in the preparations and negotiations with Australia over the rights to the Joint
Petroleum Development Area (JPDA) in the Timor Sea and other border issues. It also acted
as an advisory group to the Prime Minister in petroleum legislation issues and other petroleum
issues in general. It was an important discussion partner for NPD in setting up and designing
the Project, and has remained an important stakeholder in the Timor-Leste petroleum sector.
The office was closed soon after the new Government was formed.
Timor Sea Designated Authority (TSDA)
Authority formed under the Timor Sea Treaty between Timor-Leste and Australia,
responsible for the management and regulation of the petroleum activities in the JPDA. Its
role included preparation of laws and regulations, issuing of PSCs, regulation of HSE issues
and of operational activity. It was a main cooperation partner for the project throughout its
period of function. TSDA ceased to exist on 30 June 2008. It was superseded by the ANP (se
above).
6.1.2
Norwegian cooperation partners
Norwegian Agency for Development Cooperation (NORAD)
Directorate under the Ministry of Foreign Affairs responsible for the management of
development funds and the quality of the Norwegian development cooperation. Initiated the
Project based on a request from the second interim Government of Timor-Leste in 2001.
Engaged NPD as project coordinators. Has since primarily acted in a quality assurance role in
the Project, and as technical adviser to the Embassy in Jakarta
Oil-for-Development (OfD)
Project within NORAD which coordinates various programs, projects and initiatives of
support to the development of the petroleum sector in various developing countries.
Currently OfD handles all the petroleum related project in the Norad portfolio, and took over
Norad’s role in the Project, described above, in 2007.
The Norwegian Embassy in Jakarta
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Embassy accredited to Indonesia and Timor-Leste. Has the overall responsibility for the
Project, and represents Norway at the Annual Meeting.
The Norwegian Embassy Section in Dili
The Embassy Section stationed in Dili is the Norwegian Embassy in Jakartas local
representative in Timor Leste.
Norwegian Petroleum Directorate (NPD)
Directorate under the Ministry of Petroleum and Energy (MPE). Has executed various
development assistance programs for more than 25 years. Had up to recently a direct contract
with Norad for development assistance work, the contract now transferred to MPE. NPD was
appointed Project coordinator for this Project by Norad in 2002. Worked with
MDE/MNRMEP/SERN in Timor-Leste through an institutional contract that described rights
and obligations of both parties. Had overall project coordination responsibility from the
Norwegian side, but executed responsibility for the content of the work only for the
petroleum resource management and associated legal aspects of the Project. The remainder of
the tasks were handled by the Ministry of Finance (see below).
Ministry of Finance (FIN)
Identified advisers within the finance sector and established a support group for these
advisers.
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6.2 History of the project
Figure 3 shows an overall summary of the Project and its different stages.
Phases of the Project
The project has evolved through 4 distinct phases,
- related to the staff involved and the political climate:
2002
2003
2004
Start-up
Invitation & set-up
Establish legal framework
2005
2006
2007
2008
Offshore
round
Turbulent
changes
Offshore bid round
Hiatus (civil unrest)
Government changes
- new Policies forming
Stable
progress?
Transition TSDA to ANP
The revenue “Tsunami”
Aid to Finance
Aid to BPA
Aid to environment (SEMA)
Figure 3. The main events and phases of the Project
6.2.1 Discussions, 2001-2002
The project started as a series of discussions between the interim government of Timor-Leste
and Norwegian authorities late 2001 – early 2002. The purpose of these discussions was to
investigate the possibility for Norwegian support to the development of the Energy sector in
Timor-Leste, regarding both petroleum and hydro power.
A combined “fact finding mission” lead by NORAD and a series of energy seminars were
conducted in Timor-Leste in March 2002. This mission included participants from NPD, the
Ministry of Finance (FIN), the Norwegian Water Resources and Energy Directorate (NVE),
the Norwegian Embassy in Jakarta and NORAD. Based on the findings during this visit and a
series of follow-up discussions, NPD recommended to NORAD that an institutional
cooperation between NPD and the most relevant institution in Timor-Leste should be
established.
A MoU for the cooperation between Norway and Timor-Leste was signed on 20.5.2002, the
Restoration of Independence Day.
6.2.2 The planning phase, 2002-2003
With NORAD’s consent and intention to fund this project, the Project went into a planning
phase during the last part of 2002. NPD was given the task of coordinating this work. NPD
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visited Dili in October 2002 to assist in drafting a work plan and budget for the proposed
institutional cooperation and to establish the relevant institutional partner. During this mission
an agreement was made between Timor Sea Office, World Bank, Asian Development Bank,
USAID, UNDP and NPD that there was a need to coordinate the different support activities
related to the petroleum sector. This coordination was carried out through various meetings in
Dili and through telephone conferences.
NPD carried out a new planning mission to Dili in January 2003 in order to continue the
project planning, the preparation of an institutional contract and to continue the cooperation
with other relevant donors. The institutional partner was still not selected by the Timorese
authorities, and the Norwegian missions dealt primarily with the Prime Ministers Office,
TSO, TSDA and UNTAET.
The Agreement between Norway and Timor-Leste (the “country agreement”, Appendix 1) for
this project was signed by Prime Minister Mari Alkatiri and the Norwegian Ambassador Sjur
Torgersen on 10.2.2003.
During March 2003 it was agreed that NPD’s cooperation should be with the Ministry of
Development and Environment, and that the daily contact should be with the Energy and
Mineral Resources Directorate (EMRD). NPD visited Dili in April to finalise the institutional
contract and the work program and to coordinate and discuss the project with other donors
and other involved units. The contract between the two organisations was signed during this
visit. Norad had some input to the contract after it had been signed, and a revised version was
signed on 10.09.2003, and approved by Norad on 02.10.2003. NPD Project coordinator was
Mr. Erling Kvadsheim. Point of contact in EMRD was Acting Director for Oil and Gas, Mr.
Vicente Pinto. A steering committee was established, consisting of Minister for Development
and Environment, Dr. Mari Alkatiri and the Director responsible for International Affairs in
NPD, Ms. Bente Nyland.
6.2.3 Project start-up, 2003
Norway received in early 2002 a request from the Timor-Leste Government to assist in the
establishment of the marine baseline. NORAD passed this request on to NPD who established
cooperation with the Norwegian Mapping Authority for this purpose. While considering this
request NPD was made aware of the fact that an Australian consultancy firm had already
undertaken the necessary work during the UNTAET period. In agreement with Prime Minister
Alkatiri, the request was changed to a review of the existing work in order to see if additional
work would be required. The consultant’s report was made available to NPD in September
2003. The report was reviewed by the Norwegian Mapping Authority who also conducted a
brief control survey on selected baseline points by helicopter. A recommendation was sent to
the Timor-Leste Government in January 2004.
NPD was requested by NORAD and UNDP to assist in the hiring of three Norwegian
petroleum advisers to Timor-Leste. The Ministry of Foreign Affairs selected the first of the
three; Mr. Einar Risa. He took up his position in Dili in January 2003 as Director of TSDA
and. NPD identified the two others through a public announcement of the positions in
Norwegian press. NPD carried out interviews with relevant candidates and sent a
recommendation to UNDP in Dili who took care of the rest of the employment process. Mr.
Tore Bjordal and Mr. Halvard Enoksen moved to Dili in August 2003 to work as advisers in
the Ministry of Development and Environment and Ministry of Planning and Finance,
respectively.
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Primary point of contact in Dili for the planning phase was Mr. Barid Manna, UNDP, who
had worked as a UN advisor in the energy sector of Timor-Leste since October 2001. His
assignment to UNDP ended in 2003 and he was engaged by the Project for 6 months in order
to bridge the gap between the primarily UN supported advise to the MDE to the new period
with NPD/Norad and other external support and advise.
It was at an early stage recommended and identified that the project would benefit from a
Timorese assistant to the Project Manager with insight into the Timorese society, organising
capacity and language skills. This decision was also based on the experience from other
projects in Timor-Leste. Mr. Carlos Alberto Soares was highly recommended for this role,
and he was hired as an independent consultant to the Project, starting his assignment on
1.7.2003.
6.2.4 2004
An HRD consultant, Ms. Elke Ender, was engaged late 2003 to review the education level and
training potential in the upstream petroleum administration and in the society at large, to
recommend a short and long term HRD program and to identify relevant education
institutions. This work was the foundation of later education and training programs. Her
report and recommendations were finalised in September 2004.
Mr. Geir Ytreland was engaged as adviser and project manager, starting his assignment in
January 2004. The hand-over of responsibility for Project management from Mr. Manna to
Mr. Ytreland took place in March. Significant activities supervised by Mr. Ytreland during
2004 included restructuring of MDE, launching of the first seismic data acquisition round,
promotional activities, drafting and public consultations of laws and PSCs, planning of future
exploration licensing rounds and establishment of industry and academic networks.
21
May 2009
Figure 4. Secretary of State and Ministry staff during a break in a Project seminar. From left: Rosa
Hanjan, Secretary of State Jose Teixeira, Maria Ribeiro, and Ana Ribeiro
The Director for Oil and Gas, Mr. Amandio Gusmao returned from his leave of absence in
Indonesia. He became the new point of contact in EMRD for NPD. Due to internal
reorganisations NPD elected a new representative in the Steering Committee: Mr. Tormod
Slåtsveen.
A seismic data acquisition bidding round was organised in 2004. This was the first substantial
activity in the Timor-Leste petroleum sector supported by the Project. Acquisition started late
2004 and the data was ready during the first part of 2005. The data formed an important part
of the planning of later licensing activities.
It was recognised that the start-up of the implementation of the education program (discussed
above) would require a significant effort. It was further recognised that supporting and
educating the staff in modern governance principles was a critical issue. These two roles were
combined in one full-time advisor position for a period of one year. The position was
announced in Norway and Ms. Liv Marte Nordhaug was chosen for this position. She started
the work in October 2004. Her assignment was later extended to end 2005.
During 2004 the main internal training focus was on English language training for staff in
EMRD and in the other relevant units in the Timor-Leste petroleum administration. The
training was carried out both in-house and abroad (New Zealand). The Director of Oil and
Gas in EMRD received financial support to finalize his BSc in geology in Bandung,
Indonesia.
22
May 2009
Six scholarships for university education abroad for EMRD staff and external candidates were
set up. Guidelines for selection of students were established and the first overseas education
opportunities under this program were announced in December 2004. In addition a ’small
grants’ program supporting Timorese students studying in Indonesia was initiated to broaden
the future recruitment base for the petroleum public sector in Timor-Leste.
Various workshops, including two petroleum data management workshops for staff from
several relevant agencies in Dili were conducted. A program for purchasing the necessary
computer equipment and software was initiated. These activities improved the inter-agency
cooperation and it established EMRD as the leading unit in the petroleum database work in
Timor-Leste.
Figure 5. Data management workshop in the Fomento Building, Dili. Odd H. Oksvold
and Kjell R. Knudsen lecturing.
A group of 13 senior civil servants from various agencies visited Norway for two weeks in
May 2004. The group visited ministries and state regulatory agencies: NPD, Ministry of
Petroleum and Energy, State Pollution Agency, Ministry of Finance and the Central Unit for
Investigation and Prosecution of Economic and Environmental Crime. The group also visited
the industry: ConocoPhillips, Statoil, Norsk Hydro, Kollsnes gas pipeline terminal, ABB and
had presentations by education and training units: Petrad and Rogaland Kurs- og
Kompetansesenter. It was a highly successful trip that demonstrated to the participanst the
time and efforts that are necessary for creating a functional government petroleum
administration, appropriate tax and fiscal systems, good governance and transparency. The
group submitted a joint thorough report in English to the Prime Minister shortly after the trip,
the first of its kind from EMRD and partners.
An environment impact assessment (EIA) workshop was conducted in Dili by Norwegian
Institute for Nature Research in November 2004. The workshop was initiated in cooperation
between EMRD and the Environment Directorate, and it was one of the recommendations that
came out of the Norway study tour.
23
May 2009
In cooperation with TSDA it was decided to carry out a regional geophysical and geological
mapping of the offshore areas that are adjacent to JPDA in order to increase the knowledge of
the prospectivity in those areas, both as a preparation for the border discussions with Australia
and also to better understand the continuation of the geological trends out from the better
known JPDA area. The work was conducted by consultant Alastair Gray who carried out the
work in the EMRD offices in Dili. Several staff in EMRD and TSDA were involved in parts
of the work and considerable knowledge transfer took place. The project also resulted in a
much better overview of the available geophysical data, both in terms of quality and regarding
physical location in Australia.
The Sunrise Field Joint Venture submitted a feasibility study for the development options for
the large Sunrise gas field in 2004. The possible landing of the gas to Timor-Leste through a
pipeline from the field was not sufficiently evaluated. In order to provide the best possible
expert advice to the Timor-Leste Government in this issue the project engaged Mr. Sverre
Lund, a highly respected Norwegian pipeline expert. The potential landing of gas to TimorLeste might be one of the most significant achievements from the petroleum activity in the
Timor Sea. The reviews carried out by Mr. Lund contributed significantly to the fact that this
is still a viable option.
The revisions and drafting of petroleum legislation was primarily handled by the TSO and
TSDA. EMRD and NPD were generally consulted at late stages in these processes, which
from the project’s point of view was not an ideal process. In order for the project to provide
the best possible contribution at the late stage, lawyer Bjørn Erik Leerberg of Simonsen Føyen
Advokatfirma DA, Norway, was engaged. Mr. Leerberg has broad international experience in
this field. He also knows Timor-Leste well from previous work for UNTAET during the
establishment of the JPDA. Mr. Leerberg’s contribution to the discussion had impact on
several of the main elements in the legislation.
6.2.5 2005
During 2005 the responsibility for petroleum issues in the government was given to a new
ministry, the Ministry for Natural Resources, Minerals and Energy Policy (MNRMEP). Dr.
Alkatiri took the position as minister. Dr. Jose Teixeira was appointed Secretary of State.
EMRD was split into a unit called Oil, Gas and Energy Directorate (OGED) and a Directorate
for Geology and Minerals. OGED became the new cooperating organisation for NPD on a
day-to-day basis. Mr. Amandio Gusmao continued in the role as Director.
24
May 2009
Figure 6. Project advisers and the Director of Oil and Gas outside the Ministry office, the Fomento
Building. From left: Carlos Soares, Liv Marte Nordhaug, Geir K. Ytreland, Amandio Gusmao.
The support processes and tasks that had been initiated continued in 2005, including the
restructuring of the Ministry, the implementation of the first seismic data acquisition round,
the preparation and launching of the first bidding round for offshore acreage, promotional
activities, contributions to the drafting of petroleum laws, PSCs, tender protocols and other
regulations relevant for the bidding round.
The training and education initiatives were expanded. English training for Ministry staff
continued and intensive English training in Australia and New Zealand were arranged for
most of the EMRD/OGED staff. Awards in the small grants program for support to Timorese
students abroad were made and the selection of candidates for university degrees scholarships
was made.
Significant amounts of computer hardware, software, office equipment was purchased in
connection with the establishment of the OGED database (the “Lafaek” database) and for the
project and its advisers in general. NPD conducted a two-week workshop in Dili in October in
connection with the start-up of the Lafaek database.
Prime Minister Dr. Mari Alkatiri, Minister of Planning and Finance Ms. Madalena Boavida,
Secretary of State Dr. Jose Teixiera and several other Timor-Leste politicians and senior civil
servants visited Norway in late May 2005. The purpose of the visit was to receive information
about Norway’s experience in the public sector management of the petroleum activity,
especially the creation of a national oil company and the establishment of a petroleum fund.
25
May 2009
During the visit Prime Minister Alkatiri and his delegation met with Norwegian Prime
Minister Kjell Magne Bondevik, Minister for Petroleum and Energy Torild Widvey and
Minister for International Cooperation Hilde Frafjord Johnson. The visit included a seminar
with the Central Bank of Norway hosted by Governor Svein Gjedrem and a seminar arranged
by the consultancy firm Econ AS in cooperation with NPD regarding national oil companies
(see below). Other meetings were also conducted, including a meeting with the Ministry of
Petroleum and Energy.
Figure 7. Prime Minister Mari Alkatiri and Prime Minister Kjell Magne Bondevik at a press conference
after their meeting on May 24, 2005.
A high-level seminar on Norwegian and international experience with national oil companies
as a means of national control and influence on the petroleum sector was held by the
consultancy firm Econ AS in cooperation with NPD. The seminar included a presentation by
former CEO of Statoil Harald Norvik among other high level speakers from the Norwegian
and international oil industry and petroleum administration.
26
May 2009
Figure 8. National oil company seminar, Oslo. From left: Director Leif Ervik, Norwegian Ministry of
Finance. Secretary of State, Dr. Jose Teixeira. Former CEO of Statoil, Harald Nordvik. Moderator,
Willy Olsen. In the forefront: Prime Minister, Dr. Mari Alkatiri.
During 2005 a need for further assistance was raised with the Norwegian Embassy in Jakarta
on several occasions. A request for additional advisers in the finance sector as well as the
petroleum resource management sector were therefore sent from the Timor-Leste government
to the Norwegian Embassy in Jakarta during the second half of 2005.
Two advisers were in place by the end of the year: Mr. Samuel Robinson was employed for
an interim period as a petroleum fund adviser to the Banking and Payments Authority (BPA).
He bridged the gap between a period where IMF funded this adviser position and a new
period of Norwegian support. Mr. Sigurd Klakeg was employed by NPD to work as a fiscal
policy and petroleum fund adviser to the MoPF. He was recruited by the Norwegian Ministry
of Finance.
An extensive employment process, using a Norwegian recruitment consultant (Hartmark
Consulting) was carried out to identify the remaining new advisers; Mr. Roger White (Project
Manager), Ms. Rosalind Waddams (Geological Adviser), Ms. Anne-Lene Midseim (Legal
Adviser), Mr. Håvard Holterud (Tax Adviser) and Mr. Terje Iversen (Petroleum Fund
Adviser, financed separately through an agreement with IMF).
6.2.6 2006
After a reorganisation of the Timor-Leste government, Dr. Jose Teixeira was appointed
Minister for MNRMEP. OGED changed name to the National Directorate for Oil and Gas
(DNPG – a Portuguese acronym).
The request for further assistance was approved by Norwegian authorities in early 2006,
including an additional grant of NOK 14.5 million. The number of advisers and activities in
the project increased significantly as a result of this.
27
May 2009
Mr. Ytreland’s assignment as Project Manager ended in March 2006. Mr. Roger White was
recruited in the 2005 recruitment campaign and he took on the task as Project Manager when
Mr. Ytreland left. His work included supporting all the ongoing tasks and processes,
including: General project management, support to MNRMEP staff and other advisers, liaison
with other units and representing the Timorese authorities externally. Negotiations and
agreements of PSCs, establishment of a capacity development plan for DNPG, preparations
for the development of Timor-Leste content plans, coordination of external downstream
proposals with internal upstream requirements and the Sunrise Field pipeline and LNG plant
plans. He also functioned as Alternate Commissioner for the Timor Sea Designated Authority.
During a period from late May to September Timor-Leste was affected by a period of civil
unrest. The progress of the project was significantly influenced by this and there were a
number of associated security issues for both the MNRMEP staff and the international
advisers. DNPG and the MNRMEP had a very low activity level from end of May into
August-September. In the beginning of that period several of the advisers left the country for
security reasons and a number of the MNRMEP staff had to leave Dili, move into refuge
camps or stay home from work to take care of their possessions and families. Project Manager
Roger White, Project Implementer Carlos Soares and some of the MNRMEP staff kept the
office going at a minimum level during the whole period. The advisers were all back by mid
June. In late May the DNPG office was looted and damaged, and some extra costs incurred in
order to replace the stolen or damaged equipment. The evacuation costs for the international
advisers were covered by the project, as agreed by the Embassy in Jakarta.
A total of six scholarships for degree studies at universities were granted, four at University of
Western Australia in Perth, one at University of Stavanger and one pending foundation
exams.
Ms. Rosalind Waddams was engaged as geological adviser. She started her assignment in
March 2006. In addition to acting as geological adviser and mentor for Timor-Leste staff, her
main tasks included providing geological expertise and experience for the offshore acreage
release, the planned onshore round and establishment of a national database for the petroleum
sector.
Ms. Anne-Lene Midseim was engaged as legal adviser to DNPG. She started her assignment
in March 2006. Her work included drafting of PSCs, negotiations and coordination of external
advisers in the PSC award process, farm-outs, preparing the validation process for TimorLeste for implementation of the EITI principles, drafting of rules and regulations, lecturing on
anti-corruption, good governance and transparency issues lecture to staff of MNRMEP,
supporting the Director in DNPG in the various daily legal tasks etc. DNPG had not yet
employed local legal staff, and Ms. Midseim therefore had limited possibility to transfer
specific legal knowledge or do extensive training in legal aspects. She contributed extensively
to the cooperation between the various public sector units.
Mr. Sigurd Klakeg continued his assignment as adviser to the Macroeconomic and Tax Policy
Unit in the MoPF. His work included investment policy issues for the petroleum fund, fiscal
policy issues, national budget issues, membership in the Investment Advisory Board, etc. His
counterpart was Mr. Cristino Gusmao, Director of the Macroeconomic and Tax Policy Unit.
Mr. Håvard Holterud was engaged as Petroleum Taxation Adviser in the Petroleum Tax
Division, Ministry of Planning and Finance. His work included training of staff in the
Petroleum Tax Division, tax audits, evaluating transfer pricing, withholding tax etc. In
addition, Mr. Holterud worked on day-to-day issues in the division, like tax payer inquiries,
28
May 2009
review of tax models, budget proposals for the World Bank, contact with Australian
authorities, a new organizational model for the division, evaluation of the external auditor for
the petroleum fund etc. His counterpart was Mr. Agostinho Ramos.
Mr. Tørres Trovik was engaged as Petroleum Fund Investment Adviser to MoPF on a parttime basis. His work included attending the meetings in the Investment Advisory Board,
advising the authorities on implementation of the petroleum fund act and the management
agreement, advising on issues related to the operational management of the petroleum fund
assessing of the strategic asset allocation of the fund etc.
6.2.7 2007
The progress of the project was influenced by periods of civil unrest and also by the
presidential and parliamentary elections held during 2007. It affected the petroleum
administration activities, and also the provision of advisors.
The presidential elections in April resulted in the appointment of Jose Ramos Horta and led
smoothly on to the Parliamentary elections on 30th June. However, appointment of a
Government did not take place until 9th August. In the new government the responsibility for
petroleum issues was placed under the Secretary of State for Natural Resources, Mr. Alfredo
Pires. The responsibility was delegated to the Secretariat of State for Natural Resources
(SERN – Portuguese acronym) under Secretary of State Mr. Alfredo Pires. The Ministry of
Planning and Finance was renamed Ministry of Finance (MoF)
Plans for reorganisation of the petroleum sector, including the merger of TSDA and DNPG
into the National Petroleum Authority (ANP) were unveiled by MNRMEP early in 2007, but
these plans were shelved pending appointment of the new government. Detail work to change
the organisation was put on hold. The deadline for reorganisation to take place was later
extended to June 2008.
The process of extending the project beyond 2008 was initiated in 2007. Following the annual
meeting on February 1st, NORAD held a mid-term review of the project (see Chapter 8) in
late April, followed by a workshop on extension in May which led to a letter from MNRMEP
in June requesting extension of the project. However this was in the midst of the election
process and was later not considered binding on the new Government.
A revised proposal for project extension was submitted by the project to Secretary of State for
Natural Resources Alfredo Pires for comment and approval. However, he suggested a change
of focus in the project and requested money contributions for scholarships and consultants in
place of provision of advisors. Environmental assistance was requested to be postponed
pending clarification of responsibility for petroleum related environment matters.
In November it was agreed between the Norwegian Embassy in Jakarta and the Secretary of
State that the project would cover supply of petroleum advisors only (as before) but that a
special team from Norad (representing Norway’s “Oil for Development” initiative) would
visit Dili in January 2008 to discuss scholarships and environmental assistance as well as to
review the overall project.
Two advisors left the project – geologist Rosalind Waddams left in early May and legal
advisor Anne-Lene Midseim left in early June. Although recruitment efforts took place for
both positions and suitable replacement candidates were found, the positions were not filled
29
May 2009
due firstly to the security situation post elections, and later pending confirmation of long-term
needs for these positions.
Mrs. Rebecca Denham was appointed workplace skills and human resource advisor in March,
confirming the role she had been taking on a temporary basis. Her work included support to
the HR officer, administration and support to scholarship students, administration of small
grants, staff development programmes, liaison with TSDA, oil companies and Norad to
provide training courses and seminars etc.
Mr. Sigurd Klakeg continued as adviser to the Macroeconomic and Tax Policy Unit (MTPU)
in the MoF until the end of January 2007. Mr. Klakeg provided some support to MOPF from
Oslo until his successor assumed his position in July. During this period Mr. Klakeg was a
member of IAB of the Petroleum Fund and participated in the meeting in May. Mr. Vidar
Ovesen, who was identified and selected by the Norwegian Ministry of Finance, took over the
position as adviser and the Board member as of July 2007. Mr. Ovesen spent most of his time
advising the Minister (and her investment adviser Olgario de Castro) on fiscal policy and
petroleum fund issues. Due to the current staffing profile in MoF he has only to a limited
degree spent time on capacity building in the Macroeconomic and Tax Policy Unit. Mr.
Tørres Trovik’s role as Petroleum Fund Investment Adviser to MoF continued.
Mr. Håvard Holterud continued his task as Petroleum Taxation Adviser in the Petroleum Tax
Division, MoPF, carrying out a large number of tasks, including training of staff.
NPD continued the work of building the Lafaek database and populating it with real data from
both the sovereign areas of Timor-Leste and from the JPDA. A major data management
workshop was held in Stavanger from 16-27th April with participants from both DNPG and
TSDA
30
May 2009
Figure 9. Participants at the Database Workshop at NPD, April 2007.
Back from left: Gualdino da Silva, Kjell R. Knudsen, Odd H. Oksvold, Erling Kvadsheim.
Front from left: Carlos Soares, Eva da Costa, Francisco Ferreira, Joao Quintino, Tito de Jesus.
6.2.8 The final year, 2008
The provision of new advisors proved to be difficult in 2008, due initially to candidates
having fears about security in Dili, and later due to the high world-wide demand for qualified
staff.
In early 2008 the need for a new geological adviser was confirmed by SERN, and the position
was filled by Ms. Abryl Ramirez from NPD, who moved to Dili in July 2008. Her work in
ANP until September has included advice on offshore exploration activities within active
PSCs, assisting the Directors in meetings, advice on seismic acquisition, training and
knowledge transfer in the geosciences in ANP.
Mr. Håvard Holterud (Petroleum Tax Advisor) finished his assignment in May 2008.
Erling Kvadsheim (NPD Project Coordinator in Stavanger) left NPD and the Project in
February 2008. He was replaced by Ms. Else Ormaasen, but continued on a consultant basis.
Else was Project Coordinator until the end of Phase 1.
Rebecca Denham’s contract as Workplace Skills and HR Adviser was extended from March
2008 beyond the end of Phase 1, but at the request of SERN, her work emphasis changed to
HR support and Scholarships Administration.
Vidar Ovesen’s contract (as Fiscal policy and Petroleum Fund Adviser) was due to expire end
July, but was extended beyond the end of Phase 1.
31
May 2009
Roger White has been Project Manager since March 2006. He is employed on a consultancy
contract which was extended beyond the end of Phase 1. His main task has been to support
DNPG to develop into a well functioning public administration unit for the sovereign areas of
Timor-Leste. He has acted as a resource person and adviser to the Government, the TSDA and
other relevant public sector units on petroleum related issues in general. Since the formation
of the National Petroleum Authority (ANP) in July 2008, he has concentrated on developing
training courses for new staff, as well as project administration.
Carlos Soares’ task as Project Implementer continued beyond the end of Phase 1. Carlos’
multilingual abilities and cross-cultural skills have made it possible to overcome cultural and
practical barriers that otherwise would have been challenging obstacles to the success of the
Project.
Mr. Vidar Ovesen continued in the role as adviser to the Macroeconomic and Tax Policy Unit
(MTPU) in the MoF. He was a member of the Investment Advisory Board of the Petroleum
Fund until January 2008, when he resigned from the Board and was appointed by the Minister
of Finance to sit on the Secretariat of the Board. Most focus in this period has been on
assessing the current investment strategy of the Petroleum Fund, advising on changes of the
investment strategy, including outsourcing funds to external managers, considering the future
strategic asset allocation and amendments to the Petroleum Fund Law.
Mr. Ovesen has spent most of his time advising the Minister (and her investment adviser
Olgario de Castro) on fiscal policy and petroleum fund issues. Due to the current staffing
profile in MoF he has only to a limited degree spent time on capacity building in the
Macroeconomic and Tax Policy Unit.
Mr. Tørres Trovik continued his engagement as Petroleum Fund Investment Adviser to MoF.
He joined the World Bank in August 2008 but has been allowed to continue his engagement
in the Investment Advisory Board (IAB).
The project, here called Phase 1, ended officially on the 15th September 2008, but continues in
a seamless manner into the new support program, called Phase 2 which has a time frame up to
2013. Several of the tasks that were not finished within the time frame of Phase continue into
Phase 2.
32
May 2009
Figure 10. Secretary of State Alfredo Pires and Project Coordinator
Else Ormaasen at discussions of the new program in Dili, May 2008.
7. Accounts
The overall grants and expenses of this project were:
Grants
Initial grant, 2003
Additional grant, 2006
Total
Total expenses
Expense overrun
Advance from the grant of Phase 2, 2008
Balance
30 000 000
14 500 000
44 500 000
(49 419 601)
(4 919 601)
4 919 601
0
Table 1. Overall Project account overview
It was agreed at the start-up of the project that NPD should handle all payments (Institutional
cooperation agreement (Appendix 2.1)). NPD sent quarterly invoices to the Timorese
counterpart who approved the expenditure and forwarded it to NORAD (initially) and later
the Embassy in Jakarta for payment. This system functioned well.
This arrangement was chosen initially because the administrative capacity was not yet in
place in MDE to handle this part of the project. It was the stated intention to transfer this
responsibility to NPD’s Timorese counterpart as soon as the capacity was in place. However,
in 2006 Prime Minister Alkatiri requested verbally that the current procedures should be
continued throughout the project. Partly because the accounting procedures in the Timorese
administration at that time were only tailored to handle general budget support, not detail
grants like this, and a partly a fear of lack of efficiency.
For practical reasons two accounts were set up in ANZ Bank in Dili, one for local expenses
and travel assistance and one for the education projects. Money was transferred on a regular
basis to these accounts by NPD based on detail budgets. Accounts were presented annually at
the Annual Meetings. It was initially the intention to have these accounts audited by a local
auditor. It turned out that there was no credited auditor for this kind of work in Timor-Leste.
Appointing an international auditor would bee far too costly compared to the size of the
amounts on these bank accounts. It was therefore decided, in agreement with NORAD, to
omit the planned auditing. All receipts and accounts were at all times available for inspection
by Norwegian authorities or the Norwegian Auditor General, had they so wished.
33
May 2009
Budgets for this project (Phase 1) were made up with a decrease in activities towards the end.
Due to the fact the there since 2007 had been a clear intention to extend the cooperation the
activity levels in terms of advisers was not reduced as initially planned. This meant that in
reality some of that Phase 2 funds had to be committed and spent before 15.9.2008. This was
done in full endorsement of the Embassy in Jakarta. The total costs of the activity up to
15.9.2008 are thus higher than the grant of NOK 44.5 million. The difference is regarded as
an advance of the grant for Phase 2.
Detail accounts of each year are shown in the attached Annual Reports. A summary of the
expenses are shown in table 2
2002
Year
-2003
2003
2004
2005
2006
2007
2008
Sum
Assist UNDP
71
71
Ministry of Finance assistance
97
97
Maritime Mapping Authority
assistance
77
Petroleum Advisors
Project Manager
Local implementer
451
528
746
746
12
1463
1224
1 659
1945
1337
7640
316
335
407
420
671
540
2689
222
625
Training and governance
advisor
63
325
245
1480
Geological Advisor
865
1082
649
2596
Legal Advisor
924
1382
2306
593
444
1264
76
190
215
481
1615
1687
1417
4719
536
3039
Petroleum Fund Advisor BPA
(Interim)
227
Petroleum Fund Investment
Advisor to MoPF (Part-time)
Petroleum Fund Advisor to
MoPF
Petroleum Taxation Advisor
to MoPF
471
2032
250
222
283
307
1730
1512
1293
46
365
571
0
982
355
593
Advisers travel expenses etc.
Mapping of training and
education needs
88
Training and education
Data Management
Misc. Equipment
98
Technical assistance and
workshops
NPD project administration
468
379
459
6868
1655
382
912
-12
5471
623
544
832
1169
1093
5108
61
145
211
86
35
1084
5
242
713
2026
2 534
Recruitment
Total
547
140
Travel assistance
Miscellaneous and
contingency
755
721
3
-6
-2
21
0
129
145
896
7320
7272
10947
13917
8355
49420
Table 2. Annual cost allocations (1000 NOK)
34
May 2009
8. Interim reviews
The Project was reviewed twice in 2007. It was studied as part of a NORAD case study of
countries with Norwegian support to the development of the petroleum sector. It was also
subject to a traditional interim review by an external consultant, in order to check if the
Project was progressing in accordance with the approved plans and intentions.
The NORAD case study1 concluded that
The Project was structured according to Timor-Leste’s needs and was very relevant.
That although it was a new programme the first steps had been successfully
completed.
That it had been a cost-effective project but that lack of continuity of advisers formed
a threat to the effectiveness.
That Timor-Leste was still highly dependent on technical assistance and that the
sustainability of the Project thus was dependent on long-term commitment. TimorLeste’s growing economy should enable the country to take over the financial
responsibility for this kind of assistance in the foreseeable future.
The mid term review2 commented that the petroleum assistance project in Timor-Leste was
unparalleled to any other project Norway had been supporting in this sector. Further, some of
the conclusions of the review were that
The flexibility that was built into the general and very open goal and output statements
makes it difficult to assess the results and effectiveness of the Project.
However, the flexibility has been important to accommodate the changing situation
and assumptions.
A more detail planning process may have identified some of the gaps in the capacity
and would probably have identified the need for mobilisation of more advisers at an
earlier stage.
An exit strategy was missing.
The time frame of five years was too short to achieve the goal.
Several processes in the administration (e.g. the bidding round) were carried out in
line with best international practice, but this was only possible because the advisers
played a very active role. This may have happened at the expense of the capacity
building.
Advisers should spend more time on capacity building and less on expert work
An emergency plan for advisers should have been in place at the outset.
1
Evaluation of the Norwegian Petroleum-Related Assistance. Case studies regarding Mozambique, Bangladesh,
East Timor and Angola. NORAD Evaluation Report 1/2007.
2
Mid Term Review of TIM 2010 – Assistance in developing the management of the petroleum sector in TimorLeste. The Bridge Group, May 2007
35
May 2009
9. Project results
9.1 Resource management
The Project has financed and provided advisers in the following fields:
Management and institutional development
General resource management
Geology and geophysics
Facility engineering (upstream and downstream)
Project economics
Law
HRD and Training
Good governance
IT
Revenue Management
The Project and its advisers provided support and assistance in a multitude of tasks:
Institutional development
Although the structure of the public resource management has changed several times during
the time of the Project, significant knowledge and experience from organising the Norwegian
petroleum sector and the petroleum sector in other parts of the world have been discussed
transferred. EMRD/OGED/DNPG was early on regarded as one of the best organised and
administered units in the Timorese public administration.
Petroleum legislation
The project contributed to the formulation of the petroleum laws, model PSCs and the tender
protocol.
The Timor Sea Regional Mapping Project, 2004 (in cooperation with TSDA)
Organised and part financed by the Project. It resulted in a better understanding of the
petroleum potential in the Timor Sea and added significant value to the planning of the later
activities.
The seismic data acquisition round (2004-2005)
Enabled and facilitated by the Project. Transfer of knowledge took place through active
participation in the planning, through onboard training during the acquisition and during the
initial processing.
Prime Minister Alkatiri’s official visit to Norway in May 2005
Arranged by NPD on behalf of the Project. The visit exposed a series of Government
members and senior civil servants to the Norwegian petroleum authorities and industry. It
included meetings with members of the Norwegian Government, including the Prime
Minister. The visit also included a high-level seminar on the challenges and values of
establishing national oil companies. The visit added significantly to securing the good
relationship between the two countries.
Establishment of the EMRD/OGED/DNPG web site
The establishment of the web site was supported and facilitated by the Project. It quickly
became the main electronic information channel for the Timorese petroleum authorities (in
addition to the TSDA web site). This was particularly useful in connection with the promotion
of the PSCs, the road shows etc.
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May 2009
Promotion road shows (2005)
The Project assisted EMRD in the preparation of promotion material and the execution of an
extensive road show to Singapore, London and Houston, which created significant interest
among international oil companies.
Participation on conferences
The project financed and facilitated participation on relevant conferences, primarily in the
region. This resulted in valuable experience from promoting and presenting in international
forums. It expanded the industry and academic network of the Timorese petroleum
authorities.
Possible development of the Greater Sunrise Field
MDE/MNRMEP/SERN and the advisers were involved in repeated and difficult negotiations
and meetings with Australian authorities and the Greater Sunrise Field operator, concerning
the different development options of this very large gas field. This includes issues related to
pipeline crossing of the Timor Trough, landing options for gas, development concepts, LNG
technology and LNG chain issues. The Project provided key pipeline and gas field experts
from Norwegian industry and NPD in order to prepare the Timorese authorities as well as
possible for these processes. Due to the work of these experts and the associated steps taken
by Timorese authorities, the landing of gas or other industrial options that will create
significant positive effects to Timor-Leste are still viable options.
The first offshore bidding round
The preparations, definitions of areas, promotion, preparations of data, bidding process,
review and awards of contracts were done in OGED with close support of the Project advisers
and NPD. Significant transfer of knowledge took place. The quality assurance and negotiation
strength that were provided by the advisers were key elements in why the bidding round was
such a success. Industry leaders in the involved companies gave OGED credit for carrying out
an unexpectedly professional bidding round.
PSC negotiations and drafting of final contracts
Negotiations of the PSCs in the first bidding round were carried out with the technical support
and drafting capabilities of various resident advisers. This is a highly specialised field which
require long experience, which the advisers provided. At the same time significant knowledge
transfer took place such that a later round can be done with only minimal foreign
involvement.
Preparations of an onshore bidding round
Over a period of a few years, OGED/DNPG made various preparations for onshore bidding,
including preparations for data acquisition, subdivision of the island into geological zones
suitable for bidding etc. This was done in close cooperation with various resident advisers and
NPD.
Follow-up of PSC terms and work obligations
A large part of DNPGs work in the last part of the Project was associated with follow-up of
the industry’s work within the various contract areas. This work includes approvals and
follow-up of activities such as seismic acquisition and drilling. It also involves discussions
and negotiations about the details of the PSC terms, farm-ins and farm-outs, change of
operatorship etc. These jobs require a multitude of knowledge and experience. DNPG and
later SERN have been able to carry out these tasks supported by the Project advisers and
NPD, as well as support from other units, like TSDA.
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May 2009
9.2 Data management
Good data management has been an important part of the Project throughout. The petroleum
sector is a very data-intensive industry, with a series of specific requirements. The project
advisers and NPD have been able to transfer knowledge from what is one of the best
functioning data management regimes in the world to the evolving Timorese administration.
Some of the results are:
Management support
Through showing the benefit of good data management and thus creating recognition of the
importance of data management, the management of EMRD/OGED/DNPG and TSDA/ANP
has supported this element by giving data management sufficient priority and resources.
Data management
Key professional staff in these units have been trained and are now to a large degree able to
Understand international petroleum data ontology (terminology, definitions and
relations (data model).
Specify and develop an MS-Access database of reference data and link this to internet
web-site.
Organize and quality control administrative information about petroleum activities in
the Timor-Leste region.
Establish and maintain geographical information system (GIS) about petroleum
activities in Timor-Leste region.
Document management
Key professional staff in TSDA has been trained in document management system
requirements and functional specification demands.
Key documents produced
A series of documents have been produced, including
Use of Lafaek database by TSDA (2006)
GIS training manual (2006)
GIS Document (version 4, 2008)
Draft of Data Management Strategy (version 0.5, 2007)
Electronic document management system for DNPG/TSDA. Requirement
specification (last version, 2007)
Maps of Timor-Leste sovereign area and JPDA showing relevant petroleum
administration information (contract areas, wells, discoveries etc)
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May 2009
9.3 Finance management
The Project has financed and provided advisers in the following fields:
Petroleum tax
Fiscal policy and petroleum fund advice
Operation of petroleum fund
The Project and its advisers provided support and assistance in a multitude of tasks:
Petroleum tax
The adviser carried out basic training and knowledge transfer in accounting, finance theory,
transfer pricing, asset valuation, unitisation, LNG contracts and the petroleum sector in
general, as well as in general office skills. Tax audits of operators, JV partners and oil service
companies were facilitated, as well as the consequent follow-up. A basic system for tax audits
were set up as well as fit-for-purpose tax declaration and accounting forms for petroleum
related companies. The adviser assisted the Commissioner for East-Timor Revenue Service in
activity planning, organisational development and in the establishment of the principles for
tax risk assessment. A proposal for long-term competence development plan for the
Petroleum Tax Division (PTD) was prepared for the Minister of Planning and Finance. The
adviser also facilitated the establishment of routines of cooperation between PTD and TSDA.
The adviser also acted as a specialist in a number of tax issues, including cooperation and
discussions with Australian tax authorities and advice in connection with tax legislation. This
support and these activities have contributed to the gradual development of a professional
Timor-Leste tax authority. The PTD started at a very basic competence level, and it will still
take significant amount of time before it can act totally independently of expert advice and
assistance from international experts.
Results achieved:
Training on petroleum tax, accounting and basic finance topics for staff in the
Petroleum Tax Division, MOPF
Analyze and give advice on possible tax effects and revenue effects regarding PSA
agreements, gas pipeline and the implementation of new consolidated tax law
Help establish regular meetings with DNPG/TSDA and MOF to discuss current issues
and improve flow of information between the different Timor-Leste petroleum
authorities.
Conduct and give advice on tax audits and desk audits
Identify and give advice on current petroleum tax issues
Designed spreadsheets to facilitate overall monitoring of petroleum tax payments.
New tax return form designed for petroleum producers in order to improve ability to
monitor overall validity of tax liability and be able to make priorities on further
investigations.
Information to taxpayers
Design and give advice on long term plan to establish a professional petroleum tax
authority and address necessary key resource assumptions
Fiscal policy and petroleum fund advice
This is a key area for the Timor-Leste’s overall fiscal and financial management. The staff
available for knowledge transfer and training has been very limited and the advisers in this
field has to a large extent acted as experts rather than advisers. The work has included
estimation of petroleum wealth and sustainable income, input to the Government’s budget
submissions to the Parliament, drafting of budget texts and analyses, coordination and
participation in the Ministry’s work on investment strategies for the petroleum fund,
39
May 2009
assistance in the administration of external petroleum fund manager, secretariat and
membership of the Investment Advisory Board of the Petroleum Fund, drafting of
amendments to the Petroleum Fund Law, participation in the EITI National Working Group,
LNG contract analyses, negotiation advice, participation in various work shops etc.
Significant knowledge transfer to the Director of Macro Economy and Tax Policy Unit and
other relevant staff has been facilitated.
Operation of the petroleum fund
The Project financed for a limited period an adviser to the BPA to assist and facilitate the
establishment of a functional front desk activity for the day-to-day operation of the petroleum
fund. This contributed to a sound and professional operation of the fund in the early and very
critical phase of the establishment of the fund. It included training and knowledge transfer to a
number of staff in BPA, including the BPA Director. This task was later taken over by IMF.
9.4 Environment management
It was the intention from the beginning of the Project to include relevant aspects of
management of the petroleum related environmental issues in the Project. This was achieved
only to a limited degree. There were several reasons for this, among others lack of capacity in
the Environment Directorate. Some activities were carried out, including
Environmental impact assessment (EIA) workshops
Two workshops were conducted, which both attracted participants from several units within
the petroleum administration and from the Environment Directorate. This resulted in a work
plan for future EIA activities.
Workshops and visits
Staff from the Environment Directorate took part in a number of the workshops in various
petroleum related topics that took place in Dili during the time of the Project. This exposed
the staff to a number of important issues and helped in understanding the operational aspects
and the various requirements from the petroleum industry, that also are important for the
environment authorities. Key staff from the Environment Directorate also took part in visits to
Norway in order to meet with relevant authorities in Norway and the industry.
9.5 Education and training
The education and training element of the Project has been one of the main focus areas
throughout. It has comprised a large number of activities, including
HRD potential mapping (2004)
A review of the staff in EMRD, their education basis and further training potential was carried
out. It included a review of relevant universities and schools abroad. It resulted in a report
(staff confidential) which has formed one of the bases for establishing later education plans
and programs.
English training
English is the language of the petroleum industry. It was early on recognised that a significant
effort was necessary in order to prepare the administration for dealing with the industry.
Training courses were arranged in-house, both class room lectures and one-to-one training. 30
students participated. A number of the key staff were given intensive English training abroad.
The program consisted of 3-6 months courses in New Zealand and Australia. A total of 10
students participated in this program.
40
May 2009
Data management workshops
Seven data management workshops were conducted in Dili and in Stavanger, Norway. A total
of 15 staff, primarily from EMRD/OGED/DNPG/SERN and TSDA/ANP but also from other
units in the administration, took part in these workshops. It has provided insight into a large
number of important data management topics and has enabled key staff to perform several
important tasks, including establishing a data base system (“Lafaek”) in cooperation with
NPD.
Resource management seminars
Various resource management seminars have been conducted in Dili, primarily lectured by
NPD staff. The topics include resource management, resource classification and accounting,
data management, organisational structures of petroleum authorities, taxation, geology and
geophysics, seismic operations and drilling, field development etc. This has contributed to
both an understanding of the petroleum authorities’ role and tasks and an understanding of the
industry’s activities and needs. It has enabled staff to better communicate with the industry in
meetings and to carry out tasks more efficiently.
Good governance and workplace skills workshops
Seminars and workshops on good governance and workplace skills have been conducted by
various resident advisers. It has helped in the daily organisation of the work in
EMRD/OGED/DNPG/SERN and contributed to a reliable and transparent organisation which
is regarded as one of the more efficient and well-run in the Timorese administration.
Scholarships
A scholarship program was established. Six full scholarships to Australia and Norway were
awarded 2005 – 2006, all to be completed by 2011.
Small grants
A small grants program was established. A total of 108 Timorese students received small
grants of around $500 per annum over the period 2005 – 2008. They were enrolled in a
number of universities in Indonesia, with the majority attending Universitas Proklamasi 45
Yogyakarta, and AGP Bandung. Some students received grants in multiple years. 2005: 51
awarded, 2006: 54, 2007: 53, 2008: 38.
Assistance in administrating SERN funded scholarships
The Project has assisted SERN in organising and administrating SERN funded scholarships in
2008: 61 SERN Scholarships Indonesia (SSI Transferencia) for students transferring or
enrolling independently to 4 universities chosen by secretary of state, 33 SERN Scholarships
Australia (SSA Ulun Mamar) for Australian undergraduate degrees were awarded by the end
of September 2008 and 40 SSI Ulun Mamar – the next on the list from the SSA Ulun Mamar
– who will study a Matriculation program at Universitas Gadjah Madah, and if successful
will enter into undergraduate studies at UGM.
41
May 2009
9.6 Planned outputs and indicators vs. Results
Indicator
At least 3 additional Timor-Leste staff in
the public sector petroleum
administration should have a Master
degree, or equivalent, in a petroleum
related topic
At least 6 Timor-Leste nationals should
have a Bachelor degree, or equivalent, in
a petroleum related topic
Result
Not achieved
Comment
Not realistic to achieve within
the time frame of the project
Achieved
Only partly the result of the
project, partly by students
returning from abroad and then
recruited
All Timor-Leste staff in the public sector
petroleum administration should have
taken part in workshops and courses
within petroleum related topics.
At least 50 Timor-Leste staff in the
public sector petroleum administration
and related sectors should have gone
through at least one technical English
course
At least one lease sale/licensing
round/establishment of a PSC should
have been carried out without significant
help from external advisers
Achieved
Well functioning administration with
clear responsibilities and positive
reputation in the Timor-Leste
government
International acknowledgement for a fitfor-purpose legal and contractual
framework for the petroleum industry
Well functioning management and fiscal
system for petroleum revenues
Achieved
Only one PSC round has been
carried out by EMRD/OGED
during the duration of the
project, heavily supported by
advisors. A second round has
been postponed.
ANP is well respected
Achieved
Legal framework is high-class
Achieved
Reliable, comprehensive and available
petroleum data archive for use in
promotion and for administrative
purposes
Work in
progress
The management is still fragile
and dependent on significant
assistance from advisers
Well under-way, but still a lot
to be done
Achieved
Not achieved
42
May 2009
Planned output
Project management and coordination
with other donors
Analysis of education needs and training
capacity within the relevant Timor-Leste
administration
Implementation of education and training
programmes
Technical assistance by NPD within its
fields of competence
Result
Achieved
Achieved
Achieved
Assistance in petroleum data
management
Achieved
Computer equipment, necessary software
and other data handling equipment
Achieved
Partly
achieved
Comment
Analysis was done in 2005/6,
as a planning tool for the
project, but is now outdated
Achieved
Achieved
9.7 Problems encountered
9.7.1 Lack of cooperation partner in the planning phase
The planning of the project in 2001 and 2002 was made difficult by the fact that no
cooperating institution on the Timorese side was selected until 2003. The planning was done
to a large extent by NPD in cooperation with the Prime Minister, TSO and to some extent
UNDP. Dealing directly with the Prime Minister was a big advantage in terms of decisions
and strategic input, but inefficient in terms of his availability for discussions and meetings. A
lot of the planning had to be kept at a general level, and a lot of flexibility had to be put into
the planning documents, since a detail tailoring of the project towards the Timorese
cooperating institution was not possible.
An earlier selection of cooperation partner could have increased the efficiency of the planning
process and the initial parts of the project.
9.7.2 Lack of coordination between advisers
The project experienced in the first couple of years a high level of cooperation between
donors, in particular with the World Bank and UNDP. However, on an individual advisor
level, lack of coordination created some disturbances.
There was not always sufficiently coordination between the Norwegian advisers outside the
project and the advisers inside the project, even if the were all financed by the same
Government. This could lead to cases where the Timor-Leste Government or public
institutions would get conflicting advice from they Norwegian advisers. One such case
included the discussion of formation of a national oil company, where the project
recommended a different strategy for timing and responsibility for such a company than other
43
May 2009
Norwegian financed advisers. Another such case was a potential serious conflict of interest in
connection with first bidding round, where one Norwegian adviser outside the project
recruited a new key adviser to a Government institution from a company that at the same time
was considering bidding for PSCs. The project’s advisers advised strongly against it, which
led to personal conflicts between advisers and a period of lack of access to key stakeholders
for the project’s advisers.
Both of these examples could have been avoided with better cooperation between advisers or
better guidance from the Norwegian authorities in handling such disagreements.
9.7.3 Lack of clarity on the roles and responsibility of the advisers
All of the advisers, but in particular the resident Project Managers, experienced that their role
towards their counterparts and towards the political level in the ministries was unclear at
times. They all experienced that the politicians regarded them as an “expert workforce” that
could be used for expert tasks or as high level representatives of the Timorese authorities if
needed. This even sometimes happened without involvement of the advisers’ counterparts.
This would occasionally put the adviser in a difficult position towards their counterpart, but
more importantly it often conflicted with the advisers’ TOR or job description, and it required
that the adviser acted as an expert worker in stead of an adviser.
This gave the advisers opportunities to get involved at a high level and even influence central
and strategic issues. However, when the advisers’ advice did not underpin the political
strategies, the advisers sometimes felt “left out in the cold” and were isolated from
information and from influence. This reduced the advisers’ ability to do a good job, reducing
the overall efficiency of the project and the knowledge transfer to their counterparts. All three
Project Managers experienced this at various times.
The balance between being an adviser and an expert worker is difficult. Ideally advisers
should only give advice and transfer knowledge. In reality a lot of the necessary tasks in the
petroleum and finance administration could not be done without active participation of the
advisers. The donor is insisting that it wants advisers to be advisers. The recipient also wants
experts. The advisers also see areas where they can contribute to a better solution for the host
country in the short term by contributing directly.
These issues cannot be solved easily. The lack of counterparts and capacity in the host
country is a real constraint. However, by spending time on mapping out the expectations and
agreeing on a set of principles for how the advisers should act and report, will improved this
situation. It will also help in the identification of the right advisers.
9.7.4 Insufficient emergency preparedness in connection with the civil
unrest
Timor-Leste is a developing country with a recent war-torn past. Civil unrest in some form
must be expected. During the unrest in 2006 it became clear that the project lacked a
sufficient emergency plan. There was continuous contact between NPD, the Embassy in
Jakarta and the advisers during that period and all who wanted to were evacuated. However,
there was no pre-designed plan for how the emergency should be handled, and practical issues
in connection with increasing the personal safety were very much left to the individuals
themselves to arrange.
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May 2009
A project like this should as part of its preparation and planning include a personnel safety
review, establish necessary emergency procedures and ensure that sufficient safety measures
and equipment are in place in the homes, in cars and in the office.
45
May 2009
46
May 2009
10. List of Appendixes
Appendix 1
Country Agreement
Appendix 2
Institutional Contract
Appendix 3
Appendix 4
Appendix 5
Appendix 6
Appendix 7
Appendix 8
Report to NORAD 2002-2003
Report to NORAD 2004
Report to Embassy 2007
Report to Embassy January – September 2008
Appendix 9
Appendix 10
Appendix 11
Appendix 12
Minutes 1 Annual Meeting 2004
Agreed Minutes of the 2nd Annual Meeting 26 Jan 2005
Appendix 13
List of Project participants
47
May 2009
Appendix 1.
Appendix 2
Annex 3
Appendix 3.
Annual Report to NORAD
for the period 2002 - 2003
for the cooperation between the Timor-Leste and Norway
regarding the Project:
Assistance in developing the management of the
petroleum sector in Timor-Leste
1.
Project Name
Assistance in developing the management of the petroleum sector in Timor-Leste
2.
Implementing institution
Implementing institution in Timor-Leste is the Ministry of Planning and Finance.
The work is carried out through an institutional cooperation between the Ministry of
Development and Environment (MDE) and the Norwegian Petroleum Directorate (NPD).
The day-to-day implementation of the project is done through cooperation between the
Energy and Mineral Resources Directorate (EMR) and the NPD.
3.
Project Design
3.1
Goal
advisors.
3.2
Objective
3.3
Outputs
Phase 1
administration
Education of personnel started
Technical assistance by consultants or by NPD within its fields of competence
Phase 2
NPD technical assistance and workshops in identified areas
4.
Use of inputs
4.1
Financial input
The grant from NORAD is NOK 30 million. The timeframe is up to 2008. The project
description in Annex 1 of the Institutional Contract gives a preliminary breakdown of the
budget into likely budgetary provisions per year. It states that for the Planning phase and
Phase 1 the total expenditure will be of the order of 2.659 million NOK. As shown in table 3,
below, the estimated total cost up to December 2003 is approx. 1.6 million NOK. The main
reason for this discrepancy is that the planning has taken longer than anticipated in the initial
plan, such that the work with the HRD plan and the technical workshops have been delayed.
Another reason is that NORAD has been able to cover some of the planning costs over other
budgets.
Table 1
Overall project economics (Norwegian Krones)
NORAD grant for the period 2002-2008
Expenses 2002-2003
Remaining grant
30 000 000.00
1 609 246.61
28 390 753.39
4.2
Input in kind
MDE has provided office facilities and necessary logistic support to NPD during the different
missions.
4.3
Project accounts
The procedure for handling of the Project funds is described in Annex 2 of the Institutional
Contract between NPD and MDE. It states that NPD handles all disbursements in this Project.
Project funds are then transferred from NORAD to NPD quarterly based on invoices of actual
costs. The invoices should be approved by MDE. Table 2 shows the NPD cost overview for
the period 2002 - 2003.
In order to handle local expenses like purchases, travel assistance and the consultancy fee for
the Project Implementer, a local bank account has been opened in ANZ Bank in Dili. Money
is transferred to this bank account from NPD based upon written requests in accordance with
the agreed budget and work plan. A detail account of the local expenditure is shown in
Appendix 1.
Table 2
Total project cost 2002-2003.
Item
Category
Cost (NOK)
Total cost
(NOK)
2002
Project Planning
NPD project planning, 264 hrs @ NOK 591
NPD travel expenses, Dili, October
Total
156 024.00
139 128.81
3
Ministry of Finance
Norwegian Ministry of Finance support and travel
costs
96 751.80
4
5
6
Marine baseline determination
NPD planning and follow-up, 52 hrs@ NOK 591
Norwegian Mapping Authority support
Miscellaneous
Total
30 732.00
32 340.00
1 380.60
1
2
295 152.81
96 751.80
64 452.60
Total cost 2002
456 357.21
2003
7
8
9
10
11
12
13
14
15
16
Project Planning (Jan – March)
NPD project planning, 126 hrs @ NOK 665
NPD travel expenses
Travel expenses, Mr. Risa, January
Miscellaneous
Total
83 790.00
57 380.08
31 642.49
48.00
Project Administration (April - December)
NPD administration, 352.5 hrs @ NOK 665
NPD travel expenses
Total
234 412.50
144 472.16
Marine baseline determination
NPD planning and follow-up, 12 hrs @ NOK 665
NPD travel expenses
Total
7 980.00
4 343.00
Assistance to UNDP
NPD administration, 88.5 hrs @ NOK 665
Travel expenses, candidates
Total
58 852.50
11 770.00
172 860.57
378 884.66
12 323.00
70 622.50
17
18
19
20
21
22
5.
Resident project manager
Hiring expenses
Total
12 052.80
Project implementer
Consultancy fee
Total
316 722.50
HRD consultant
Consultancy fee
Total
87 800.00
Equipment
Misc. office equipment
Total
98 496.53
Miscellaneous
Airfreight
Poussada Maubisse meeting
Total
1 474.84
1 652.00
12 052.80
316 722.50
87 800.00
98 496.53
3 126.84
Total cost 2003
1 152 889.40
Total cost 2002-2003
1 609 246.61
Progress of implementation
This is the first Annual Report from the Ministry of Planning and Finance (MPF) to NORAD
regarding the project “Assistance in developing the management of the petroleum sector in
Timor-Leste”. It covers the period from start-up of planning early 2002 to end of 2003. The
Country Agreement was signed on 10.02.2003, and the subsequent Institutional Contract
between NPD and MDE was first signed in April 2003. It was revised after some input from
NORAD and signed again in September. NORAD approved the contract in October 2003.
This progress report follows in general the subdivision of the Project as outlined in the Project
description in the Institutional Contract between NPD and MDE. The Project has, however,
been modified and adjusted within the overall goal and objectives in order to optimise the
results. In the situation where the Timor-Leste administration is at this early stage of
establishment, the ability to adjust the project in cooperation with the donor is of utmost
importance.
5.1
Pre Project Phase (2002 – March 2003)
5.1.1 Project preparations
The project started as a series of discussions between the interim government of Timor-Leste
and Norwegian authorities late 2001 – early 2002. The purpose of these discussions was to
investigate the possibility for Norwegian support to the development of the Energy sector in
Timor-Leste, regarding both petroleum and hydropower.
Based on these first discussions a combined “fact finding mission” and a series of energy
seminars were conducted in Timor-Leste in March 2002. This mission included participants
from NPD, the Ministry of Finance, the Norwegian Water Resources and Energy Directorate,
the Norwegian Embassy in Jakarta and NORAD. Based on the findings during this visit and a
series of follow-up discussions, NPD recommended to NORAD that an institutional
cooperation between NPD and the most relevant institution in Timor-Leste should be
established. Based on this recommendation an Agreement between Norway and Timor-Leste
for this project was set up. Prime Minister Mari Alkatiri and the Norwegian Ambassador Sjur
Torgersen signed the Agreement on 10.02.2003
5.1.2 Project Planning
With NORAD’s consent and intention to fund this project, the Project went into a planning
phase during the last part of 2002. NPD was given the task of coordinating this work.
A mission was conducted to Dili 27th - 31st October by NPD to assist in drafting a work plan
and budget for the proposed institutional cooperation and to establish the relevant institutional
partner. A draft work plan and budget were submitted to Dili and to NORAD in November. A
draft contract for the institutional cooperation was also prepared. During this mission an
agreement was made between Timor Sea Office, World Bank, Asian Development Bank,
USAid, UNDP and NPD that there is a need to coordinate the different support activities
related to the petroleum sector. This has been carried out through various meetings in Dili and
through telephone conferences.
NPD carried out a new planning mission to Dili in January 2003. The purpose of that trip was
to continue the project planning, the preparation of an institutional contract and to continue
the cooperation with other relevant donors. The planning was not entirely finished as a result
of that mission, partly because the institutional cooperation partner was not yet finally
identified and partly because the rapidly changing situation in the administration required
further discussions and adjustments to the program. To assist in the planning work, Mr. Einar
Risa, UN adviser in Dili, was invited to Stavanger and NPD for consultations and advice.
During March 2003 it was agreed that NPD’s cooperation should be with the Ministry of
Development and Environment, and that the daily contact should be with the Energy and
Mineral Resources Directorate (EMR). NPD visited Dili in April to finalise the institutional
contract and the work program and to coordinate and discuss the project with other donors
and other involved units. The contract between the two organisations was signed during this
visit. NORAD had some input to the contract after it had been signed, and a revised version
was signed on 10.09.2003, and approved by NORAD on 02.10.2003.
5.1.3 Input from the Norwegian Ministry of Finance
The Norwegian Ministry of Finance took part in the fact finding and seminar mission to Dili
in March 2002 and contributed to the follow-up discussion on the possibility of Norwegian
assistance to Timor-Leste in the sector of petroleum taxation and in relation to establishing a
national petroleum revenue fund.
The International Monetary Fund has made an independent review of how an “oil fund” could
be established, and only minor input from the Norwegian Ministry of Finance has been
required after that.
5.1.4 Marine baseline determination
Norway received in early 2002 a request from the Timor-Leste Government to assist in the
establishment of the marine baseline, which is the basis for all marine borders and boundaries.
This baseline is e.g. a prerequisite for all marine border negotiations with neighbouring states.
NPD established cooperation with the Norwegian Mapping Authority for this purpose. While
considering this request NPD was made aware of the fact that an Australian consultancy firm
had already undertaken the necessary work. In agreement with Prime Minister Alkatiri, the
request was changed to a review of the existing work in order to see if additional work would
be required. The finalisation of the consultant’s report was delayed, but it was made available
to NPD in September 2003. The report has been reviewed by the Norwegian Mapping
Authority and a recommendation will be sent to the Timor-Leste Government in January
2004.
5.2
Phase 1 (April – December 2003)
5.2.1 Assistance to UNDP
NPD was requested by NORAD and UNDP to assist in the hiring of three Norwegian
petroleum advisers to Timor-Leste. The Ministry of Foreign Affairs identified the first of the
three; Mr. Einar Risa. He took up his position in Dili in January 2003. NPD identified the two
others through a public announcement of the positions in Norwegian press. NPD carried out
interviews with relevant candidates and sent a recommendation to UNDP in Dili who took
care of the rest of the employment process. Mr. Tore Bjordal and Mr. Halvard Enoksen
moved to Dili in August 2003 to work as advisers in the Ministry of Development and
Environment and Ministry of Planning and Finance, respectively.
The cooperation between the Project and the Norwegian petroleum advisers has proven to be
very useful for exchange of information and discussions through the planning and
implementation of the Project. It was agreed at an early stage that the costs related to the
assistance to UNDP for identifying the advisers should be taken from the Project.
5.2.2 Human resource development plan
An independent consultant has been engaged to develop a HRD plan for the Timorese staff in
the petroleum sector of the public administration. The consultant will commence her work in
December 2003. It is expected that the work will take 6-9 months.
5.2.3 Project administration
Project coordination/administration
Project coordinator for the establishment of this project has been Mr. Erling Kvadsheim, NPD
International Cooperation Team. The work has consisted of formulation of plans and
programs in cooperation with NORAD, MDE, other units in the Timor-Leste administration
and other donors and agencies. A total of six visits to Dili have been carried out during 2002
and 2003.
Project Manager
Project Manager in Dili for Phase 1 has been Mr. Barid Manna, who has worked as a UN
advisor in the energy sector of Timor-Leste since October 2001. The Steering Committee has
decided to extend his assignment to the Project with 6 months in order to bridge the gap
between the primarily UN supported advise and support to the MDE to the new period with
NPD/NORAD and other external support and advise.
NPD has, on behalf of MDE, engaged Mr. Geir Ytreland as adviser and project manager for
Phase 2 for a period of up to two years. He starts his assignment ultimo January 2004.
Project Implementer
It was at an early stage recommended and identified that the project would benefit from a
Timorese assistant to the Project Manager with insight into the Timorese society, organising
capacity and language skills. This decision was also based on the experience from other
projects in Timor-Leste. Mr. Carlos Alberto Soares was highly recommended for this role,
and he was hired as an independent consultant to the Project, starting his assignment on
01.07.2003.
The first PMC meeting was conducted on 18.09.2003 in Dili. The meeting discussed the
progress of the Project and agreed on a recommendation for work program and budget for
2004. The minutes of the PMC meeting are shown as Appendix 2.
Steering Committee Meeting
The first SC meeting was conducted on 14.10.2003 in Dili. Mr. Vicente da Costa Pinto
represented the MDE, Mr. Erling Kvadsheim represented the NPD. The meeting agreed on a
detail work program and budget for 2004. The minutes of the SC meeting are shown as
Appendix 3.
5.3
Use of inputs
The financial input has been used efficiently, and the procedures for remuneration of NPD
and contractors have been followed. A procedure for handling of local purchases has been
established.
The details of the accounts are shown in section 4 of this report.
Cooperation
The project has been developed in a collaborative and positive attitude by NPD, MDE staff
and advisers and with input from other agencies and units. No serious problems have been
encountered. However, because there are other donors in this area, it has proven very
important to maintain a good cooperation and discussion in order to avoid duplication of
efforts and misunderstandings.
Visa
There seems at the moment to be no practical way of obtaining permanent/long term visa and
work permits for expatriates that are not employed by UN. Since this Project will utilise
several expatriate consultants and advisors, it will be important that Timor-Leste sets up a
workable system for longer-term visas.
6.
Assessment
The Project is in an early phase, and although some of the objectives of the Project are shortterm, there are still only few direct results or impacts of the Project. It is our conviction that
the thorough planning and collaborative process of the early phase have put the Project in a
good position to obtain its goals and objectives.
The subdivision of outputs into Phase 1 and Phase 2, as shown in Section 3.3 of this report,
has not been followed in the same way in the implementation of the project. Due to the long
planning phase, the need for an extensive Phase 1 was not regarded as necessary. The bulk of
the analysis of education needs, the training and all the workshops have thus been
“transferred” to Phase 2. This has been communicated verbally to NORAD by NPD on
several occasions. This is part of the continuous adjustments of a project of this kind and will
not affect the overall outcome of the project.
7.
Work plan and budget for 2004
The SC agreed on a work plan for 2004 that is very much in line with the general project
description and plan dated 11.04.2003, which up to this SC meeting was the primary planning
document. The agreed work plan and associated budget is shown in the minutes of the SC
Meeting (Appendix 3). However, due to an earlier start-up of the Adviser and Project
Manager and to changes in the exchange rate between USD and NOK the budget has been
slightly revised for this report. The revised budget will be put forward to the next SC Meeting
(January 2004) for approval.
The items of the 2004 work plan are:
7.1
Adviser and Project Manager
The SC decided to announce a new position as resident adviser and Project Manager to the
Energy and Mineral Resources Directorate. The assignment is on an independent consultancy
basis. It was announced internationally and the procurement was carried out in agreement
with the current Timor-Leste procurement practices (which in effect is the UN procurement
procedures, bar the internal UN announcements). The adviser will start his assignment ultimo
January 2004.
7.2
Project Implementer
The Project Implementer will continue his function, which has proven to be a very useful
position for the Project.
7.3
Interim adviser
The Steering Committee has decided to extend the assignment of the current Adviser and
Project Manager to the Project with 6 months in order to bridge the gap between the primarily
UN supported advise and support to the MDE to the new period with NPD/NORAD and other
external support and advise. The hand-over of responsibility for Project Management will be
agreed between MDE and NPD.
7.4
HRD Consultant
The goal is to develop a comprehensive plan for education and training for the Timorese staff
in all units in the public sector that are dealing with petroleum administration.
7.5
HRD Program
It is expected that the activities in the HRD Program will commence during 2004. It has
already been agreed that part of the cost for the finalisation of the Director of Oil and Gas,
Mr. Amandio Gusmao Soares’ education in Bandung will be covered by the Project.
7.6
Data Management Workshop
Proper management of data from the petroleum activity, ranging from rock samples to
production figures, is a prerequisite for a sound petroleum administration. NPD will conduct a
workshop and fact finding in March 2004 in collaboration with the Timor Sea Designated
Authority.
7.7
Petroleum Resource Management Workshop
As a follow-up of the Norway Study tour (below) NPD will conduct a petroleum resource
management workshop in Dili during the second half of 2004.
7.8
Study tour
A study tour to Norway for ca 12 senior Timorese staff will be conducted. The purpose is to
study the Norwegian petroleum administration.
7.9
Data hardware and software
It is expected that the data equipment in the EMR will need to be supplied and updated and
support as a follow up of the data management workshop.
7.10 Office Equipment
The EMR office will need to continue its upgrade to a modern and well functioning office in
terms of general office equipment. Office furniture and computer equipment for the advisers
will also need to be supplied.
7.11 NPD assistance and travel
It is expected that NPD will spend approximately 400 hours on administration and travel. It is
further budgeted for 2-3 visits to Dili.
7.12 PMC and SC meetings
It is the Steering Committee’s intention to hold meetings both in Timor-Leste and in Norway.
The budget takes account of travel costs and hours used. NPD travel to PMC meetings when
this cannot be combined with other activities is also budgeted for.
7.13 Contingent workshop
Because of the early stage in the Project and the high level of activity in the EMR in 2004 the
Project should have the option of conducting a third workshop in 2004 when the need in the
EMR and the capacity to carry out a third workshop is assessed.
Table 3
Revised budget for 2004
Item Category
Cost (USD)
Cost (NOK)
7.0 NOK/USD
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Project Implementer
Interim adviser
HRD consultant
HRD programme and conferences
Data management workshop
Petroleum resource management workshop
Norway study tour
Office equipment etc
NPD assistance and travel
PMC and MC meetings
Technical workshop (contingent)
Miscellaneous
Total
8.
Appendices
60 000
100 000
185 000
70 000
140 000
40 000
40 000
75 000
20 000
20 000
57 000
40 000
40 000
70 000
957 000
420 000
700 000
1 295 000
490 000
980 000
280 000
280 000
525 000
140 000
140 000
400 000
280 000
280 000
490 000
6 700 000
Appendix 1: Bank statement and account of local expenditures
Appendix 2: Minutes of Project Management Committee Meeting, 18th September 2003
Appendix 3: Minutes of Steering Committee Meeting, 14th October
Addendum
to Annual Report to NORAD
for the period 2002 - 2003
1.
Change in Project Design
Reference is made to Section 6, Assessment, of the Annual Report, which states that: “The
subdivision of outputs into Phase 1 and Phase 2, …, has not been followed in the same way in
the implementation of the project. Due to the long planning phase, the need for an extensive
Phase 1 was not regarded as necessary. The bulk of the analysis of education needs, the
training and all the workshops have thus been “transferred” to Phase 2. This has been
communicated verbally to NORAD by NPD on several occasions. This is part of the
continuous adjustments of a project of this kind and will not affect the overall outcome of the
project.”
It was agreed at the Annual Meeting between MDE and NORAD on 29th January 2004 to
abandon the subdivision of this project into Phase 1 and Phase 2. Any further planning and
reporting of this project will thus reflect that. The whole project period from end of the
Planning phase will be called “Implementation phase”
The outputs of the project will remain the same, but the list of outputs (ref. Section 3.3 in the
Annual report) needs to be reorganised and will from now on be shown as:
Outputs
administration
2.
Use of inputs
The budget and budget items remain the same, but the expected annual use of inputs can be
shown as:
Project Phase
Year
Assist UNDP
Petroleum Advisors
Resident Advisor MDE
Local implementor
Mapping of training and education
needs
Maritime Mapping Authority assistance
Data Management
Misc. Equipment
NPD technical assistance and
workshops
SC and PMC meetings
Travel assistance
Miscellaneous and contingency
Total
Planning
20022003
71
Implementation
2004
2003
Sum
2005
2006
2007
2008
2000
1500
450
1500
1500
0
12
212
88
700
1295
420
490
450
450
450
0
980
1700
1600
1500
1500
0
98
0
500**
140
140
1085
300
50
600
200
50
600
160
50
400
300
400
400
400
400
70
600
7670
80
575
5455
80
700
5240
80
700
3430
97
77
468
379
713*
0
3
792*
400
280
0
770
7200
71
5700
2807
2432
578
7280
97
577**
800
388
2985
2847
280
310
3348
30500**
(Amounts in 1000 NOK)
*
Actual expenses
**
It is assumed that the extra cost associated with the Baseline control survey will be
added to the total donation
Appendix 4.
for the period January – December 2004
1.
Project Name
2.
Development and Environment (MDE) and the Norwegian Petroleum Directorate (NPD).
Energy and Mineral Resources Directorate (EMR) and the NPD.
3.
Project Design
3.1
Goal
advisors.
3.2
Objective
3.3
Outputs3
At the Annual Meeting for 2002-2003 for this project it was agreed that a change in the
project design and in the definitions of output should be implemented. Previously the Project
was split in two phases with separate outputs, but is now regarded as only one project phase
with joint outputs. Reference is made to the Addendum to the Annual Report to NORAD for
the period 2002-2003.
1
administration
4.
Use of inputs
4.1
Financial input
The grant from NORAD is NOK 30 million. The timeframe is up to 2008. Table 1 shows the
overall project economics. It should be noted that the cost of a quality control survey of the
marine baseline, carried out by the Norwegian Mapping Authority, has been included in the
project expenses. This was handled this way for practical reasons at the request of NORAD,
and it is the Project’s understanding that the expenses for this survey will be added to the
grant. This is adjusted for in Table 1.
Table 1
Overall project economics (Norwegian Krones)
Initial NORAD grant for the period 2002-2008
Expenses 2002-2003
Expenses 2004
Remaining initial grant
30 000 000.00
1 609 246.61
7 318 334.56
21 074 421.83
Expected additional grant for marine baseline work
527 000.00
4.2
Input in kind
MDE has provided office facilities for advisors, consultants, seminars and workshops and
necessary logistic support to NPD during the different missions.
4.3
Budget for 2004
A budget for 2004 was presented to the Annual Meeting in January 2004 (Table 2a and 2b).
This budget was revised and approved by the Steering Committee in September 2004 (Table
3a and 3b).
Table 2a
Budget for 2004 (as of 1.1.2004)
Category
Cost (USD)
Cost (NOK)
7.0 NOK/USD
Interim adviser
Project Implementer
HRD consultant
Technical assistance and workshops
PMC and MC meetings
Miscellaneous
Total
100 000
185 000
64 000
70 000
140 000
20 000
20 000
155 000
57 000
40 000
106 000
957 000
700 000
1 295 000
450 000
490 000
980 000
140 000
140 000
1 085 000
400 000
280 000
740 000
6 700 000
Baseline mapping
Total, including baseline mapping
71 000
1 028 000
500 000
7 200 000
Table 2b
Annual budget provisions as of 1.1.2004
Norwegian Krones (*1000)
Project Phase
Year
Assist UNDP
Planning
Implementation
20022003
71
2003
Sum
2004
2005
2006
2007
2008
700
2000
1500
1500
0
71
Petroleum Advisors
12
1295
1500
Local implementor
212
450
450
needs
88
490
0
980
97
assistance
Data Management
77
5700
2807
450
450
450
2462
578
1700
1600
1500
1500
7280
97
500
577
0
140
300
200
160
Misc. Equipment
98
140
50
50
50
NPD technical assistance and
workshops
0
1085
600
600
400
300
2985
379
400
400
400
400
400
2847
468
SC and PMC meetings
800
388
280
280
Travel assistance
0
0
70
80
80
80
310
3
740
600
575
700
700
3318
792
7200
7670
5455
5240
3430
30500
Total
713
Table 3
Revised budget for 2004 (as of 14.9.2004)
Category
Cost (USD)
Cost (NOK)
7.2 NOK/USD
Interim adviser
Project Implementer
Education and good governance adviser
HRD consultant
Miscellaneous
Total
111 000
180 000
63 000
56 000
68 000
107 000
19 000
19 000
278 000
56 000
10 000
866 000
800 000
1 295 000
450 000
400 000
490 000
770 000
140 000
140 000
2 000 000
400 000
70 000
6 955 000
Baseline mapping
Total, including baseline mapping
69 000
1 035 000
500 000
7 455 000
Table 3b
Annual budget provisions (as of 14.9.2004)
Project Phase
Year
Assist UNDP
Planning
Implementation
20022003
71
2003
Sum
2004
2005
2006
2007
2008
800
1500
1500
0
0
71
Petroleum Advisors
12
1295
1500
Local implementor
212
450
450
400
600
Training and governance advisor
needs
88
490
0
770
97
assistance
77
3800
2807
450
450
450
2462
1000
578
1870
1870
1800
3000
9310
97
500
577
Data Management
0
140
300
200
640
Misc. Equipment
98
140
50
50
338
0
2000
600
400
300
300
3600
379
400
400
400
400
400
2847
Travel assistance
0
0
70
80
80
80
310
3
70
365
465
530
630
2063
792
7455
7705
5415
3560
4860
30500
Total
468
713
4.4
Project accounts
Contract between NPD and MDE. It states that NPD handles all disbursements in this Project.
Project funds are then transferred from NORAD to NPD quarterly based on invoices of actual
costs. The invoices should be approved by MDE. Table 4 shows the NPD cost overview for
2004
In order to handle local expenses like purchases, travel assistance and the consultancy fee for
the Project Implementer, a local bank account has been opened in ANZ Bank in Dili. Money
is transferred to this bank account from NPD based upon written requests in accordance with
the agreed budget and work plan. A detail account of the local expenditure is shown in
Appendix 1.
Table 4
Total project cost in 2004
Item
Category
Cost (NOK)
Total cost
(NOK)
1
2
Interim adviser
Consultancy fee
Travel expenses
701 405.27
45 009.25
746 414.52
3
4
Consultancy fee
Travel expenses
1 256 903.95
206 142.05
1 463 046.00
5
Project Implementer
Consultancy fee
335 545.00
335 545.00
6
7
8
Consultancy fee
Travel expenses
Hiring costs
187 500.00
28 931.80
5 143.72
221 575.52
9
10
HRD consultant
Consultancy fee
Travel expenses
348 036.00
110 761.81
458 797.81
11
12
13
HRD program and conferences
English training etc.
1 student, living expenses in Bandung
Petrad 8-weeks course, 1 participant
137 023.07
43 093.10
126 395.31
306 511.48
14
Data hardware and software, equipment etc.
Misc. expenses, see Appendix 1
185 725.70
185 725.70
114 284.75
123 025.00
237 309.75
15
16
Data management workshop, March 2004
NPD travel expenses
NPD hours
17
18
19
20
Norway visit, May 2004
NPD travel expenses
Travel and accommodation, participants and guides
Daily allowance, participants and guides
Misc. expenses
7 026.00
374 837.82
86 625.00
52 382.00
520 870.82
21
22
Data management workshop, November 2004
NPD travel expenses
NPD hours
101 088.23
125 020.00
226 108.23
23
Environment Impact Assessment workshop,
November 2004
Consultancy fee and travel expenses
264 090.00
264 090.00
24
25
26
27
Regional Mapping Project
Consultancy fee
Travel expenses
Data purchase
To be reimbursed by TSDA
342 155.00
22 060.10
19 369.20
-119 279.26
264 305.04
28
29
30
Sunrise Field pipeline review
NPD travel expenses
NPD hours
894 528.19
26 628.00
73 152.00
994 306.16
31
Petroleum legislation review
Consultancy fee
26 908.00
26 908.00
32
33
NPD hours
NPD travel expenses
479 465.00
143 136.19
622 601.19
34
35
36
Miscellaneous
Airfreight
Agio/disagio
Miscellaneous expenses
5 360.72
-16 075.34
4 306.00
-6 408.62
Total
37
38
39
Coastal mapping
NPD Travel
Norwegian Mapping Authority
Helicopter hire
Total
6 867 706.56
3 350.00
321 500.00
125 778.15
450 628.15
7 318 334.71
5.
Progress of implementation
This is the second Annual Report from the Ministry of Planning and Finance (MoPF) to
NORAD regarding the project “Assistance in developing the management of the petroleum
sector in Timor-Leste”. It covers the period from January to December 2004.
This project implementation report follows the subdivision of the budget for 2004 as given in
Tables 3 and 4 of this report
5.1
Interim Adviser
The Steering Committee of the Project decided to extend the assignment of the UNDP
financed Adviser to MDE and Project Manager of the Project, Mr. Barid Manna, from
January to June 2004, in order to bridge the gap between the primarily UN supported advise
and support to the MDE to the new period with NPD/NORAD and other external support and
advise. He was employed by the Project on a consultancy contract. The hand-over of
responsibility for Project management to the new Adviser and Project Manager took place in
March. The Interim Adviser submitted his final report in August 2004.
5.2
Project Implementer
This role has been carried out by Mr. Carlos Alberto Soares since 1.7.2003. He is employed
by the Project on a consultancy contract. It has proven a very useful arrangement for the
implementation of this project. It has made it possible to overcome cultural and practical
barriers that otherwise would have been challenging obstacles to the success of the Project.
The Project Implementer’s tasks have included assistance in the organisation and day-to-day
running of the project, main responsibility for IT and database issues in EMRD and in the
project, organisations of workshops and travels, translation, day-to-day assistance to the other
advisors, Project Manager and Project Coordinator.
5.3
The Adviser and Project Manager, Mr. Geir Ytreland, took up his position in January 2004.
He is employed by the Project on a two-year consultancy contract. His tasks include
managing the day-to-day implementation of the project, acting as advisor and mentor for
Timorese staff, performing expert tasks within petroleum geology, petroleum administration
and energy issues in general, cooperation with other relevant units in the administration and
with the commercial companies within the sector, close cooperation with NPD etc.
Mr. Ytreland has offered significant knowledge of the petroleum business and strong
geological and management skills to the Project. Under his supervision the EMRD has
performed a variety of tasks that are relevant to a petroleum administration and he has
initiated important processes that have brought the petroleum business of Timor-Leste
forward towards exploration and production activities and value generation for the society. He
has also acted as a resource person and adviser in many related issues within the Timorese
petroleum administration.
He has among other things participated and supervised work on restructuring of MDE,
launching of the first seismic data acquisition round, established and expanded interagency
linkages, instituted promotional activities, contributed to the drafting of petroleum laws and
PSCs and to the public consultations of laws and PSCs, planning of future exploration
licensing rounds and established growing industry and academic networks.
5.4
Education and Good Governance Adviser
It was recognised early in 2004 that the start-up of the implementation of the education
program (discussed below) would require a significant effort. At the same time it was
recognised that supporting and educating the staff in modern governance principles was a
critical issue. It was thus suggested to combine these two roles in one full-time advisor
position for a period of one year. The position was announced in Norway and three
consultants applied for the consultancy. Based on a ranking of the candidates the Steering
Committee approved the hiring of Ms. Liv Marte Nordhaug for this position. She started the
work in October 2004.
Her work has included start-up of the implementation of the education program, and
participation in various institution building activities, like restructuring of EMRD, input to the
drafting of the transparency aspects of the petroleum laws and PSCs, cooperation with other
relevant institutions in Timor-Leste like TSDA, World Bank, UNDP etc.
This arrangement has proven very successful for the project, and has contributed significantly
to the progress of the project in the three months it has been in operation.
5.5
HRD consultant
The HRD consultant, Ms. Elke Ender, finished her consultancy in September 2004. Her final
report is issued separately.
The consultancy included a review of the education level and training potential in the
upstream petroleum administration and in the society at large. It also included a
recommendation of short and long term HRD program and identification of relevant
education institutions.
As a result of this work the Project now has a viable education and training program that will
significantly improve the relevant skills of the Timor-Leste petroleum administration. It is one
of the corner stones in the Project and has been very well prepared by the consultant.
5.6
During 2004 the main focus has been on English language training for staff in EMRD and in
the other relevant units in the Timor-Leste petroleum administration. One student has carried
out intensive English training in New Zealand. The Director of Oil and Gas in EMRD has
received financial support for his MSc in geology in Bandung, Indonesia.
The work with establishing guidelines for selection of students to the various scholarships and
the setting up of the scholarships has been done, and the first overseas education opportunities
under this program were announced in December. In addition a ’small grants’ program has
been initiated to broaden the future recruitment base for the petroleum public sector in TimorLeste
5.7
Data hardware and software, office equipment etc
Miscellaneous necessary office equipment and data hardware have been purchased.
5.8
Data management workshops, March and November 2004
Two petroleum data management workshops have been conducted in Dili in 2004. During
these workshops the principles and procedures for a petroleum database were established. An
inter-agency steering group has been established. The work and the steering group are
currently headed by Mr. Carlos Soares, Project Implementer. The work has further included
the establishment of a pilot petroleum database with dedicated people responsible for entering
data and maintaining the database. This work will be continued in 2005. It is necessary to
supply more hardware and software for this database work. This will be purchased in 2005.
The impact of this work is significant. It has given new exposure to several of the staff, giving
them direct responsible for parts of the process. It has strengthened the inter-agency
cooperation and it has established EMRD as the leading unit in this work in Timor-Leste.
5.9
Norway study tour
A group of 13 senior civil servants from various agencies visited Norway for two weeks in
May 2004. The group visited ministries and state regulatory agencies: NPD, Ministry of
Petroleum and Energy, State Pollution Agency, Ministry of Finance, Central Unit for
Investigation and Prosecution of Economic and Environmental Crime. The group also visited
the industry: ConocoPhillips, Statoil, Norsk Hydro, Kollsnes gas pipeline terminal, ABB and
had presentations by education and training units: Petrad and Rogaland Kurs- og
Kompetansesenter.
It was a highly successful trip that demonstrated the time and efforts involved in creating a
government petroleum administration, tax and fiscal issues, importance of good governance
and transparency. The group submitted a joint thorough report in English to the Prime
Minister shortly after the trip, the first of its kind from EMRD and partners.
5.10 Environment Impact Assessment Workshop
An environment impact assessment (EIA) workshop was conducted in Dili by Norwegian
Institute for Nature Research in November 2004. The workshop was initiated in cooperation
between EMRD and the Environment Directorate, and it was one of the recommendations that
came out of the Norway study tour.
The objectives of the workshop was to give an introduction to EIA and the ecosystem
approach as key concepts in resource management, to discuss the role of EIA in Timor-leste
with key stake holders, to assess the draft legal framework, to provide a draft plan for capacity
building in the EIA process and to discuss coordination between the environment and
petroleum sectors in the EIA area.
It was attended by 12 Timorese civil servants from Environment Directorate, EMRD and
TSDA and by the UNDP advisor in Environment Directorate. The workshop is regarded as
particularly useful and quite unique in that it as established the coordination of these two
important sector within the overall resource management at such an early stage in the
development of the petroleum sector. The workshop resulted in a series of action points for
the EIA work.
5.11 Regional Mapping project
In cooperation with TSDA it was decided to carry out a regional geophysical and geological
mapping of the offshore areas that are adjacent to JPDA. The reason for this work was to
increase the knowledge of the prospectivity in those areas, both as a preparation for the border
discussions with Australia and also to better understand the continuation of the geological
trends out from the well known JPDA area.
The work was conducted by consultant Alastair Gray who carried out the work in EMRD
offices in Dili. The work was done efficiently, and several of the local staff in EMRD and
TSDA were involved in the parts of the work. The work was also presented to the staff at
various occasions, and considerable knowledge transfer took place. The project has also
resulted in a much better overview of the available geophysical data, both in terms of quality
and regarding physical location in Australia. The work was summarised in a final report. The
report is classified as confidential.
5.12 Sunrise Field pipeline review
The Sunrise Field Joint Venture has submitted a feasibility study for the development options
for the large Sunrise gas field. The Timor-Leste Government has expressed that it will not
consider the report until the landing of the gas to Timor-Leste through a pipeline from the
field was better evaluated. This view was strongly supported by NPD and the Project. The
Joint Venture then presented a feasibility study of this option. In order to provide the best
possible expert advice to the Timor-Leste Government the Project engaged Mr. Sverre Lund,
who is a highly respected pipeline expert, to review the pipeline part of the feasibility study.
Mr. Lund has taken part in meetings with the operator and partners and in discussions with
relevant authorities and advisors. He has reviewed in detail the study and provided several
important and very critical comments that have been presented to the operator for further
discussion.
The potential landing of gas to Timor-Leste might be one of the most significant
achievements from the petroleum activity in the Timor Sea. The reviews carried out by Mr.
Lund have contributed significantly to the fact that this is still a viable option. The
Government of Timor-Leste has requested further financing to this consultancy in 2005 in a
letter to the Norwegian Embassy in Jakarta in November 2004.
5.13 Petroleum legislation review
As part of NPD’s support to the discussion of the petroleum laws and PSCs it was decided to
engage layer Bjørn Erik Leerberg of Simonsen Føyen Advokatfirma DA, Oslo, Norway. Mr.
Leerberg is a highly respected petroleum legislation specialist with broad international
experience in that field. He also knows Timor-Leste well from previous work for UNTAET
during the establishment of the JPDA. Mr. Leerberg’s contribution to the discussion had
impact on several of the main elements in the legislation.
NPD has spent 721 hours on the assistance in 2004. This excludes the NPD work on
workshops and seminars. A large part is spent by Mr. Erling Kvadsheim, Project Coordinator,
and also by other NPD technical and support staff.
The Project coordinator has carried out four visits to Dili during 2004, one as part of one of
the data management workshops, three for planning and follow-up purposes; in January,
September and November.
The total hours spent by NPD, including workshops and seminars adds up to 1204 hours.
5.15 Miscellaneous
Transfer of documents through surface or air-mail is still not a sufficiently reliable option in
Timor-Leste. Important documents that cannot be transferred through e-mail are thus handled
through courier service.
The large number of money transactions between Norway and Timor-Leste or between
Norway and international consultants gives rise to a large account of money exchange gains
or losses (agio/disagio).
5.16 Marine Baseline Mapping
This project was finished in 2003, but the invoices for most of the work were received in
2004.
It was agreed by NORAD and NPD in 2003 that this work, that is not directly petroleum
related, should be handled through the petroleum project for practical reasons. It is thus the
Project’s expectation that the expenses for this work will be covered by NORAD outside the
grant of 30 millions NOK to the petroleum project (see also Table 1).
6.
Assessment
The activity on the Project and the resulting impacts to the cooperating institution, other
relevant units in Timor-Leste and the Timor-Leste society at large have been significant in
2004. The EMRD and other relevant units have changed focus significantly towards the daily
operation of a petroleum business. The training and education program is well into
implementation, the preparation for both onshore and offshore (outside JPDA) activities are
well under way, important studies have been undertaken by consultants in cooperation with
local staff, staff have been exposed to the international petroleum business and other
countries’ authorities, staff have been given project management responsibility, the
organisation of the units are being modified and focus has been put on good governance
practices. These processes have to a large extent been possible due to the grants and advise
from the Norwegian Petroleum Project, and also by the fact that the Project has supplied very
high quality advisors. Some of the important achievements include:
6.1
Seismic data acquisition round
This is the first organised substantial activity in the Timor-Leste petroleum sector. The round
was announced by the Prime Minister at the SEAAOC conference in Darwin in June. Three
competitive bids were received and the contract was offered to to BGP-GGS, a Norwegian
and Chinese consortium. Acquisition started late 2004 and the data will be ready during the
first part of 2005. The data are acquired on a speculative basis, which means that there are no
direct costs to the Timor-Leste Government, but Timor-Leste will receive a certain part of the
revenue from future sales of the data. The data will form a very important part of the:
6.2
Planning of future licensing activities
It is expected that the first offshore licensing round will be announced during the 2nd half of
2005. It is the intention to announce the first onshore round 1st half 2005.
6.3
Promotion
A group of three Timor-Leste staff has been established in EMRD. Timor-Leste was
represented at Northern Territory Fair in June 2004 and on the OSEA Conference in
Singapore in December. Significant activities will be done on a exploration road show during
2005 in order to promote the exploration opportunities in Timor-Leste.
6.4
Timor Sea regional mapping project
The project assessed the proven and potential reserves in contested offshore areas as well as
within parts of JPDA. The exploration potential was evaluated and refined, and geological
risks and uncertainties were identified. There is a significant database spin-off of this work. It
was the first major cooperative effort between EMRD and TSDA. Significant knowledge
transfer took place during the project, and it is expected that similar projects will be necessary
in the near future, in relation to the proposed offshore and onshore licensing.
6.5
Aliambata gas harvesting project
This is a demonstration project testing the possibilities of using onshore gas seeps for power
generation. It is a cooperation project with the World Bank. The project manager is Mr.
Lourenso Pedro, EMRD.
6.6
Interagency linkages
EMRD has established cooperation with TSDA, TSO, Prime Minister’s office, Secretary of
State’s office etc. The cooperation is based on pragmatic and result oriented relationships
based on utilisation of staff capacities, mutual sharing of tasks, information and data. These
relationships are constantly being strengthened. Good relationships have also been established
with the World Bank and Ministry of Planning and Finance. Good, open door relationships
also exist with universities; in particular theNational University of Timor-Leste and the
University of Western Australia.
6.7
Networking
Extensive network with Norwegian regulatory authorities. Networks are being established
with Asian and Australian oil industry and with the seismic contracting community and with
with US and other oil industry
6.8
Pipeline issues
The project has supplied one of the leading offshore pipeline experts available to assist
Timor-Leste in the country’s quest to secure a pipeline from the Sunrise Gas Field to TimorLeste. The reviews carried out have contributed significantly to the fact that this is still a
viable option
6.9
Use of inputs
and contractors have been followed. A procedure for handling of local purchases has been
established. The details of the accounts are shown in Section 4 of this report.
Few problems in the implementation have been encountered. This is due to good working
relationships within and outside EMRD and well developed communication with all relevant
stake holders.
7.
A SC meeting has not been conducted in 2005. The work plan and budget is based on a
consultation between NPD and the Prime Minister and Secretary of State in January 2005.
The work plan is to a large extent based on the revised budget that was approved by the SC on
14.9.2004 (see Section 4). The budget will be reviewed and updated on each SC meeting.
The items of the 2005 work plan are:
7.1
The consultant will continue his assignment through the entire 2005.
7.2
Project Implementer
The Project Implementer will continue his function, which has proven to be a very useful
position for the Project, through 2005.
7.3
The consultancy is expected to last until October 2005.
7.4
Advisers’ travel expenses etc.
The expenses include consultancy visits Norway, medical service, travel in connection with
promotion and conferences, visits to universities abroad, necessary visits to Australian and
other authorities.
7.5
HRD Program and conferences
This includes tuition fees, travel expenses, homestay and other living expenses, in addition to
English training in Dili for staff from EMR, Timor Sea Office, the Environment Directorate
and the Ministry of Planning og Finance
7.6
This includes new hardware and software in connection with setting up of the EMRD
database system. It also includes the necessary training, service costs and updates for new and
old data equipment.
7.7
Office Equipment
The EMR office will need to continue its upgrade to a modern and well functioning office in
terms of general office equipment. Office furniture and computer equipment for the advisers
will also need to be supplied.
7.8
Workshops
This includes two workshops in Dili. One follow-up workshop for the data management and
one follow-up workshop for the environment impact assessment EIA work.
7.9
Other advisors and assistance
This budget item provides the necessary support flexibility in the project that has proven to be
very useful so far. Work items that will be covered by this budget include geological and
geophysical work prior to licensing, follow-up of EIA work, support and follow-up of the
education and good governance work and other relevant assistance.
It is expected that NPD will spend approximately 750 hours on administration and travel. It is
further budgeted for three visits to Dili.
7.11 Travel assistance
This budget item covers necessary travel expenses for local staff in relation to ad hoc
meetings and promotion activities
7.12 Miscellaneous
This includes administration costs and other unspecified expenses.
Table 5a
Budget for 2005
Category
Cost (USD) Cost
(NOK)
6.5 NOK/USD
Project Implementer
Adviser’s travel expenses etc.
Workshops
Travel assistance
Miscellaneous
Total
215 000
60 000
87 000
54 000
288 000
62 000
8 000
92 000
231 000
62 000
11 000
54 000
1 224 000
1 400 000
390 000
563 000
350 000
1 870 000
400 000
50 000
600 000
1 500 000
400 000
70 000
250 000
7 843 000
Table 5b
Project Phase
Planning
Implementation
Year
2002-2003
2003
Assist UNDP
71
2004
Sum
2005
746
0
12
1463
1400
Local implementor
212
335
390
222
563
350
97
assistance
77
2007
2008
71
Petroleum Advisors
needs
2006
88
459
0
307
1500
0
0
400
400
400
2246
2875
2137
785
150
500
547
1870
1870
1800
3000
8847
97
451
528
Data Management
0
46
400
200
Misc. Equipment
98
140
50
50
workshops
0
2 534
2100
400
300
300
5634
338
379
623
400
400
400
400
3070
Travel assistance
0
0
70
80
80
80
310
3
-6
250
450
520
603
1820
792
7320
7843
5500
3500
4783
30451
Total
8.
468
646
713
Appendices
Appendix 1: Bank statement and account of local expenditures
Appendix 5.
1.
Project Name
2.
Development and Environment, now superseded by the Ministry of Natural Resources,
Minerals and Energy Policy (MNRMEP) and the Norwegian Petroleum Directorate (NPD).
The day-to-day implementation of the project is done through cooperation between the Oil,
Gas and Energy Directorate (OGED) and the NPD.
3.
Project Design
3.1
Goal
advisors.
3.2
Objective
3.3
Outputs1
administration
4.
Use of inputs
4.1
Financial input
The initial grant from NORAD is NOK 30 million (ca USD 4.6 million). The timeframe is
2003 to 2008. The cost of a quality control survey of the marine baseline, carried out by the
Norwegian Mapping Authority, has been included in the project expenses. This was handled
this way for practical reasons at the request of NORAD, and it is expected that the expenses
for this survey, which add up to NOK 451 000, will be added to the grant. It has further been
agreed to include new advisers in OGED and in the Ministry of Planning and Finance (MoPF)
in the project, the grant for the new advisers is expected to be NOK 13.9 million. The total
expected grant is thus expected to be NOK 44.4 million. Table 1 shows the overall project
economics.
The MoPF and the MNRMEP requested in 2005 further support in the way of new advisers to
MoPF and MNRMEP. These requests were accepted by the Embassy. It was agreed between
the Embassy and NPD in 2005 that NPD should handle the administration of hiring and
employment of new petroleum advisers in the financial sector in Timor-Leste. This should be
organised under the umbrella of the current cooperation between Norway and Timor-Leste in
the petroleum sector which is administered by NPD. In addition, the Embassy has agreed to
finance two additional advisers to OGED for a period of one year with possibilities of
extension. The contracts between NPD and MoPF and MNRMEP for these new advisers are
currently being drawn up and the budgets and project economics in this report assumes that
they will be signed and approved by the Embassy.
The project economics is divided into two parts; One part for the original cooperation with the
Ministry of Natural Resources, Minerals and Energy Policy (MNRMEP) and one for the new
advisers. The two parts are for practical reasons in this report denoted “Original MNRMEP”
and “New Advisers”.
1
At the Annual Meeting for 2002-2003 for this project it was agreed that a change in the project design and in
the definitions of output should be implemented. Previously the Project was split in two phases with separate
outputs, but is now regarded as only one project phase with joint outputs. Reference is made to the Addendum to
the Annual Report to NORAD for the period 2002-2003.
Tabel 1
Overall project economics
NOK
USD
(6.50 NOK/USD)
Original MNRMEP
Initial NORAD grant for the period 2003-2008
Expenses 2002-2003
Expenses 2004
Expenses 2005
Remaining initial grant
30 000 000.00
(1 609 246.61)
(7 318 334.56)
(6 743 706.05)
14 328 712.78
4 615 000
(248 000)
(1 126 000)
(1 037 000)
2 204 000
Expected additional grant for marine baseline work
Expected total remaining grant
451 000.00
14 779 712.78
70 000
2 274 000
13 900 000.00
(528 364.00)
13 371 636.00
2 138 000
(81 000)
2 057 000
44 351 000.00
28 151 348.78
6 823 000
4 331 000
New Advisers
Expected total grant for the period 2005-2007
Expenses 2005
Remaining expected grant
The total cooperation
Total expected grant for the period 2002-2008
Total expected remaining grant
4.2
Input in kind
The Ministry has provided office facilities for advisors, consultants, seminars and workshops
and necessary logistic support to NPD during the different missions.
4.3
Budget for 2005
A budget for 2005 was presented to the Annual Meeting in January 2005 (Table 2a and 2b).
This budget was revised and approved by the Steering Committee in May 2005 (Table 3a and
3b).
Table 2a
Budget for 2005 (as of 26.1.2005)
Category
Cost (USD) Cost
(NOK)
6.5 NOK/USD
Project Implementer
Workshops
Travel assistance
Miscellaneous
Total
215 000
60 000
87 000
54 000
288 000
62 000
8 000
92 000
231 000
62 000
11 000
54 000
1 224 000
1 400 000
390 000
563 000
350 000
1 870 000
400 000
50 000
600 000
1 500 000
400 000
70 000
250 000
7 843 000
Table 2b
Project Phase
Planning
Implementation
Year
2002-2003
2003
Assist UNDP
71
Sum
2004
2005
2006
2007
2008
746
0
1500
0
0
400
400
400
71
Petroleum Advisors
12
1463
1400
Local implementor
212
335
390
222
563
350
needs
88
459
0
307
97
assistance
77
2246
2875
2137
785
150
500
547
1870
1870
1800
3000
8847
97
451
528
Data Management
0
46
400
200
Misc. Equipment
98
140
50
50
workshops
0
2 534
2100
400
300
300
5634
338
379
623
400
400
400
400
3070
Travel assistance
0
0
70
80
80
80
310
3
-6
250
450
520
603
1820
792
7320
7843
5500
3500
4783
30451
Total
468
646
713
Table 3a
Revised budget for 2005 (as of 25.5.2005)
Category
Cost (USD) Cost
(NOK)
6.5 NOK/USD
Project Implementer
Workshops
Other technical advisors and assistance
NOC seminar and PM visit
Travel assistance
Mid-term review
Miscellaneous
Total
215 000
74 000
115 000
54 000
262 000
62 000
8 000
92 000
100 000
131 000
62 000
11 000
54 000
23 000
1 263 000
1 400 000
480 000
750 000
350 000
1 700 000
400 000
50 000
600 000
650 000
850 000
400 000
70 000
350 000
150 000
8 200 000
Table 3b
Project Phase
Planning
Implementation
Year
2002-2003
2003
Assist UNDP
71
Sum
2004
2005
2006
2007
2008
746
0
1500
0
0
400
400
400
71
Petroleum Advisors
12
1463
1400
Local implementor
212
335
480
222
750
350
needs
97
assistance
Data Management
77
88
459
0
307
2246
2875
2227
972
150
500
547
1700
1800
1800
3000
8607
97
451
528
0
46
400
200
Misc. Equipment
98
140
50
50
0
2 534
2100
400
300
300
5634
379
623
400
400
400
400
3070
0
0
70
80
80
80
310
468
Travel assistance
Mid-term review
338
350
Total
646
713
350
3
-6
150
350
430
506
1433
792
7320
8200
5330
3410
4686
30451
4.4
Project accounts
Contract between NPD and MNRMEP. It states that NPD handles all disbursements in this
Project. Project funds are then transferred from NORAD to NPD based on invoices of actual
costs. The invoices should be approved by the Ministry. Table 4a and 4b shows the NPD cost
overview for the cooperation in 2005, split between the “Original MNRMEP” and the “New
Advisers” parts of the Project.
These accounts include only the costs that are included in invoices sent to the
Embassy/NORAD for payment in the calendar year 2005. The NPD accounts for this Project
was closed in end November, and costs incurred in December or which NPD had not received
invoice for by end November are not included.
In order to handle local expenses, two local bank accounts have been opened in ANZ Bank in
Dili. One account is for handling of purchases and travel assistance, the other for training
expenses. Money is transferred to these bank accounts from NPD based upon written requests
in accordance with the agreed budget and work plan. Detail accounts of the local expenditures
are shown in Appendices 1 and 2.
Table 4a
Project cost – Original MNRMEP, 2005
Item
Category
Cost (NOK)
Total cost (NOK)
Budget
(as of 25.5.2005)
1
Consultancy fee (January – October)
1 224 127.00
1 224 127.00
1 400 000.00
2
Project Implementer
Consultancy fee (January – November)
407 020.00
407 020.00
480 000.00
3
Consultancy fee (January – October)
625 000.00
625 000.00
750 000.00
4
5
6
Advisers’ travel expenses
Project Manager
Project Implementer
200 206.00
3 850.00
45 969.00
250 025.00
350 000.00
Misc. education and training expenses, see
Appendix 2
1 730 400.58
1 730 400.58
1 700 000.00
Data hardware and software, equipment etc.
Consultants
Computer hardware and software
118 879.40
245 698.13
364 577.53
400 000.00
7
8
9
NPD technical assistance and workshops
10
11
Data management workshop and NPD assistance
Travel expenses
406 hours @ NOK 665.00
137 033.27
269 990.00
12
Adviser workshop, March
Misc. costs
23 891.50
13
Other NPD assistance
136 hours @ NOK 665.00
90 440.00
521 354.77
600 000.00
14
15
16
17
Prime Minister’s visit to Norway
Travel expenses and accommodation
Dinners and catering
NPD travel expenses
Misc. expenses
518 286.21
118 278.00
10 952.00
31 551.00
679 067.21
850 000.00
Other technical assistance and workshops
18
National Oil Company Seminar
Consultants
503 630.73
19
Sunrise Field pipeline review
70 366.08
20
Regional Mapping Project
Cost sharing with TSDA
(119 279.26)
454 717.55
650 000.00
21
Travel assistance
Director of OGED
5 457.51
5 457.51
70 000.00
22
23
NPD Project Administration
640 hours @ NOK 665
Travel expenses
425 600.00
58 571.80
484 171.80
400 000.00
24
25
Miscellaneous
Misc.
Agio (gain on exchange rates)
14 956.67
(17 169.57)
(2 212.90)
150 000.00
6 743 706.05
8 200 000.00
Total
Notes:
Item 1
Consultancy fee for November and December is not included. The real cost for 2005 is NOK 1 457 461.00
Item 2
Consultancy fee for December is not included. The real cost for 2005 is NOK 447 020.00
Item 3
Consultancy fee for November is not included. The real cost for 2005 is NOK 687 500.00
Item 20
It was agreed between the predecessor of OGED, EMRD, and TSDA to share the cost of the regional mapping project carried out
in 2004. The project paid the consultant in 2004. The TSDA share of this project was paid back to the project in 2005.
Table 4b
Project cost – New Advisers, 2005
Item
Category
Cost (NOK)
Total cost (NOK)
Budget 2005
(see Section 9)
1
Project Administration
General administration, 90 hrs @ NOK 665
59 850.00
59 850.00
250 000
2
Recruitment of advisers
Consultant
241 666.00
241 666.00
1 000 000
3
4
Advisers
Interim adviser BPA
Petroleum Fund adviser to MoPF
226 848.00
0
226 848.00
1 020 000
0
0
130 000
528 364.00
2 400 000
Miscellaneous
5
Total
Notes:
Item 1
Budget estimate was for whole year, but the table shows what has been included in the invoice, which was closed on 30
November. A bulk of the NPD administration was carried out in December.
Item 2
Invoices received after 30 November are not included. The total expenses are expected to be close to the budget for 2005.
Item 4
The salaries for the Petroleum Fund Adviser to MoPF who started his assignment in October will all be invoiced in 2006.
5.
Progress of implementation – Original MNRMEP
This is the third Annual Report from the Ministry of Planning and Finance (MoPF) to
NORAD regarding the project “Assistance in developing the management of the petroleum
sector in Timor-Leste”. It covers the period from January to December 2005.
This project implementation report follows the subdivision of the budget for 2005 as given in
Table 3a of this report.
5.1
He is employed by the Project on a two-year consultancy contract. His tasks include
managing the day-to-day implementation of the project, acting as advisor and mentor for
Mr. Ytreland has offered significant knowledge of the petroleum business and strong
geological and management skills to the Project. Under his supervision the EMRD, and later
OGED, has performed a variety of tasks that are relevant to a petroleum administration and he
has initiated important processes that have brought the petroleum business of Timor-Leste
forward towards exploration and production activities and value generation for the society. He
has also acted as a resource person and adviser in many related issues within the Timorese
petroleum administration.
He has among other things participated and supervised work on restructuring of the Ministry,
the implementation of the first seismic data acquisition round, the preparation and launching
of the first bidding round for offshore acreage, established and expanded interagency
linkages, carried out significant promotional activities, contributed to the drafting of
petroleum laws and PSCs and to the public consultations of laws and PSCs, contributed to and
partly led the work with the establishment of tender protocols and other regulations relevant
for the bidding round and established growing industry and academic networks.
5.2
Project Implementer
implementation of this Project. It has made it possible to overcome cultural and practical
running of the project, main responsibility for IT and database issues in EMRD, and later
OGEDm and in the project, organising of workshops and travels, translation, day-to-day
assistance to the other advisors, Project Manager and Project Coordinator.
5.3
It was recognised early in 2004 that the start-up of the implementation of the education
program (discussed below) would require a significant effort. At the same time it was
recognised that supporting and educating the staff in modern governance principles was a
critical issue. It was thus decided to combine these two roles in one full-time advisor position
for a period of one year. Ms. Liv Marte Nordhaug was offered this position and she started the
work in October 2004. It was decided by the Steering Committee in May 2005 to extend her
assignment until December 2005.
Her work has included implementation and further development of the education program,
significant work related to selection of candidates for external education and training, contacts
with universities and training institutions, selection of candidates for awards in the “small
grants program”, participation in various institution building activities like restructuring of
EMRD, input to the drafting of the transparency aspects of the petroleum laws and PSCs,
cooperation with other relevant institutions in Timor-Leste like TSDA, World Bank, UNDP
etc. She has assisted the Project Manager in several tasks, and had the role as Acting Project
Manager in his absence. She also contributed significantly to the preparation of the promotion
“road show”.
This arrangement has proven very successful and has contributed significantly to the progress
of the project.
5.4
Various training and education initiatives have been initiated. This includes English training
for Ministry staff and intensive English training in Australia and New Zealand for most of the
OGED staff. A small grants program for support to Timorese students abroad have been
initiated and awards have been made. The preparation and selection of candidates for
university degrees have been carried out and a decision of which candidates that will get these
scholarships was made.
In order to make the administration and day-to-day running of the HRD Program easier, it has
been decided to transfer funds for this purpose to a designated bank account in Dili.
Approximately 1.7 million NOK was transferred in the 1st Quarter of 2005.
5.5
Data hardware and software, office equipment etc
This includes purchase of data hardware and software in connection with the establishment of
the OGED database (the “Lafaek” database). I also includes work by NPD in connection with
preparation, implementation and training of staff.
The Norwegian consultant GIS Partner as has been given the task of creating some necessary
GIS software. Australian company CSM Technology delivered the hardware and software and
also worked with setting up the hardware and software in Dili.
Miscellaneous other office equipment and computer equipment for the project and its advisers
have been purchased.
5.6
NPD technical assistance and workshops
Sunrise pipeline study:
Mr. Sverre Lund of Lucon AS finalized in January his advice to the Timorese authorities in
relation to the feasibility study for the possible landing of a gas pipeline from the Sunrise gas
field to Timor-Leste.
Norway Visit in March:
In connection with Mr. Ytreland and Ms. Nordhaug’s consultation meeting with NPD in
March, Mr. Carlos Soares and Mr. Amandio Gusmao visited Norway. The purpose of the
meetings was forward planning and information to Mr. Gusmao who was about to take up the
position as Director of Oil and Gas in EMRD. In addition to internal discussions and planning
with NPD and the advisors, a meeting was also held with NORAD and Ministry of Foreign
Affairs.
Data management workshop:
Mr. Kjell Reidar Knudsen and Mr. Odd Herman Oksvold of NPD conducted a two-week
workshop in Dili in October in connection with the start-up of the Lafaek database.
Prime Minister Alkatiri visit to Norway in May:
Prime Minister Mari Alkatiri, Minister of Planning and Finance Madalena Boavida, Secretary
of State Jose Teixiera and several other Timor-Leste politicians and senior civil servants
visited Norway in late may 2005. The purpose of the visit was to receive information about
Norway’s experience in the public sector management of the petroleum activity, especially
the creation of a national oil company (NOC) and the establishment of a petroleum fund.
During the visit Prime Minister Alkatiri and his delegation met with Norwegian Prime
Minister Kjell Magne Bondevik, Minister for Petroleum and Energy Torild Widvey and
Minister for International Cooperation Hilde Frafjord Johnson. The visit included a seminar
with the Central Bank of Norway hosted by Governor Sven Gjedrem and a seminar arranged
by Econ in cooperation with NPD regarding national oil companies (see below). Other
meetings were also conducted, including a meeting with the Ministry of Petroleum and
Energy.
National oil company seminar in Oslo in May
A high-level seminar on Norwegian and international experience with National Oil
Companies as a means of national control and influence on the petroleum sector was held by
Econ in cooperation with NPD. The seminar included a presentation by former CEO of Statoil
Harald Norvik among other high level speakers from the Norwegian and international oil
industry and petroleum administration.
5.7
NPD has spent 640 hours on the assistance in 2005. This excludes the NPD work on
workshops and seminars. A large part is spent by Mr. Erling Kvadsheim, Project Coordinator,
and also by other NPD technical and support staff.
The Project coordinator has carried out two planning and follow-up visits to Dili during 2004,
one in August, one in November. The latter is not included in the accounts for 2005, but will
be included in 2006.
The total hours spent by NPD, including workshops and seminars adds up to 1182 hours.
5.8
Miscellaneous
The large number of money transactions between Norway and Timor-Leste or between
Norway and international consultants gives rise to a large account of money exchange gains
or losses (agio/disagio).
6.
Progress of implementation – New Advisers
The requests for new advisers were sent from the Timor-Leste authorities to the Embassy in
Jakarta during the second half of 2005. The activities in 2005 have primarily been connected
with the recruitment of these advisers (see section 9) with two exceptions: 1) The Petroleum
Fund Adviser to MoPF was recruited by the Norwegian Ministry of Finance. He started his
assignment in October 2005. 2) The previous Petroleum Fund Adviser to BPA (employed by
IMF), Mr. Samuel Robinson, was given the task of bridging the period until a new adviser
could be in place.
7.
Assessment
7.1
Activities
2005. The focus in EMRD, later OGED, has continued to change towards the daily operation
of a petroleum business. The exposure to and cooperation with international petroleum
industry is gaining momentum, and OGED and other relevant public sector units are
managing this task with increasing confidence. The process is clearly in a good direction
towards the Project goal of creating an administration that can operate largely independent of
advisors, but there is still a significant way to go. Some of the most significant achievements
include:
The seismic acquisition round and the preparation for the first bidding round have been the
real start-up of substantial activity in the sovereign Timor-Leste petroleum sector. OGED has
played a central part of this process, along with other units and international advisers and
consultants. It has given OGED experience with a large number of administrative tasks,
technical tasks and has given broad exposure to the international industry. The exposure has
been during the promotion road show, through receiving companies in the offices in Dili and
through technical conferences and other meetings. The understanding is growing in OGED
and other units of the petroleum administration of how the international petroleum business
works, and what is required from professional working relations with the industry.
The visit to Norway by the Prime Minster and his delegation of politicians and senior civil
servants and the National Oil Company seminar held in Oslo in May both contributed to the
awareness of key challenges to the nation when establishing a petroleum administration.
The establishment of the Lafaek database is a significant step forward in the ability for OGED
to handle the administration of the petroleum sector. It also will be a good tool for better
cooperation between OGED and other units in the petroleum administration, notably TSDA.
The establishment of the OGED web site has been a valuable learning process for OGED. The
web site proved invaluable in the distribution of information related to the bidding round and
the technical conference in November.
The continued intensive English education of the staff in OGED and other ex-EMRD staff has
proven to be successful. The level of English in the office is much higher than only one year
ago. Staff meetings can now be conducted in English without translation, and several of the
staff feel confident in taking part in discussions with English speaking counterparts.
The university programmes are in the process of starting up. Four candidates for degree
programmes in Norway and Australia have been selected (two OGED and two external
candidates). 51 Timorese students in Indonesia have received minor financial support.
Good governance issues have been addressed in a series of ways, all contributing to a well
functioning and reliable administration. It has included setting of high standards of
transparency and objectivity in the selection of degree and small grant candidates, addressing
administrative issues related to timeliness, recruitment, private use of government property,
internet scams etc. The Civil Service Act distributed to all former EMRD staff, and a full day
seminar was held to go through article by article. The visits and National Oil Company
seminars in Norway are also regarded as important governance activities in demonstrating
how the Norwegian public petroleum sector operates.
7.2
Use of inputs
and contractors have been followed. Procedures for handling of local purchases and
education/training expenses paid out of Dili have been established. The details of the accounts
are shown in Appendices 1 and 2 of this report.
7.3
Problems encountered
Regarding this Project there are in general good working relationships inside OGED, between
OGED and other units in the petroleum administration and between the Ministries and NPD
and other Norwegian authorities.
Budgeting for the various activities in a project which is of such a large and complex nature is
difficult and transfer of budget funds from one year to another is inevitable. NPD also
experience some accounting challenges due to distance and to the fact that NPD’s accounting
systems are not specifically designed for these kinds of projects, which sometimes leads to
delays in accounting and payments. NPD reports that they can live with the situation and it is
hoped that it is also acceptable to the Embassy.
It has been brought forward by NPD, that there is insufficient coordination of some of the
support initiatives that include consultants and advisers within the petroleum sector. In order
to maximise the overall benefit from these support activities and to avoid duplication of
efforts or conflicting advice, or even conflicts between advisers, there is a need for good
coordination, also from the donor’s part.
One example of unfortunate lack of coordination and communication occurred between one
Norwegian consultant and the NPD Project in 2005, which resulted in quite conflicting advice
given to the Timorese authorities. This resulted in disagreements between advisers and
between advisers and NPD to such an effect that there is currently less cooperation between
advisers in some units in the petroleum sector, with a corresponding drop in efficiency and
loss of progress.
This is not an optimal situation, and there is a clear need to strengthen the work towards better
coordination and communication.
The Project initiated in 2003 together with the World Bank an effort to coordinate the various
support initiatives in the petroleum sector in Timor-Leste. This coordination contributed to
good working relations and exchange of plans between the relevant donors. The Project,
supported by NPD, will take new initiatives to re-establish and develop further working
relations.
8.
Work plan and budget for 2006 – Original MNRMEP
The work plan and budget for 2006 were prepared by the Steering Committee at its meeting
on 15 November 2005.
The following changes to the budget of 15 November 2005 have been made following input
from the Embassy/NORAD: 1) the new advisers in OGED is moved from the “Original
MNRMEP” budget to the “New Advisers” budget, and 2) The proposed contingency budget
of NOK 3.6 million for “Petroleum Advisers Unspecified” is not included.
The budget for 2006 is shown in table 5
Table 5
The budget for 2006 – Original MNRMEP
Category
Cost
(USD)
Cost
(NOK)
Previous budget
(25.5.05)
6.50 NOK/$
Adviser and Project Manager (G. Ytreland)
Project Manager (new)
Project Implementer
Data Management
Travel assistance
Miscellaneous
Total
77 000
223 000
74 000
10 000
77 000
194 000
62 000
8 000
138 000
77 000
3 000
31 000
980 000
500 000
1 450 000
520 000
63 000
500 000
1 260 000
400 000
50 000
900 000
500 000
20 000
200 000
6 363 000
0
1 500 000
400 000
0
150 000
1 800 000
200 000
50 000
400 000
400 000
80 000
350 000
5 330 000
The total budget for 2006 as shown in Table 3b was NOK 5 330 000 (USD 820 000). The
increase in the budget is thus NOK 1 033 000 (USD 160 000). This increase will be covered
by transfer of unspent budget for 2005 and some reallocation of funds from later years.
The cost elements are:
8.1
This comprises a two months extension of the current contract in order to work with the
preparation of the bid round and to overlap with the new advisor. In addition, the consultancy
fee for November and December 2005 is included in the 2006 budget.
8.2
Project Manager (New)
This represents a one year contract with a new project manager, currently being hired. Due to
a rise in salary and consultancy fee level, the total cost estimate is NOK 250 000 higher than
previous budget (total 1 750 000). However, since the expected start-up of the new adviser
will be around mid-March, some of the costs will be on the 2007 budget.
8.3
Project Implementer
This is the continuation of the current contract with Carlos A. Soares. It shows both an
increase in cost estimate which is due to exchange rate differences when the salary was
changed from USD to NOK and it includes the consultancy fee for December 2005.
8.4
This includes the consultancy fee for November 2005.
8.5
Advisors’ travel expenses
This comprises miscellaneous international travel in connection with promotion, technical
meetings, conferences, consultations with NPD etc. The travel activity has proven to be
significantly higher than expected. This budget element is increased by NOK 350 000.
8.6
HRD programme
The 2006 HRD budget includes:
English training in Timor-Leste and overseas
Payment for four selected degree students overseas
Payment of two not-yet selected degree students overseas
Two staff for Petrad 8-weeks courses in Norway
Internships and temporary replacements
Small-grants project
The expenses related to the HRD Programme in 2005 have been somewhat lower than
expected. This is primarily due to later start-up of some of the activities, particularly the
overseas education. There are currently approximately USD 90 000 bank credit on the Project
HRD bank account in Dili which can be spent in 2006. This budget element is thus reduced
by NOK 540 000.
8.7
Data management
This includes
Miscellaneous purchases and upgrades of existing computer equipment,
communication equipment and software
Consultants who i.a. may upgrade the front-end of the LAFAEK database and prepare
external access to public data via internet
Further GIS training
One follow-up meeting with experts from NPD
The cost of the follow-up meeting was previously not budgeted for separately. This budget
item is thus increased by NOK 200 000.
8.8
Office equipment
This includes misc. equipment for the server and database room, in addition to general
maintenance of existing equipment.
8.9
Resource management workshop, including petroleum resource classification,
reporting and resource accounting. TSDA, MoPF and other units could be invited to
participate. Could be conducted by NPD specialists.
Good governance and ethics seminar, including good governance practices, ethics and
code-of-conduct at the individual employee level in the Ministry. Relevant also for
MoPF and others. Could be conducted by relevant international consultants.
Environmental issues workshop, including discussing how environmental issues can
be taken care of in the future oil- and gas activities in Timor-Leste. Could involve
OGED, Environment Directorate, TSDA and other units. Could be conducted by
relevant international consultants.
This is one more workshop than initially planned for 2006. Both the Resource Management
and the Good Governance workshops are expected to include several lecturers from abroad,
and are expected to require additional funds. This budget item is thus increased from the
initial budget by NOK 500 000.
This includes NPD project coordination and administration. It includes approximately 450 hrs
administration work in Norway, 2-3 visits to Timor-Leste by NPD Project Coordinator and
one visit by NPD Director or designate for SC meeting. Due to higher travel costs and high
activity level on the project, the budget has been increased by NOK 100 000.
This is a general budget for minor travel expenses for local staff in connection with meetings,
conferences etc. The requirements for this budget item has proven to be smaller than initially
thought, and the budget is reduced by NOK 60 000.
8.12 Miscellaneous
A part of the funds in this budget item has been redistributed to other cost elements. This
budget item is thus reduced by NOK 150 000.
9.
Work plan and budget for 2006 – New Advisors
Based on requests from MNRMEP and MoPF the Norwegian Embassy in Jakarta agreed to
finance two new advisers in OGED, three advisers in MoPF and to recruit one adviser in
BPA, to be financed by IMF. In addition, an interim adviser in BPA has been recruited in
order to fill the gap between the previous IMF-adviser and the new adviser. It has been agreed
between the Embassy and NPD that NPD will handle the employment and administration of
these advisers:
Geological Adviser to OGED
Legal Adviser to OGED
Interim Petroleum Fund Adviser to BPA
Petroleum Fund Adviser to BPA (recruitment only)
Petroleum Fund Adviser to MoPF
Petroleum Fund Investment Adviser to MoPF (part-time)
Petroleum Taxation Adviser to MoPF
This activity will be secured in amendments to the Agreement between Norway and TimorLeste for support to the petroleum sector and handled by NPD under the contract between
NPD and the Ministry of Development and Environment, superseded by Ministry of Natural
Resources, Minerals and Energy Policy, as requested by the Norwegian Embassy in Jakarta.
These contracts are currently being drafted.
A preliminary budget for this part of the project was agreed between NPD and the Embassy in
October 2005. It was based on an assumption that most of the new advisers could be in place
in January 2006. The recruitment process has taken longer than first anticipated, and most of
the 2005 costs have been moved into 2006, and some 2006 costs into 2007. Some of the
contingency costs have correspondingly been moved into 2008. The preliminary budget is
shown in Table 6. It could be compared to Table 8a and 8b which shows the total annual
budget provisions. The budget for 2006 is shown in Table 7.
Table 6
Preliminary budget for new advisers as of October 2005
(Two typing errors in this table has been corrected following the annual meeting on 26.1.2006)
Category
NPD Project administration
Recruitment
Petroleum Fund Adviser to BPA
(interim)
Adviser to MoPF (part-time)
Petroleum Taxation Adviser to
MoPF
Total
2005
(NOK)
250 000
1 000 000
420 000
130 000
1 800 000
2006
(NOK)
133 000
2007
(NOK)
1 700 000
1 700 000
Total
(NOK)
383 000
1 000 000
1 700 000
1 700 000
140 000
560 000
1 000 000
1 700 000
1 000 000
1 700 000
1 700 000
250 000
8 323 000
3 777 000
3 777 000
Cost
(USD)
Cost
(NOK)
1 700 000
4 157 000
13 900 000
Table 7
The budget for 2006 – New Advisers
Category
Previous budget
(Oct. 2005)
6.50 NOK/$
Recruitment
Petroleum Fund Adviser to BPA (interim)
Petroleum Fund Investment Adviser to MoPF
(part-time)
Total
31 000
117 000
218 000
218 000
73 000
200 000
758 000
1 417 000
1 417 000
473 000
133 000
154 000
262 000
196 000
78 000
1 347 000
1 000 000
1 700 000
1 275 000
510 000
8 750 000
1 000 000
0
1 700 000
1 700 000
140 000
1 700 000
1 700 000
250 000
4 323 000
The total budget for 2006 as shown in Table 7 was NOK 4 323 000 (USD 665 000). The
increase in the budget is thus NOK 4 427 000 (USD 680 000). This increase will be covered
by transfer of unspent budget for 2005 and some reallocation of budget from 2007
The cost elements are:
9.1
This includes the additional administration in NPD due to the addition of new advisers. A
large part of the NPD administration in 2005 was spent in December and will thus be invoiced
in 2006. Some of the unspent budget for 2005 is thus transferred to 2006.
9.2
Recruitment
This includes the final invoices from the recruitment firm, the advertisements and some costs
related to interviews etc. It was initially planned that this process would be finished in 2005,
but a large part of the invoices were payable in December 2005 and in 2006. This will thus be
covered by transfer of budgets from 2005.
9.3
The adviser is expected to take up her position in March 2006. Some of the costs are thus
delayed to 2007.
9.4
The adviser is expected to take up her position in March 2006. Some of the costs are thus
delayed to 2007.
9.5
This position is held by Mr. Samuel Robinson in order to fill the gap between the previous
adviser (Mr. Robinson) and the new adviser that is expected to take up his position in March.
It was previously expected that he would start in February, and the budget for the interim
adviser is thus increased to cover for an additional month. This is done by transferring some
of the contingency budget for 2007 into 2006.
9.6
This position will be on the Petroleum Fund Investment Advisory Board and is a part-time
assignment. The adviser is expected to visit Timor-Leste 3-4 times per year in addition to
some preparatory work abroad.
9.7
This position is held by Mr. Sigurd Klakeg. He started his assignment in October 2005. Due
to a delay in the accounting, the expenses for 2005 will all be paid in 2006.
9.8
This adviser is expected to be in place on 1 April 2006. Some of the costs will be transferred
to the budget for 2007.
9.9
The recruitment process is not finished by the time of this report. There are still several
uncertainties in relation to recruitment costs and relocation costs for the advisers.
10. Total budget provision for the support to the petroleum sector
(MNRMEP and MoPF)
A breakdown of the total budget into budget provisions per year is shown in tables 8a and 8b.
Numbers shown in italics are actual costs.
Table 8a
Total budget provisions per year (NOK)
Year
Assist UNDP
Petroleum Advisors,
unspecified
Local implementor
advisor
education needs
assistance
Data Management
Misc. Equipment
workshops
(OGED)
Travel assistance
Total (Original MNRMEP)
Actual costs
20022003
2003
71
12
212
Budget
2004
2005
2006
2007
746
1463
335
1224
407
1950
520
300
500
625
250
63
500
222
500
459
307
1730
1260
0
98
451
46
140
365
0
400
50
0
2 534
1655
900
300
300
5689
379
0
3
792
623
0
-6
7320
484
5
-2
6743
500
20
200
6363
500
20
500
3920
500
20
480
4600
3454
65
1175
30451
60
242
200
758
1417
1417
77
713
227
713
746
4949
2474
910
750
1800
2800
97
468
Total
71
88
0
(MoPF, BPA)
Recruitment
(Interim)
MoPF
Petroleum Taxation Advisor to
MoPF
Total (New advisers)
Total
2008
792
7320
547
7897
97
528
811
288
260
1000
1700
1700
283
283
473
700
1000
1000
1700
1700
0
529
1275
510
8750
425
3000
3991
630
630
1700
4140
13900
7272
15113
7911
5230
44351
Table 8b
Total budget provisions per year (USD)
Year
Assist UNDP
Petroleum Advisors,
unspecified
Local implementor
advisor
education needs
assistance
Data Management
Misc. Equipment
workshops
(OGED)
Travel assistance
Actual costs
20022003
2003
11
2
33
Budget
2004
2005
2006
2007
115
225
52
188
63
300
80
46
77
96
38
10
77
71
47
266
194
69
7
22
56
0
62
8
390
255
138
46
46
875
74
1
0
1037
77
3
31
976
77
3
77
603
77
3
74
708
531
10
180
4684
9
37
31
117
218
218
34
14
77
12
15
72
58
96
110
122
-1
1126
35
110
122
1126
Total
11
115
761
381
140
115
277
431
15
(MoPF, BPA)
Recruitment
(Interim)
MoPF
Petroleum Taxation Advisor to
MoPF
Total (New Advisers)
Total
2008
84
1215
15
81
125
44
40
154
262
262
44
44
73
108
154
154
0
262
262
0
81
196
78
1346
65
462
614
97
97
262
637
2138
1119
2325
1217
805
6823
11.
Appendices
Appendix 1: Account of local expenditures, including data hardware and softare
Appendix 2: Account of local HRD expenditures
Appendix 1
List of expenses from NORAD-NPD Education Assistance Account (# 1011109960030)
Date
15-22005
16-32005
16-32005
23-32005
28-32005
31-32005
Sum total
spent per
Apr 1
Balance
per
Apr 1
11-42005
13-42005
13-42005
20-42005
02-052005
02-052005
Sum total
spent Apr
1- May
16th
Balance
per May
16th
24-052005
W#
1
Amount (USD)
3,400.00
5
Description
Funds to cover Herminio’s expenses in relation to
intensive English training overseas
Reimburse staff for outlays (advertisements, IELTS
test, and express delivery passports
Reimburse Project Account for outlays for English
training overseas
Funds to cover Maria Ribeiro’s tuition and
homestay fees
Funds to cover Maria Ribeiro’s airfare
6
Funds to cover Jaime Mesquita’s tuition and airfare
3,824.06
13
Student visa applications Gilsel Borges and
Lourenco Pedro
680.00
02-062005
03-062005
14
Plane ticket Gilsel Borges
931.00
15
Living allowance, home stay etc. for Gilsel Borges
in Perth
7,650.00
2
3
4
822.00
10,416.08
10,597.65
1,273.00
30,332.79
204,420.66
7
Payment for English classes and 30 dictionaries
3,453.00
8
Plane ticket Ana Lucinda Ribeiro
1,002.00
9
Transfer to 8 Indonesian Universities
29, 477.87
10
Living allowance etc. for Maria Ribeiro for
intensive English in New Zealand
Living allowance, home stay etc for Jaime Mesquita
in Brisbane
Visa outlays March-April Maria Ribeiro and Jaime
Mesquita
6,937.00
11
12
3,094.35
92.50
44,056.37
160,421.46
20-062005
20-062005
Sum total
spent May
16th –
June 20th
Balance
per June
20th
23-062005
30-062005
30-062005
01-072005
08-072005
12-072005
14-072005
02-082005
02-082005
11-082005
12-082005
Sum total
spent June
20th –
August
12th
Balance
per
August
12th
17-082005
17-082005
17-082005
23-082005
23-082005
16
17
Transfer to the last Indonesian Uni (ITAT
Surabaya)
Transfer to cover tuition for Gilsel E. M. C. Borges
1,171.04
7, 946.00
18,378.04
142,093.00
18
Outlays x-rays and medicals Brizildo Ferreira,
Joaquim Amaral and Francisco Ferreira
Visa for Francisco Ferreira
186.00
154.00
21
June Salary for temporary staff Joaõ dos Reis
(replacement for Lourenco Pedro)
Plane ticket Dili-Perth for Francisco Ferreira
22
Tuition fees for Francisco Ferreira
6,670.92
23
6,100.00
26
Homestay and living expenses July 13th –
December 21st for Francisco Ferreira
Plane ticket for Manuel De Lemos to attend Petrad
course in Stavanger
July Salary for temporary staff Joaõ dos Reis
Student visa for Australia for Brizildo Ferreira
27
Tuition fees for Brizildo Ferreira
3,986.92
28
Tuition fees for Joaquim De Jesus Amaral
2,723,56
19
20
24
25
340.00
970.00
3,090.00
154.00
335.00
24,710.40
117,474.43
29
30
31
32
33
English language training from Lorosa’e English
Language Institute
Plane tickets Brizildo Ferreira (USD 1053) and
Joaquim Amaral (USD 1548)
July salary Francisco Ferreira (USD 154), Visa
Medical exp Brizildo Ferreira (USD 20 + USD 60)
Living expenses Brizildo Ferreira for 4 months in
Australia
Living expenses Joaquim De Jesus Amaral
6,600.00
2,601.00
234.00
4,764.40
3033.04
25-082005
29-082005
01-092005
22-092005
34
Insurance for Joaquim de Jesus Amaral
376.61
35
August salary Francisco Ferreira
154.00
36
August Salary for temporary staff Joaõ dos Reis
Fee for changing Ana Lucinda Ribeiro’s Perth
ticket (USD 157) and per diem food only for 8
days (USD 320)
154.00
37
Sum total
spent
August
12th –
September
22nd
Balance
per
September
22nd
26-0938
2005
10-102005
10-102005
Sum total
spent
September
22nd
October
10th
Balance
per
October
10th
31-102005
21-112005
30-112005
05-122005
39
40
477.00
18,393.65
99,116.21
September salary Francisco Ferreira (USD 154)
and visa application fee Manuel Mendonca (USD
80)
Visa medical exam (USD 60) and two x-rays (at
USD 20 each) Manuel Mendonca
English teaching material expenses Rebecca
Denham
234.00
100.00
292.20
626.20
98,521.77
41
October salary Francisco Ferreira
154.00
42
Dental treatment Francisco Ferreira
264.48
43
November salary Francisco Ferreira
154.00
44
10 weeks living expenses Francisco F and Gilsel B
6942.84
Appendix 6.
Annual Report to the Norwegian Embassy in Jakarta
Assistance in developing the management of the petroleum sector
in Timor-Leste
1.
Project Name
2.
The work is carried out through an institutional cooperation between the Ministry of Natural
Resources, Minerals and Energy Policy (MNRMEP) and the Norwegian Petroleum
Directorate (NPD).
National Directorate for Oil and Gas (DNPG) and the NPD.
3.
Project Design
3.1
Goal
advisers.
3.2
Objective
MNRMEP and associated institutions in Timor-Leste performing petroleum sector
management functions for a period of six years at an estimated cost of NOK 44.5 million (ca
6.8 mill USD), such that the Norwegian experience of developing a public sector petroleum
administration can benefit Timor-Leste, and such that NPD’s technical expertise and other
Norwegian and international expertise can be utilised in developing a well-functioning
petroleum administration in Timor-Leste.
3.3
Outputs1
administration
4.
Use of inputs
4.1
Financial input
The initial grant from NORAD is NOK 30 million (ca USD 4.6 million). The timeframe is
2003 to 2008. It has been agreed to include new advisers in DNPG and in the Ministry of
Planning and Finance (MoPF) in the Project at a cost of NOK 13.9 million. The cost of a
quality control survey of the marine baseline, carried out by the Norwegian Mapping
Authority, has been also been included in the project expenses at the request from NORAD.
The additional grant is NOK 14.5 million. The total grant is thus increased to NOK 44.5
million. Table 1 shows the overall project economics.
It was agreed between the Embassy/Norad and NPD in 2005 that NPD should handle the
administration of hiring and employment of new petroleum advisers in the financial sector in
Timor-Leste. This should be organised under the umbrella of the current cooperation between
Norway and Timor-Leste in the petroleum sector which is administered by NPD.
The project economics is divided into two parts; One part for the original cooperation with the
Ministry of Natural Resources, Minerals and Energy Policy (MNRMEP) and one for the new
advisers. The two parts are for practical reasons in this report denoted “Original MNRMEP”
and “New Advisers”. The Embassy/Norad has indicated that this division is not any longer
necessary and it will not be used in this Project for the budgeting for 2007 and beyond.
1
Table 1
NOK
USD
(6.50 NOK/USD)
44 500 000.00
6 846 000
Original MNRMEP
Expenses 2002-2003
Expenses 2004
Expenses 2005
Expenses 2006
Total, 2002-2006
1 609 246.61
7 318 334.56
6 743 706.05
5 459 502.81
21 130 790.03
248 000
1 126 000
1 037 000
890 000
3 301 000
New Advisers
Expenses 2005
Expenses 2006
Total, 2005-2006
528 364.00
5 487 851.81
6 016 215.81
81 000
844 000
925 000
Total expenses 2002-2006
27 147 005.84
4 226 000
Remaining grant
17 352 994.16
2 620 000
4.2
Input in kind
The MNRMEP has provided office facilities for advisers, consultants, seminars and
workshops and necessary logistic support during the different missions, meetings and
workshops
4.3
Budget for 2006
A budget for 2006 was presented to the Annual Meeting in January 2006 (Table 2). This
budget was revised and approved by the Steering Committee in June 2006 (Table 3).
Table 2
The budget for 2006
As per January 2006
Category
Cost (NOK)
Cost (USD)
6.50 NOK/$
Project Implementer
Data Management
Travel assistance
Miscellaneous
Total, Original MNRMEP
500 000
1 450 000
520 000
63 000
500 000
1 260 000
400 000
50 000
900 000
500 000
20 000
200 000
6 363 000
77 000
223 000
74 000
10 000
77 000
194 000
62 000
8 000
138 000
77 000
3 000
31 000
980 000
Recruitment
Total, New advisers
200 000
758 000
1 417 000
1 417 000
473 000
1 000 000
1 700 000
1 275 000
510 000
8 750 000
31 000
117 000
218 000
218 000
73 000
154 000
262 000
196 000
78 000
1 347 000
Total
15 113 000
2 327 000
Table 3
The revised budget for 2006 – Original MNRMEP
As per June 2006
Category
Cost (NOK)
Cost (USD)
6.20 NOK/$
Project Implementer
Data Management
Travel assistance
Miscellaneous
Total, Original MNRMEP
583 000
1 450 000
520 000
63 000
900 000
1 260 000
600 000
50 000
900 000
500 000
20 000
200 000
7 046 000
94 000
234 000
84 000
10 000
145 000
203 000
97 000
8 000
145 000
81 000
3 000
32 000
1 136 000
Recruitment
Total, new Advisers
200 000
758 000
1 417 000
1 417 000
1 173 000
1 000 000
1 700 000
1 275 000
100 000
9 040 000
32 000
122 000
229 000
229 000
189 000
161 000
274 000
206 000
16 000
1 458 000
Total
16 086 000
2 594 000
4.4
Project accounts
Project. Project funds are then transferred from NORAD to NPD based on invoices of actual
costs. The invoices should be approved by the MNRMEP. Table 4a and 4b shows the NPD
cost overview for the cooperation in 2006, split between the “Original MNRMEP” and the
“New Advisers” parts of the Project.
These accounts include the costs included in invoices sent to the Embassy/NORAD for
payment in the calendar year 2006.
Table 4a
Project cost – Original MNRMEP, 2006
Item
Category
Cost (NOK)
Total cost (NOK)
Budget
(as of June 2006)
1
Consultancy fee (November 05 – March 06)
583 335.00
583 335.00
583 000
2
Project Manager (R. White)
Consultancy fee (March - October)
1 075 981.76
1 075 981.76
1 450 000
3
Project Implementer
Consultancy fee (December 05 – October 06)
420 253.00
420 253.00
520 000
4
Consultancy fee (November 05)
62 500.00
62 500.00
63 000
5
6
Advisers’ travel expenses
Adviser and Project Manager (Ytreland)
Project Manager (White)
99 710.00
121 971.10
221 681.10
900 000
7
8
Misc. education and training expenses,
Petrad 8-weeks course
1 394 628.08
117 500.00
1 512 128.08
1 260 000
9
Data management
Computer hardware and software
570 942.25
570 942.25
600 000
0.00
0.00
50 000
Office equipment
10
NPD data management assistance
136 hours worked
97 785.00
11
Consultancy regarding Bidding Round
Evaluation Commission
G. Ytreland
284 491.00
382 276.00
900 000
12
13
518 hours worked
Travel expenses
365 335.00
258 733.40
624 068.40
500 000
0.00
0.00
20 000
6 337.22
6 337.22
200 000
5 459 502.81
7 046 000
Travel assistance
14
Miscellaneous
Misc.
Total
Notes:
Item 2:
Item 3:
Budget was to year end. Real cost in 2006 is estimated at 1,360,000.
Budget was to year end. Real cost in 2006 is estimated at 500,000.
Table 4b
Project cost – New Advisers, 2006
Item
Category
Cost (NOK)
Total cost (NOK)
Budget 2006
(per June 2006)
1
2
277 hrs worked
NPD travel expenses
196 100.00
12 768.81
208 868.81
200 000.00
3
4
5
6
7
Recruitment of advisers
Consultant
Advertisements
Candidates’ travel expenses
NPD travel expenses
Misc.
483 332.00
201 980.50
27 672.00
5 698.00
2 600.00
721 282.50
758 000
8
9
Geological Adviser to DNPG
Salary and living expenses (March – August)
Travel expenses
704 529.20
160 704.76
865 233.96
1 417 000
10
11
Legal Adviser to DNPG
Salary and living expenses (March – August)
Travel expenses
771 916.89
151 637.65
923 554.54
1 417 000
12
Consultancy fee and travel
593 097.03
593 097.03
1 173 000
13
14
(part-time)
Salary
Travel expenses
12 033.00
63 562.00
75 595.00
1 000 000
16
Salary and living expenses (November 05 –
August 06)
Travel expenses
1 494 557.54
120 705.49
1 615 354.62
1 700 000
17
18
Salary and living expenses (April – August)
Travel expenses
404 874.94
65 867.00
470 741.94
1 275 000
19
Insurance
14 215.00
14 215.00
100 000
5 487 851.81
9 040 000
15
Total
Notes:
Items 8+9: The total cost in 2006 is estimated at NOK 1,300,000. The remainder will be charged in 2007.
Items 10+11:
The total cost in 2006 is estimated at NOK 1,400,000. The remainder will be charged in 2007.
Item 12: The table shows the cost up to August 2006. The remainder will be charged in 2007. The real cost for 2006 is estimated at NOK
1,150,000.
Items 13+14:
The table shows the cost of only one of two visits to Dili in 2006. The remainder will be charged in 2007. The real cost
in 2006 is estimated at NOK 225,000. See section 6.7 for further comments to this budget item.
Items 17+18:
The total cost in 2006 is estimated at NOK 1,000,000. The remainder will be charged in 2007.
5.
Progress of implementation – Original MNRMEP
This is the fourth Annual Report to the Embassy/NORAD regarding the project “Assistance in
developing the management of the petroleum sector in Timor-Leste”. It covers the period
from January to December 2006.
The progress of the Project was significantly influenced by the period of civil unrest and the
associated security issues for both the MNRMEP staff and the international advisers. DNPG
and the MNRMEP had a very low activity level from end of May into August-September. In
the beginning of that period several of the advisers left the country for security reasons and a
number of the MNRMEP staff had to leave Dili, move into refuge camps or stay home from
work to take care of their possessions or families. Project Manager Roger White, Project
Implementer Carlos Soares and some of the MNRMEP staff kept the office going at a
minimum level during the whole period. The advisers were all back by mid June. In late May
the DNPG office was looted and damaged, and some extra costs have incurred in order to
replace the stolen or damaged equipment. The evacuation costs for the international advisers
have been covered by the project, as agreed by the Embassy in Jakarta.
This progress of implementation report follows the subdivision of the budget for 2006 as
given in tables 2 and 3 of this report.
5.1
He was employed by the Project on a two-year consultancy contract. His tasks included
managing the day-to-day implementation of the project, acting as adviser and mentor for
Mr. Ytreland offered significant knowledge of the petroleum business and strong geological
and management skills to the Project. Under his supervision the EMRD, and later OGED,
performed a variety of tasks that are relevant to a petroleum administration and he initiated
important processes that have brought the petroleum business of Timor-Leste forward towards
exploration and production activities and value generation for the society. He also acted as a
resource person and adviser in many related issues within the Timorese petroleum
administration.
He among other things participated and supervised work on restructuring of the MNRMEP,
the implementation of the first seismic data acquisition round, the preparation and launching
of the first bidding round for offshore acreage, established and expanded interagency
linkages, carried out significant promotional activities, contributed to the drafting of
petroleum laws and PSCs and to the public consultations of laws and PSCs, contributed to and
partly led the work with the establishment of tender protocols and other regulations relevant
for the bidding round and established growing industry and academic networks.
His assignment was ended in March 2006. The MNRMEP entered into a contract with Mr.
Ytreland to be able to use his services in connection with the evaluation commission for the
bidding round. This is discussed in Section 5.9 below.
5.2
Project Manager
Mr. Roger White took on the task as project Manager in March 2006. His tasks include acting
as manager for the support to the developing DNPG into a well functioning public
administration unit within its field of responsibility and acting as adviser and mentor for
Timor-Leste staff, particularly the Director of OGED, within the areas of petroleum sector
administration, exploration activities, energy issues and related legal and administrative
issues. He should also perform expert tasks within the same fields, as necessary and
contribute to the development of DNPG includes making short- and long term capacity
building and recruitment plans. It is expected that based on his vast industry experience that
he should act as a resource person and adviser to the MNRMEP and other relevant public
sector units in petroleum related issues in general.
The work carried out in 2006 includes all of the tasks above. In particular:
Support to the negotiations and preparation for signing of the petroleum sharing
contracts in the Timor Sea, which were signed in November.
A capacity development plan for DNPG, a short-term plan to prepare DNPG to
manage the new PSCs and a revised organisation design
Preparations for the development of Timor-Leste Content plans (part of the PSCs)
Coordination of external downstream proposals with internal upstream requirements
and the Sunrise Field pipeline and LNG plant plans (required by the Minister)
Scenarios for further project work and possible project expansion
Function as Alternate Commissioner for the Timor Sea Designated Authority
Investigation of possible landing sites for pipeline and terminal/supply base sites
General project management, support to MNRMEP staff and other advisers, liaison
with other units and representing the Timorese authorities externally.
5.3
Project Implementer
running of the project, main responsibility for IT and database issues in DNPG and in the
project. He has taken the main responsibility for supporting the work regarding the use of
Timor-Leste Content (part of the PSCs), in addition organising of workshops and travels,
translation, day-to-day assistance to the other advisers, Project Manager and Project
Coordinator.
5.4
This is the remaining invoice on this task which was completed in 2005.
5.5
Includes all travel expenses for the advisers apart from relocation costs. A significant expense
was incurred as a consequence of the evacuation in connection to the unrest in the middle of
2006. This was adjusted for in the budget update of June 2006 (ref tables 2 and 3).
5.6
Various training and education initiatives are included. This includes English training for
MNRMEP staff and intensive English training in Australia and New Zealand for several of
the DNPG staff. The small grants program for support to Timorese students abroad that were
initiated in 2005 was continued in 2006 and awards have been made. A major expense is the
cost of the degree students in Australia and Norway.
A total of six scholarships for degree studies at universities have been granted. Four at
University of Western Australia, one at University of Stavanger and one is pending (the
student did not pass the foundation exams and an alternative education is being considered).
All students are taking educations in geoscience. Possible further scholarships should focus on
other relevant topics.
In order to make the administration and day-to-day running of the HRD Program easier, it has
been decided to transfer funds for this purpose to a designated bank account in Dili.
Approximately 1.3 million NOK was transferred in the 2nd Quarter of 2005.
5.7
Data management
This includes purchase of computer equipment. Some of the equipment was damaged or
stolen during the unrest in May. This has led to some extra costs.
5.8
No major office equipment apart from the computer equipment (above) was purchased in
2006.
5.9
Data management assistance
Mr. Kjell-Reidar Knudsen and Mr. Odd Oksvold of NPD have continued the work of building
the Lafaek database and to populate it with real data from both the sovereign Timor-Leste and
from the JPDA. Some assistance has also been given in map production for various purposes.
136 hours were used for this purpose.
Participation in the Bid Evaluation Commission
Mr. Geir Ytreland was engaged by the MNRMEP to take part in the work of the Bidding
Round Evaluation Commission. This included some preparatory work, travel to Dili and a few
weeks’ work in Timor-Leste.
Other
There is a significant discrepancy between the budget and the actual costs. This is due to the
fact that two workshops and one consultancy job had to be cancelled because of the civil
unrest in May-June and the following low level of activity in the MNRMEP during a long
period in the second half of 2006. The workshops include data management and resource
management. The planned consultancy was for an assessment and a training program
regarding code-of-conduct. Both the workshops and the consultancy will be planned for in
2007.
5.10 NPD project administration
NPD has spent 518 hours on the assistance related to the original project with MNRMEP
between November 2005 and October 2006 . This excludes the NPD work on direct technical
assistance. A large part is spent by Mr. Erling Kvadsheim, Project Coordinator, and also by
other NPD technical and support staff.
The Project coordinator has carried out two planning and follow-up visits accounted for in
this report; one in November 2005 and one in May 2006. He also visited Dili in September
2006, but the travel costs for this visit will be included in the 2007 report.
The administration related to the new advisers is reported separately. The total hours spent by
NPD on this project in this period, including administration of both project elements and
technical assistance, add up to 931 hours.
5.11 Miscellaneous
Funds from the budget for miscellaneous items were reassigned to other items, notably the
HRD program and the NPD administration on an ad hoc basis.
6.
Progress of implementation – New Advisers
An additional grant to cover the work of new advisers in the MNRMEP and in the MoPF was
approved by Norway in 2006. This grant is reported separately from the original grant.
This progress of implementation report follows the subdivision of the budget for 2006 as
given in tables 2 and 3 of this report.
6.1
NPD has spent 277 hours on the assistance related to the new advisers between November
2005 and October 2006 by Mr. Erling Kvadsheim, Project Coordinator, by NPD Personnel
staff and other support staff.
6.2
Recruitment
The recruitment firm Hartmark Consulting was engaged in 2005 to identify the necessary
candidates for four of the new advisers and the new project manager. The work was finalised
in January 2006.
6.3
Geological Adviser to DNPG
Ms. Rosalind Waddams is engaged as Geological Adviser. She started her assignment in
March 2006. In addition to acting as geological adviser and mentor for Timor-Leste staff, her
main tasks have included providing geological expertise and experience for the offshore
acreage release, the planned onshore round and establishment of a national database for the
petroleum sector. She has been responsible for the training and knowledge transfer in the
geosciences in DNPG, although this work has been significantly hampered by the unrest since
May and the subsequent lack of staff to train. The fact that many of the DNPG geology staff
are out of the country for education purposes has made direct knowledge transfer a challenge.
Ms. Waddams has ensured that DNPG has handled geological issues in a professional
manner.
The work carried out in 2006 includes all the tasks above. In particular:
Leading a technical team to evaluate bids for offshore contracts submitted in the
offshore acreage release
Initiating use of interpretation software to review seismic data
Negotiation of the work programmes in the production sharing contracts
Leading discussions on onshore round strategy and timing
Establishing a national database for the petroleum sector, in coordination with staff at
TSDA
Cooperation with academic institutions, notably the University of Western Australia,
to build Timor-Leste’s geological database and promote education
Input in discussions with petroleum companies on Timor-Leste Content, focusing on
tertiary education and establishment of data and core store
Preparation of a proposal for the establishment of a geological department with a
laboratory, classrooms and a core store at the National University of Timor-Leste,
Hera
Preparation of geological materials and presentations, together with local staff, for
conferences.
6.4
Legal Adviser to DNPG
Ms. Anne-Lene Midseim is engaged as Legal Adviser to DNPG. She started her assignment
in March 2006. Her work has included:
Significant input to the work with establishing the production sharing contracts, such
as drafting of contracts, negotiating and reviewing PSCs with the contractors,
coordinating advice from external advisers, managing translation and document issues
and signing ceremony
Liaising with and advising other units in the Timorese administration
Assisting in preparation of the validation process for Timor-Leste for implementation
of the EITI principles.
Drafting of rules and regulations, including the Local Content Policy and Guideline
Anti-corruption lecture to staff of MNRMEP and focus on good governance and
transparency issues
Supporting the Director in DNPG in the various daily legal tasks
Acting as adviser to the MNRMEP on an ad hoc basis on various energy issues.
She has contributed extensively to the cooperation between the various public sector units.
DNPG has not yet employed local legal staff, and Ms. Midseim has therefore had limited
possibility to transfer specific legal knowledge or do extensive training in legal aspects. Her
role has thus been primarily as legal expert and less as a trainer.
6.5
Based on a request from the Banking and Payments Authority (BPA) to the Embassy Mr.
Samuel V. Robinson was engaged as adviser to BPA to carry out tasks in connection with the
handling of the petroleum fund and related issues. His work has included
Implementation of the communication systems through SWIFT (Society for World
Interbank Financial Telecommunication)
Preparation of financial statements for the petroleum fund annual report
Facilitation of strategic planning sessions
Preparation of internal audit manuals
Other assistance to BPA on an ad hoc basis
Mr. Robinson’s assignment was carried out in early 2006 and during four months in the
second half of 2006. His assignment is now finished.
6.6
Mr. Sigurd Klakeg is engaged as adviser to the Macroeconomic and Tax Policy Unit (MTPU)
in the MoPF. His work has included:
Petroleum Fund: The guidelines for the management of the Petroleum Fund were adopted in
2005. 2006 has been a year of consolidation and capacity building in BPA. Mr. Klakeg has
encouraged a change in the investment policy to exploit the investment universe of the
Petroleum Fund Law. Formally this issue has been discussed in the meetings of the
Investment Advisery Board, where he is a member, since April 2006. With a steadily growing
Petroleum Fund, currently more than 1 billion USD, there is an increasing opportunity loss in
the current investment policy. The unrest in 2006 and low capacity in BPA has slowed this
process. It should be considered to outsource the management of a larger part or whole of the
Petroleum Fund.
Fiscal Policy: The Petroleum Fund Law defines the fiscal policy rule, and the calculation of
Sustainable Income (SI) is key in the budget process. Mr. Klakeg has developed a new
methodology for calculating SI. This is the basis for the 2006/07 and later budget rounds.
Budget processes have generally been demanding. There is room for a change in fiscal policy,
but it has been a challenge to get a good decision-making process. Eventually, an IMF
mission has arrived to discuss and propose a change in the tax system with a view to reduce
distortions and the overall tax burden.
Other:
Analyzed and prepared a document to the Minister on price hedging of petroleum
revenue. The decision seems to be deferred until after the election.
Participated in the process of engaging an internationally recognized audit company to
be appointed independent auditor of the Petroleum Fund.
Participated in the preparation of a one week seminar for civil society and members of
Parliament that was arranged in November, after having been postponed several times
during 2006.
TL will subscribe to EITI. Mr. Klakeg has participated in the preparation of a
validation process that will start shortly.
As the only international adviser in the Macroeconomic and Tax Policy Unit (MTPU)
Mr. Klakeg has been involved in all aspects of economic policy, but has focused on
issues related to the petroleum sector.
Has followed up on a number of issues in relation to petroleum revenue that only
indirectly have been related to the ToR of the position and the responsibility of the
MTPU. This includes establishing regular meetings between TSDA and MOPF to
discuss, i.a., audit, prices etc.
6.7
Mr. Tørres Trovik is engaged as Petroleum Fund Investment Adviser to MoPF. His work
includes attending the meetings in the Investment Advisery Board which are being held in
Dili ca 4 times per year. He attended two meetings in 2006. His tasks include advising the
authorities on implementation of the Petroleum Fund Act and the Management Agreement,
advising the authorities on the operation of the Investment Advisery Board (IAB) and
advising the authorities on issues related to the operational management of the Petroleum
Fund being carried out by the Banking and Payments Authority (BPA), including assisting in
any assessment of the strategic asset allocation of the Fund.
This arrangement has proven to be much more cost efficient than the initial plans. The reason
for this is that Mr. Trovik, who works for the Central Bank of Norway, is engaged on a parttime basis by NPD and his paid per hour worked. His work load is less than initially budgeted
for, and the cost is thus lower than planned. His engagement will be extended for one year,
well within the original budget.
6.8
Mr. Håvard Holterud is engaged as petroleum Taxation Adviser in the Petroleum Tax
Division, Ministry of Planning and Finance. His work has included:
He has carried out accounting training for staff in the Petroleum Tax Division, focusing on
profit and loss accounting and balance sheets, simple finance theory, analysis of tax risk for
sub-contractors, spread sheet analysis etc.
Mr. Holterud has supported the Division in identifying and carrying out a transfer pricing case
towards a rig company, the benefit to Timor-Leste is an increased tax income of 5.7 mill
USD, in addition to several cases regarding withholding tax. Currently an audit of the farm in
of the LNG buyers into the Bayu-Undan field is conducted and an investigation to find out
why the Bayu-Undan LNG contract still is sold at a level of USD 28 per barrel. The work
involves a cooperation with MoPF Macroeconomic and Tax Policy Unit and the TSDA.
Mr. Holterud has assisted the staff in the Division in comparing available information and
thus identifying differences in the reporting that required follow-up. This has proved to be a
challenging task for the Division and the adviser has carried out a large part of this work. The
work has included obtaining data from TSDA (PSC returns), analyzing the differences and
raising the issues with the oil companies.
A process (and plan) for collection, analysis and preparation of reports from the companies as
a basis for tax audits have been started. A continuously updated file on each oil company has
been created. This has been done with focus on the training (even self-tuition) of staff, and
also in order to reduce the Division’s vulnerability against loss of staff and competence.
In addition, Mr. Holterud has worked on several day-to-day issues in the Division, like tax
payer inquiries, review of the tax model used for planning purposes, review of the additional
tax model, budget proposals for the World Bank, contact with Australian authorities, a new
organizational model for the Division, evaluation of the external auditor for the Petroleum
Fund etc.
6.9
This includes extra insurance costs in connection with the civil unrest since May.
7.
Assessment
7.1
Activities
2006. The country has been strongly affected by the civil unrest since May 2006, and the
development of the MNRMEP, the activities in the MoPF and other units has been delayed.
The work in DNPG (former EMRD, later OGED) has continued on the path towards the daily
operation of a petroleum business. The exposure to and cooperation with international
petroleum industry is gaining momentum, and OGED and other relevant public sector units
are managing this task with increasing confidence, although low staffing levels and vacancies
due to education programmes are limiting factors. The process is in a good direction towards
the Project goal of creating an administration that can operate largely independent of advisers,
but there is still a significant way to go.
One of the most significant achievements is the implementation and completion of the first
offshore bidding round in free Timor-Leste. DNPG and the advisers have played a pivotal role
in achieving this. It has given DNPG and the Timorese authorities at large significant
experience with this process, and it is expected that the next bidding round can be performed
with less guidance and leadership from advisers. The bidding round has increased DNPG’s
experience with a large number of administrative tasks, technical tasks and has given broad
exposure to the international industry. The understanding is growing in DNPG and other units
of the petroleum administration of how the international petroleum business works, and what
is required in terms of professional working relations with the industry.
This experience has been fundamental in the preparation of an onshore bidding round.
The establishment of the Lafaek database is a significant step forward in the ability for DNPG
to handle the administration of the petroleum sector. It is also a good tool for better
cooperation between DNPG and other units in the petroleum administration, notably TSDA.
The continued intensive English education of the staff in DNPG and other ex-EMRD staff has
proven to be successful. The level of English in the office is increasing. Staff meetings can be
conducted in English without translation, and several of the staff feels confident in taking part
in discussions with English speaking counterparts. The civil unrest since May has reduced the
attendance in the internal English and office administration classes, but it is believed that
when the situation comes back to normal the attendance can be brought back to previous
levels.
The university programmes have been operational for over one year. Six candidates for
degree programmes in Norway and Australia have been selected (two DNPG and four
external candidates). For the second time ca 50 Timorese students in Indonesia have received
minor financial support. The third student completed the Petrad 8-week programme in
Norway in 2006.
Good governance issues have been addressed in a series of ways, all contributing to a well
functioning and reliable administration. The transparent process and the objectivity of the
offshore bidding round has been very positively commented by both the industry and others.
It has also included setting of high standards of transparency and objectivity in the selection
of degree and small grant candidates, as well as addressing administrative issues related to
timeliness and general office conduct.
The Macroeconomic and Tax Policy Unit in the MoPF is very short of staff and totally
dependent on international advice. The objectives for 2006 have to a reasonable degree been
achieved, but because of the low number of staff and the unrest since May it has proven very
difficult to transfer knowledge, and the results are not as good as desired. It is highly
recommended by the advisers that the planned staff increase is implemented.
The Petroleum Tax Division in the MoPF has two permanent and four temporary staff. The
planned activities has in general been met, but it is challenging to give the temporary staff
tasks that fit the competence level and also give sufficient learning and experience. It has not
been possible to increase the number of staff, although it has been planned for a long time.
The Division is very vulnerable for loss of staff and competence. This will increase as the oil
industry establishes itself in Dili. It is necessary to increase the awareness in the Division of
how the petroleum business works in order to carry out efficient tax audits. In total, the
Division is still totally dependent on foreign advisers to carry out its tasks.
7.2
Use of inputs
and contractors have been followed. Procedures for handling of local purchases and
education/training expenses paid out of Dili have been established. The details of the accounts
are shown in Appendices 1 and 2 of this report.
7.3
Regarding this Project there are in general good working relationships within DNPG, between
DNPG and other units in the petroleum administration and between the Ministries and NPD
and other Norwegian authorities.
It has been brought forward by NPD, that there is still insufficient coordination of some of the
support initiatives that include consultants and advisers within the petroleum sector. In order
to maximise the overall benefit from these support activities and to avoid duplication of
efforts or conflicting advice, there is an increasing need for good coordination, also from the
donor’s part.
It is a general problem in the Timor-Leste petroleum administration that the staffing level is
low compared to the activity level. This is particularly the case in the MoPF. This results in a
situation where the advisers feel that they are unable to transfer sufficient knowledge to their
Timorese counterparts, and that a large part of their task is working as specialists and not as
trainers.
The unrest since May has affected the Project by reducing the activity in the Timor-Leste
administration and causing delays or cancellation of Project activities.
8.
The work plan and budget for 2007 were prepared by the Steering Committee at its meeting
on 16 October 2006 in Oslo.
Although a possible extension of the project with an associated increase in activity levels also
in 2007-2008 is being discussed, the budget is prepared within the current grant of NOK 44.5
mill and assuming a project finalisation in 2008. The budget as prepared by the SC is shown
in Table 5.
Based on the expressed desire from the Embassy and Norad to simplify the budgeting and
reporting for this Project, the budget has been re-drawn as one budget, not distinguishing
between the original grant and the additional grant. This also includes the pending payments
for expenses in 2006 that is not included in the Project cost overview for 2006. This is shown
in Table 6, and is proposed as the official budget for 2007.
The overall cost savings relative to the budget in 2006 is in the order of 2 mill NOK. It is
suggested to use these funds to adjust the budget proposed by the SC in the following way:
Based on a request from the MoPF to replace the current adviser in the
Macroeconomic and Tax Policy Unit, whose assignment finishes in January 2007, it is
proposed to include the cost of a replacement adviser in the 2007 budget. The cost is
estimated at NOK 1.5 mill.
Because of an unforeseen termination of the support to DNPG by Australian
Volunteers International (AVI), it is further proposed that the Project takes on the
responsibility for the funding of a Training and Governance adviser for one year in
order to continue and complete the work done by the previous AVI adviser. The cost
is estimated at NOK 350 000.
MoPF has requested that the part-time Investment Adviser continues his assignment
for the whole of 2007. This is estimated to include two more visits to Dili than initially
planned. The budget has thus been increased by NOK 150 000 relative to the budget
proposed by the SC.
It has been identified that in order to better meet the objectives of the Project and to finalise
the Project in a more optimal way in 2008, an additional grant of ca NOK 5 mill will be
required. It has been indicated by the Embassy and by Norad that this could be achievable.
The Steering Committee at its meeting on 16 October in Oslo decided to have this as a
contingent budget. This budget based on a possible extra grant is discussed in Section 9 of this
report.
Table 5
The budgets for 2007 – as proposed by the Steering Committee, 16 October 2006.
Cost
(NOK)
Cost
(USD)
6.50 NOK/$
Project Manager (White + Ytreland)
Project Implementer
Training and governance adviser
Travel assistance
Miscellaneous
1 750 000
480 000
0
300 000
1 800 000
100 000
0
300 000
500 000
0
100 000
5 330 000
269 000
74 000
0
46 000
277 000
15 000
0
46 000
77 000
0
15 000
819 000
NPD project administration (New advisers)
Recruitment
Geological Adviser
Legal Adviser
Petroleum Fund Adviser BPA (Interim)
Petroleum Fund Investment Adviser to MoPF (Part-time)
150 000
0
1 000 000
1 000 000
0
23 000
0
154 000
154 000
0
150 000
150 000
425 000
100 000
2 975 000
23 000
23 000
65 000
15 000
457 000
8 305 000
1 276 000
Category
Total (New advisers)
Total
Table 6
The final budget for 2007 – both donations combined and adjusted for unpaid 2006 expenses and two extra advisers
Category
Project Manager
Project Implementer
Training and governance adviser 1)
Geological Adviser
Legal Adviser
(Part-time) 1)
Petroleum Fund Adviser to MoPF 1)
Travel assistance
Recruitment
Total
1)
Adjusted budget
(NOK)
Adjusted budget
(USD)
6.50 NOK/USD
1 750 000
480 000
0
1 000 000
1 000 000
0
150 000
2 035 000
560 000
350 000
1 435 000
1 476 000
557 000
450 000
313 000
86 000
54 000
221 000
228 000
86 000
69 000
150 000
425 000
300 000
1 800 000
100 000
0
300 000
650 000
0
0
200 000
8 305 000
1 650 000
954 000
300 000
1 800 000
100 000
0
600 000
800 000
0
0
200 000
13 267 000
254 000
147 000
46 000
277 000
15 000
0
92 000
124 000
0
0
31 000
2 156 000
Combined budget
(see table 5)
Additional to the budget prepared by the SC in October 2006
8.1
Project Manager
This represents a one year extension of the contract with the current project manager, Mr.
Roger White, including ca NOK 285 000 incurred in 2006.
8.2
Project Implementer
This is the continuation of the current contract with Mr. Carlos A. Soares. It includes the
consultancy fee for November and December 2006.
8.3
Training and Governance Adviser
Because of an unforeseen termination of the support to DNPG by Australian Volunteers
International (AVI), it is proposed that the Project takes on the responsibility for the funding
of a Training and Governance adviser for one year in order to continue and complete the work
done by the previous AVI adviser.
8.4
Geological Adviser
This represents the cost until year-end of a geological adviser to DNPG.
8.5
Legal Adviser
This represents the cost until year-end of a legal adviser to DNPG.
8.7
This assignment was finished in December 2006. The budget item represents costs incurred in
2006 but not yet invoiced.
8.8
This represents the cost of four visits to Dili for the current Investment Adviser, Mr. Tørres
Trovik, in addition to the costs incurred in 2006 but not yet invoiced.
8.9
The assignment of the adviser to the Macroeconomic and Tax Policy Unit in MoPF, Mr.
Sigurd Klakeg, finishes in January 2007. This budget item includes the final costs for this
assignment. Based on a request from the MoPF to continue this advisory position it is
proposed to include the cost of a replacement adviser in the 2007 budget. The cost is
estimated at NOK 1.5 mill.
8.9
The current assignment of the adviser, Mr. Håvard Holterud, finishes by end of March 2007.
This budget item includes the costs of that assignment with the addition of costs incurred in
2006 but not yet invoiced.
8.10 Advisers’ travel expenses
meetings, conferences, consultations with NPD etc.
8.11 HRD programme
The 2007 HRD budget includes:
English training and general workplace training in Timor-Leste
Payment for five to six selected degree students overseas
One staff for Petrad 8-weeks course in Norway
Internships and temporary replacements
Small-grants project
8.12 Data management
This includes miscellaneous purchases and upgrades of existing computer equipment,
communication equipment and software. The likely merger of TSDA and DNPG in 2007 will
determine the need for these upgrades, and a specific work program for data management will
be drafted when this merger has been decided.
8.13 Office equipment
Purchase of new office equipment is not included in the base case budget.
8.14 Technical assistance and workshops
The program of workshops and on-site assistance in 2006 was severely affected by the unrest
since May. Some of the activities under this budget item are thus items that were planned for
in 2006. In addition, the likely merger of TSDA and DNPG in 2007 will determine the need
for future technical assistance. The current plans include:
Database follow-up workshop. The purpose is to continue the development of the
Lafaek database. In addition the need for a document handling system will be
reviewed and recommendations made.
Code of conduct recommendation and training. This includes cost of a consultant to
finalise the work with a recommended code of conduct for DNPG, and the work with
implementing the recommendations through training and on-the-job follow-up.
This includes NPD project coordination and administration. It includes approximately 600 hrs
of administration in Norway, three to four visits to Timor-Leste by NPD Project Coordinator
and one visit by NPD Director or designate for SC meeting.
This is a general budget for minor travel expenses for local staff in connection with meetings,
conferences etc. The requirement for this budget item has proven to be smaller than initially
thought, and this activity is not included in the base case budget.
8.17 Miscellaneous
This includes various minor costs, courier service etc.
9.
The contingent budget
It has been identified that in order to better meet the objectives of the Project and to finalise
the Project in a more optimal way in 2008, an additional grant of ca NOK 5 mill will be
required. It has been indicated by the Embassy and by Norad that this could be achievable.
The Steering Committee at its meeting on 16 October in Oslo decided to have this as a
contingent budget. This budget based on a possible extra grant is shown in Table 7.
Extra funding is necessary primarily because DNPG needs more support that initially
estimated, due both to a lower skill level and capacity than the initial mapping showed and to
a higher activity level than expected. There is a need for an external project manager all
through the Project. The planning and implementation of the onshore exploration will require
that the geological adviser position is extended, as well as the legal adviser. The travel budget
and data management budget is increased accordingly. There is also room for two more
workshops, one in reserves and resource reporting and accounting and one in general resource
management issues. The NPD management budget is increase somewhat, as well as the
miscellaneous and contingency budget.
This budget implies that the Project will have spent the entire grant of NOK 44.5 mill by the
end of 2007, and an additional grant of NOK 5 mill will be required in 2008.
This is not taking into account a possible extension of the Project beyond 2008, in which case
a new, revised budget must be made, also for the years 2007 and 2008.
Table 7
The contingent budget for 2007 – adjusted for unpaid 2006 expenses and assuming an additional grant of NOK 5 mill in 2008
Category
Contingent budget
(NOK)
Contingent budget
(USD)
6.50 NOK/USD
Project Manager
Project Implementer
Geological Adviser
Legal Adviser
Petroleum Fund Adviser BPA (interim)
Travel assistance
Recruitment
Total
2 035 000
560 000
350 000
1 935 000
1 976 000
557 000
299 000
150 000
954 000
500 000
1 800 000
200 000
50 000
1 200 000
900 000
20 000
50 000
300 000
13 836 000
314 000
86 000
54 000
298 000
304 000
86 000
46 000
23 077
147 000
77 000
280 000
31 000
7 000
185 000
138 000
3 000
7 000
46 000
2 132 077
10.
Total budget provision
Table 8a
Total budget provisions per year (NOK)
Year
Assist UNDP
assistance
Petroleum Advisors
Project Manager
Local implementor
advisor
Geological Advisor
Legal Advisor
(Interim)
MoPF
to MoPF
education needs
Data Management
Misc. Equipment
workshops
Travel assistance
Recruitment
Miscellaneous and
contingency
Total
2002
- 2003
71
97
2003
12
212
88
713
2005
2006
2007
2008
Sum
71
97
77
468
2004
451
746
1463
335
1224
407
1 659
420
2035
560
222
625
63
865
924
350
1435
1476
1260
2300
2400
227
593
557
1377
76
450
526
1615
1650
3265
250
471
222
954
300
1425
772
1730
365
1512
571
1800
100
2800
1655
544
5
242
382
832
600
800
300
300
5471
3946
5
963
98
459
307
46
140
379
2 534
623
480
721
528
746
6393
2414
547
8149
1082
238
3
-6
-2
21
200
309
525
792
7320
7272
10947
13267
4189
44500
Table 8b
Total budget provisions per year (USD)
Year
Assist UNDP
assistance
Petroleum Advisors
Project Manager
Local implementor
advisor
Geological Advisor
Legal Advisor
(Interim)
MoPF
to MoPF
education needs
Data Management
Misc. Equipment
workshops
Travel assistance
Recruitment
Miscellaneous and
contingency
Total
2002
- 2003
11
15
2003
2
33
110
2005
2006
2007
2008
Sum
11
15
12
72
2004
69
115
225
52
188
63
255
65
313
86
34
96
10
133
142
54
221
227
194
354
369
35
91
86
212
12
69
81
248
254
502
38
72
34
147
46
219
119
266
56
233
88
277
15
431
255
84
1
37
59
128
92
123
46
46
842
607
1
148
-1
0
3
31
48
81
1126
1119
1684
2041
644
6846
14
0
0
15
71
47
7
22
0
58
390
96
122
74
111
81
115
984
371
84
1254
166
37
11.
Appendices
Appendix 1: Account of local expenditures, including data hardware and software
Appendix 2: Account of local HRD expenditures
Appendix 1
Table 6
The final budget for 2007 – both donations combined and adjusted for unpaid 2006 expenses and extra advisers
Combined budget
(see table 5)
Category
Project Manager
Project Implementer
Training and governance adviser 1)
Geological Adviser
Legal Adviser
(Part-time) 1)
Petroleum Fund Adviser to MoPF 1)
Petroleum Taxation Adviser to MoPF 1)
Travel assistance
Recruitment
Total
1)
Adjusted budget
(NOK)
Adjusted budget
(USD)
6.50 NOK/USD
1 750 000
480 000
0
1 000 000
1 000 000
0
150 000
2 035 000
560 000
350 000
1 435 000
1 476 000
557 000
450 000
313 000
86 000
54 000
221 000
228 000
86 000
69 000
150 000
425 000
300 000
1 800 000
100 000
0
300 000
650 000
0
0
200 000
8 305 000
1 650 000
1 954 000
300 000
1 800 000
100 000
0
600 000
800 000
0
0
200 000
14 267 000
254 000
301 000
46 000
277 000
15 000
0
92 000
124 000
0
0
31 000
2 310 000
Additional to the budget prepared by the SC in October 2006
Table 8a
Total budget provisions per year (1000 NOK)
Year
2002
- 2003
2003
2004
2005
2006
2007
2008
Sum
Assist UNDP
71
71
97
97
assistance
77
451
Petroleum Advisors
528
746
Project Manager
Local implementor
746
12
1463
1224
1 659
2035
212
335
407
420
560
222
625
advisor
6393
480
2414
63
350
1260
Geological Advisor
865
1435
2300
Legal Advisor
924
1476
2400
593
557
1377
76
450
526
1615
1650
3265
(Interim)
227
MoPF
to MoPF
471
1954
250
222
300
307
1730
1512
1800
46
365
571
100
education needs
88
Data Management
Misc. Equipment
98
workshops
468
379
2925
772
459
547
1300
6649
1082
140
238
2 534
1655
382
600
300
5471
623
544
832
800
300
3946
Travel assistance
5
Recruitment
242
Miscellaneous and
contingency
Total
500
713
5
721
963
3
-6
-2
21
200
309
525
792
7320
7272
10947
14267
3189
44500
* This amount was reduced from NOK 2 800 000 to 1 300 000 in order to accommodate the
cost of one extra year of the petroleum tax adviser in MoPF. This will be adjusted for in a
revised budget when the decision has been made to either extend the project or to add an extra
grant in order to finish in 2008 according to the original plan
Table 8b
Total budget provisions per year (1000 USD)
Year
2002
- 2003
2003
2004
2005
2006
2007
2008
Sum
Assist UNDP
11
11
15
15
assistance
12
Petroleum Advisors
Project Manager
Local implementor
69
81
115
115
2
225
188
255
313
33
52
63
65
86
34
96
advisor
984
74
371
10
54
194
Geological Advisor
133
221
354
Legal Advisor
142
227
369
(Interim)
91
86
212
35
12
69
81
MoPF
248
254
502
to MoPF
72
301
38
34
46
education needs
14
71
0
47
266
233
277
56
88
15
77
450
119
84
200*
1023
Data Management
0
7
Misc. Equipment
15
22
0
390
255
59
92
46
842
58
96
84
128
123
46
607
workshops
72
Travel assistance
37
1
Recruitment
Miscellaneous and
contingency
Total
166
110
122
1
37
111
-1
0
3
31
48
81
1126
1119
1684
2195
491
6846
148
* This amount was reduced from USD 431 000 to 200 000 in order to accommodate the cost
of one extra year of the petroleum tax adviser in MoPF. This will be adjusted for in a revised
budget when the decision has been made to either extend the project or to add an extra grant
in order to finish in 2008 according to the original plan
Appendix 7.
for the cooperation between the Timor-Leste and Norway regarding the
Project:
Assistance in developing the management of the petroleum sector in TimorLeste
1.
Project Name
2.
Implementing institution in Timor-Leste was the Ministry of Planning and Finance (until last
Annual Meeting), and is now The Secretariat of State for Natural Resources.
The work was carried out through an institutional cooperation between the Ministry of
Natural Resources, Minerals and Energy Policy (now the Secretariat of State for Natural
Resources) and the Norwegian Petroleum Directorate (NPD).
National Directorate for Oil and Gas (DNPG) and the NPD.
3.
Project Design
3.1
Goal
advisers.
3.2
Objective
The project is due to end by 10th September 2008, unless it is extended before then.
3.3 Outputs1
administration
4.
Use of inputs
4.1
Financial input
The initial grant from NORAD was NOK 30 million (ca USD 4.6 million). The timeframe is
2003 to 2008.
It was agreed to include new advisers in DNPG and in the Ministry of Planning and Finance
(MoPF) in the Project at a cost of NOK 13.9 million. At the request of Norad, the cost of a
quality control survey of the marine baseline, carried out by the Norwegian Mapping
Authority, has also been included in the project expenses.
The total additional grant is NOK 14.5 million. The total grant thus increased to NOK 44.5
million. Table 1 shows the overall project cost breakdown.
Timor-Leste. This should be organised under the umbrella of the current cooperation between
Norway and Timor-Leste in the petroleum sector which is administered by NPD. This
arrangement continued though 2007
Table 1
1
NOK
USD
(5.50 NOK/USD)
44 500 000
8 090 909
Expenses 2002-2003
Expenses 2004
Expenses 2005
Expenses 2006
Expenses 2007
1 609 247
7 318 335
7 272 070
10 947 355
13 916 891
292 590
1 330 606
1 322 195
1 990 428
2 530 344
Total, 2002-2007
41 063 897
7 466 163
Remaining grant
3 436 103
624 746
4.2
Input in kind
The MNRMEP (and later SoSNR) provided office facilities for advisers, consultants,
seminars and workshops and necessary logistic support during the different missions,
meetings and workshops.
NPD Stavanger provided office facilities for the data management workshop held in
September.
4.3
Budget for 2007
A budget for 2007 was presented to the Annual Meeting in February 2007 (Table 2).
Due to the security situation prior to the elections two of the consultants renegotiated their
contracts with NPD. The Project Implementer’s consultancy fee was increased to NOK
740 000 per year and the Workplace Skills and Human Resource Advisor’s fee was agreed at
a higher level than initially budgeted, NOK 450 000 per year.
Unfortunately there has not been any meeting of the Steering Committee during 2007 at
which the budget could be updated or revised. The increased cost of the two advisers, and
suggested increases in travel budgets and general security measures have thus not been
formally discussed by the Steering Committee.
Table 2
The budget for 2007
Category
(NOK)
Approx. budget in
USD
(5.5 NOK/USD)
Project Manager
2 035 000
370 000
Project Implementer
560 000
101 818
Approved budget
1)
350 000
63 636
Geological Adviser
1 435 000
260 909
Legal Adviser
1 476 000
268 364
557 000
101 273
450 000
81 818
1 650 000
300 000
1 954 000
355 273
300 000
54 545
1 800 000
327 273
100 000
18 182
0
0
600 000
109 091
800 000
145 455
Travel assistance
0
0
Recruitment
0
0
200 000
36 364
Total
14 267 000
2 594 000
1)
Title has been changed to Workplace Skills and Human
Resource Adviser
4.4
Project accounts
Project. Project funds are then transferred from Embassy to NPD based on invoices of actual
costs.
These accounts include the costs included in invoices sent to the Embassy for payment in the
calendar year 2007. The invoiced amounts are shown in Table 4
Table 4
NPD invoice no.
Amount (NOK)
33070059
33070058
33070057
30070253
33070094
33070145
3 789 636.06
1 713 217.85
1 717 780.35
3 787 616.06
1 404 482.63
1 504 158.15
Sum
13 916 891.10
The invoices are approved by the DNPG. Table 5 shows the NPD cost overview for the
cooperation in 2007.
Table 5
Project costs, 2007
Item
Category
Cost (NOK)
Total cost (NOK)
Budget
(as of January 2007)
Project Manager and Petroleum Adviser (R.
White)
Consultancy fee and regular travel
1 945 327.56
1 945 327.56
2 035 000
Project Implementer (C. A. Soares)
671 000.11
671 000.11
560 000
Workplace Skills and Human Resource
Adviser (R. A. Denham)
324 488.00
324 488.00
350 000
Geological Adviser (P. R. Waddams)
Salary, moving costs, housing etc.
1 082 159.36
1 082 159.36
1 435 000
Legal Adviser (A. L. Midseim)
1 381 771.98
1 381 771.98
1 476 000
Petroleum Fund Adviser to BPA (S. V.
Robinson)
444 205.90
444 205.90
557 000
(part-time) (T. Trovik)
Salary and travel expenses
189 988.00
189 988.00
450 000
Salary, moving costs, housing etc. (S. Klakeg)
Salary, moving costs, housing etc. (V. Ovesen)
848 429.93
838 141.44
1 686 634.37
1 650 000
Petroleum Taxation Adviser to MoPF (H.
Holterud)
2 032 355.05
2 032 355.05
1 954 000
Expenses
1 293 093.75
1 293 093.75
1 800 000
Equipment and local expenses
Misc. local expenses
Project car
280 127.00
74 750.00
354 877.00
100 000
194 714.04
28 137.34
911 542.07
600 000
781 830.00
358 655.13
28 928.43
1 169 413.56
800 000
430 034.39
200 000
300 000
13 916 891.10
14 267 000
NPD tech. assistance (582 hours worked)
NPD travel
Consultants
Database workshop in Norway, travel and living
expenses
Miscellaneous
Adm. and assistance (1071 hours worked)
Travel
Miscellaneous
Miscellanous and contingency
Travel assistance
Recruitment, new legal adviser
Recruitment, new geology adviser
Contingency
424 860.00
69 398.94
194 431.75
60 710.59
43 018.00
43 317.68
282 988.12
Total 2007
5.
Progress of implementation - Advisors
This is the fifth Annual Report to the Embassy regarding the project. It covers the period from
January to December 2007.
The progress of the project was significantly influenced by periods of civil unrest and also by
the presidential and parliamentary elections held during 2007, which affected the Petroleum
Administration activities, and also the provision of advisors – 2 of whom were not replaced
due initially to security fears, and later to workload factors.
The presidential elections in April resulted in the appointment of Jose Ramos Horta and led
smoothly on to the Parliamentary elections on 30th June. However, appointment of a
Government did not take place until 9th August.
During the pre-election period and until the appointment of the new government there was a
period when administration matters lacked direction and clear policy.
Plans for reorganisation of the petroleum sector were unveiled by MNRMEP early in 2007,
but after considerable debate these plans were shelved pending appointment of the new
government. To date no alternative plans have been revealed, although there is strong
commitment to implement a new Petroleum Sector organisation. Detail work to change the
organisation has been on hold since June 2007. The deadline for reorganisation to take place
was recently extended to June 2008.
Two advisors left the project – geologist Rosalind Waddams left in early May and legal
advisor Anne-Lene Midseim left in early June. Although recruitment efforts took place for
both positions and suitable replacement candidates were found, the positions were not filled
due firstly to unsettled local work and security situation post elections, and later pending
confirmation of long-term needs for these positions (beyond Project completion date of
8/2008).
Rebecca Denham was taken on as workplace skills and human resource advisor in March,
confirming the role she had been taking on a temporary basis. She has a one year contract.
Proposals for extension of the Project made some progress – following the Annual meeting on
February 1st, Norad held a mid-term review in late April, followed by a workshop on
extension on 2-4th May which led to a letter from MNRMEP on 18th June requesting
extension of the project. However this was in the midst of the election process and not
considered binding on the new Government.
By September, guidelines on future project budget constraints were received from Norway,
and on 14-19th October a workshop prepared a revised proposal for project extension which
was submitted to the new Secretary of State for Natural Resources for comment and approval.
The proposal was not accepted by SoSNR – money contributions for scholarships and
consultants were requested in place of provision of advisors. Environmental assistance was
requested to be postponed pending clarification of responsibility for petroleum related
environment matters.
In November it was agreed between the embassy and SoSNR that the project would cover
supply of petroleum advisors only (as before) but that a special team from Norad
(representing Norway’s “Oil for Development” initiative) would mobilise to Dili in January to
discuss scholarships and environmental assistance as well as to review the overall project.
By year end SoSNR had not requested extension of the project, and no progress had been
made on recruiting new advisors to replace those whose contracts expire early in 2008 (the
entire team).
5.1
Adviser and Project Manager (R.White)
Roger White took on the task as project Manager in March 2006. His tasks include acting as
manager for all support to develop DNPG into a well functioning public administration unit
within its field of responsibility. He also acts as adviser and mentor for Timor-Leste staff,
particularly the Director of DNPG, within the areas of petroleum sector administration,
exploration activities, energy issues and related legal and administrative issues.
He performs expert tasks within the same fields as required and contributes to the
development of DNPG including short- and long term capacity building and recruitment
plans. He acts as a resource person and adviser to the Government, the TSDA and other
relevant public sector units on petroleum related issues in general.
The work carried out in 2007 includes all of the above tasks. In particular:
Support to administration and management of the production sharing contracts in the
Timor Sea, which were signed in November 2006.
Capacity development plan for DNPG, a short-term plan to prepare DNPG to
participate in a revised organisation design for the petroleum sector
Preparations of guidelines for Timor-Leste Content plans (part of the PSCs)
Coordination of external downstream proposals with internal upstream requirements
Preparation of Sunrise Field pipeline and LNG plant plans (required by the Minister,
but later changed by the new Secretary of State)
Plans for possible extension of this Project
Function as Alternate Commissioner for the Timor Sea Designated Authority
Investigation of possible landing sites for pipeline and terminal/supply base sites
support to DNPG staff representing the Timorese authorities externally
assistance to EITI working group in development of work plans
General project management and liaison with other advisers in the financial sector
A special task carried out for MNRMEP during February was to head a team which
investigated suspected sabotage and fuel contamination at the Dili Power Plant.
5.2
Project Implementer (C. Soares)
by the Project on a consultancy contract. This has proven a very useful arrangement for the
The Project Implementer’s tasks have included
assistance in the organisation and day-to-day running of the project
main responsibility for IT and database issues in DNPG and in the project
support regarding the use of Timor-Leste Content (part of the PSCs)
organising of workshops and travel and translation,
day-to-day assistance to the other advisers and the Project Coordinator
administration of finances, bank accounts and petty cash
5.3
Geological Adviser (R. Waddams)
Ms. Rosalind Waddams was engaged as geological adviser in 2006. She finished her
appointment in May 2007.
Her work included
management of production sharing contracts.
advice on the preparation for onshore exploration, which has lapsed pending policy
statements from the new Government.
proposed reticulation of onshore areas
heading the work to establish a national database for the petroleum sector
establishment and maintenance of technical links with TSDA.
contribution to the discussion about establishing geology facilities at the National
University at Hera - this work has also lapsed pending policy guidelines from the New
Government.
training and knowledge transfer in the geosciences in DNPG, and this work has lapsed
since her departure. Lack of DNPG staff has also made direct knowledge transfer a
challenge.
5.4
Legal Adviser (A-L. Midseim)
Ms. Anne-Lene Midseim was engaged as Legal Adviser to DNPG in 2006. She finished her
assignment in June 2007.
Her work included
significant input to management of the production sharing contracts, including
assignment of interest (farm-outs) of 10% of the Eni contracts to Galp and Kogas.
drafting of rules and regulations
support to the Director of DNPG in daily legal tasks,
advice to the MNRMEP on an ad hoc basis on various energy issues.
She contributed extensively to the cooperation between the various public sector units. DNPG
has not yet employed local legal staff, and it was not possible for Ms. Midseim to transfer
specific legal knowledge or do extensive training in legal aspects.
Her role was thus primarily as legal expert and less as a trainer/adviser.
5.5
Workplace Skills and HR Adviser (R. Denham)
Ms. Rebecca Denham was appointed to this position in March 2007.
Her work has covered:
support to HR officer
administration and support to scholarship students
selection and administration of small grants
staff development programmes, liaison with TSDA, oil companies and NORAD to
provide training courses and seminars
organising and supporting staff in offshore visits, conferences and field trips
support for recent graduates
support and on Local Content and Local Preference matters
5.6
Petroleum Fund Adviser to BPA (T.Iversen)
Terje Iversen was engaged as adviser to BPA in May 2006 to assist in handling the petroleum
fund and its investments. Although employed by IMF, his work was funded by Norway and
was closely related to the overall efforts to ensure sound management of petroleum revenues.
His work included
Internal finance courses twice a week
Education programmes for BPA staff (English, numeracy, finance)
Assistance with BPA quarterly reports - especially the market commentary section
The petroleum fund investment workload has increased dramatically given the rapid increase
in the size of the petroleum fund. The anticipated changes in investment strategy and
operational complexity (new custodians, external managers) will further add to the need for
capacity in BPA.
Terje Iversen’s assignment finished in October 2007, with no request for any replacement, so
the position has lapsed.
5.7
Fiscal Policy and Petroleum Fund Adviser to MoF (S. Klakeg / V. Ovesen)
Mr. Sigurd Klakeg was adviser to the Macroeconomic and Tax Policy Unit (MTPU) in the
MoF until March 2007. He was a member of the Investment Advisory Board of the petroleum
fund until July 2007. Mr. Vidar Ovesen took over the position as adviser and the Board
member as of July 2007.
Major change to the budget system to move to calendar year budgeting from previous midyear to mid-year budgets, caused a very high workload in the second half of 2007.
Fiscal Policy:
The Petroleum Fund Law defines the fiscal policy, and the calculation of Sustainable Income
(SI) is key in the budget process.
The work has included
Calculation of Petroleum Wealth
Calculation (and justification) of Sustainable Income (SI)
Assistance with preparation of transitional budget for 6 months to end 2007, including
withdrawal of $40m from the Petroleum Fund.
Assistance with preparation of 2008 budget within limits of sustainable income
Discussion of fiscal envelope and ability of the economy to absorb expected growth
Public seminar on principles of sustainable income
Petroleum Fund:
Mr. Klakeg encouraged a change in investment policy to exploit the investment universe of
the Petroleum Fund Law. This theme has been taken up strongly by the new Finance Minister,
and has caused a high workload for Vidar Ovesen, who took over the advisor Role in July
2007
Since the Petroleum Fund currently is more than 2 billion USD, there is an increasing
opportunity loss in the current investment policy. A special working group appointed by the
Minister of Finance is currently considering the entire investment strategy, including
proposals to outsource some or all of the fund management (e.g. to World Bank and BIS), as
well as the optimal asset allocation of the fund (in order to include stocks in the portfolio).
The outcome of the work may lead to changes in the Petroleum Fund law as well as the
Operational Management Agreement between the Ministry of Finance and the BPA.
Provision of memos and presentations re investment and management strategy to the
Minister
Discussions with the Minister on the necessity for continued external advice on fiscal
policy – including discussions with the Minister’s personal advisor, Olgario de Castro
Representation on EITI working group as Ministry Observer
Member of working group on new investment strategy, which is preparing a
development plan for the petroleum fund
Participation in discussions re outsourcing of investments to World Bank and BIS
Compilation of the Annual Report of the Petroleum Fund 2006/7
Mr Ovesen has spent most of his time advising the Minister (and her investment adviser
Olgario de Castro) on fiscal policy and petroleum fund issues. Due to the current staffing
macroeconomic and Tax Policy Unit.
5.8
Petroleum Fund Investment Adviser to MoF (T. Trovik, part-time)
Mr. Tørres Trovik is engaged as Petroleum Fund Investment Adviser to MoF, but his
appointment will cease early in 2008 since he is joining IMF and will be ineligible.
His work has included
attending the meetings in the Investment Advisory Board in Dili ca 4 times per yr.
building internal capacity in MoF and BPA through meetings and discussions with
local staff
advising the authorities on implementation of the Petroleum Fund Act and the
Management Agreement,
advising the authorities on the operation of the Investment Advisory Board (IAB)
advising the authorities on issues related to the operational management of the
petroleum fund being carried out by the Banking and Payments Authority (BPA),
assisting in assessment of the strategic asset allocation of the Fund.
Membership of the working group on new investment strategy for the fund.
5.9
Petroleum Taxation Adviser to MoF (H. Holterud)
Mr. Håvard Holterud has been engaged as Petroleum Taxation Adviser in the Petroleum Tax
Division, Ministry of Planning and Finance since April 2006.
His work has included:
Petroleum tax and accounting training for staff in the Petroleum Tax Division,
focusing on profit and loss accounting and balance sheets, simple finance theory,
analysis of tax risk for sub-contractors, spread sheet analysis etc.
training on LNG price calculation and oil price comparisons and benchmarks
writing memos on accounting standards to be applied in Timor-Leste’s different tax
regimes, taxation of capital gains from transfer of PSCs (assignments),
answering principal questions regarding the taxation of permanent establishments and
analysis of tax effects of Bayu Undan redetermination
collection of essential and common oil industry joint venture accounting information
documents, explained and analyzed for counterpart
carrying out desk audits and site audits to identify tax issues
preparing spreadsheets 2004-2007 for petroleum income tax and additional profit tax
to monitor overall tax revenue
assessment of the economic model for Bayu-Undan
spreadsheets to calculate LNG prices and LNG oil equivalent prices according to the
long term Bayu-Undan LNG contract
establishment of staff working groups on exploration, petroleum market and tax
instalments to improve cooperation and encourage staff interaction
follow-up cooperation and regular meetings between TSDA and PTD on current issues
assistance with engagement of LNG consultants by TSDA regarding LNG pricing
discussion of tax interpretation issues with the IMF tax missions
preparation of memos and meetings with Australian Tax Authorities on issues
regarding Timor-Leste’s access to oil companies accounts in Australia.
advising DNPG on petroleum tax related issues
identification of the challenges for PTD on the Greater Sunrise development and
operations regarding petroleum tax
development of a plan for organisation, staffing and capacity building of the
Petroleum Tax Division, to meet the Sunrise challenges - with the aim for PTD to be
capable of operating main functions at a reasonable professional level within 4 years
(in time for Greater Sunrise development)
preparation of a new tax return form for oil companies to improve information and
facilitate the monitoring of tax liability
establishment of the basis for a Timor-Leste “petroleum tax ABC”
Capacity building with counterparts is regarded to be in line with objectives. Capacity
building of general staff in PTD is not as fast as desired and accordingly the achievements are
exposed to risk. This has to some extent been offset by written documentation. To increase the
speed of capacity building and reduce risks, implementation of the proposed plan and
recruitment of Timorese staff with university degrees is essential.
The collection of relevant oil industry accounting documentation and the construction of
spreadsheets has established a basis to facilitate overall monitoring of petroleum tax revenues.
6.
Progress of implementation – Administration and support
6.1
NPD spent 1071 hours on project administration, travel and recruitment in 2007.
The majority was spent by Mr. Erling Kvadsheim, Project Coordinator, and also by several
other NPD technical and support staff, including Director Tormod Slåtsveen, Mr. Øystein
Kristiansen, Ms. Mari Kvaal, Ms. Inger Helene Dahl and Ms. Britha Skjellevik.
The Project coordinator has carried out three planning and follow-up visits in 2007; in
January/February, in May and in October. Ms. Mari Kvaal visited Dili and took part in the
project planning in May. The accounts also include the costs of a visit in September 2006 by
Mr. Kvadsheim and Ms. Britha Skjellevik.
Hours spent by NPD staff on technical assistance in Data Management is reported separately,
below.
6.2
Recruitment
The main recruitment effort in 2007 was the appointment of Vidar Ovesen to the position of
Macroeconomics and investment advisor. This appointment was handled by the Norwegian
Ministry of Finance.
The recruitment of a new geology adviser and a new legal adviser included a trip to Dili for
both selected candidates. The legal candidate since withdrew the application.
The geological adviser has been put on hold until a decision is made regarding project
extension.
6.3
Includes all travel expenses for the advisers apart from relocation costs and cost related to
consultancy visits with NPD in Stavanger. (ref tables 2 and 3).
6.4
See 5.5 above for work carried out by the new Workplace Skills and HR advisor
A separate designated bank account is maintained in Dili for the HR programme.
Approximately 1.3 million NOK was transferred in 2007.
6.5
Equipment and local expenses
This includes various office and computer equipment and some local travel expenses
(including cost of some visitors’ tickets Bali-Dili).
Because of the security situation and because of increased transportation need it was decided
to purchase a project car in 2007.
6.6
Data management
Mr. Kjell-Reidar Knudsen and Mr. Odd Oksvold of NPD have continued the work of building
the Lafaek database and populating it with real data from both the sovereign areas of TimorLeste and from the JPDA.
A major data management workshop was held in Stavanger from 16-27th April with
participants from both DNPG and TSDA
Resource management
Erling Kvadsheim held a Resource Management workshop for DNPG, TSDA and NGO staff
on 16th October in Dili. This was well attended and raised many new issues for future work in
Petroleum administration.
Sunrise development options
Mr. Sverre Lund of Lucon A/S was consulted on various issues related to the pipeline options
for the Sunrise field.
6.7
Miscellaneous
Emergency response plans and procedures were developed for project staff in March 2007 in
response to ongoing security problems. Now that the Embassy Section is located in Dili (as
from September) it will be necessary to create a joint ERP which covers all Norwegians and
project staff in Dili.
Ongoing questions related to insurance (for offshore trips and particularly re automobile
insurance) are still outstanding. The Project reimbursed several staff for damage caused to
vehicles caught up in street violence.
Proposals for sharing administration staff with the Embassy Section are being developed to
help with the increasing numbers of Norwegian visitors, especially the Norad review teams.
Funds from the budget for miscellaneous items were reassigned to other items, notably the
HRD program and the NPD administration on an ad hoc basis.
6.8
Contingency
This includes extra insurance costs in connection with the civil unrest.
7.
Assessment
7.1
Activities
Timor-Leste has been strongly affected by civil unrest since May 2006. Subsequent ongoing
security problems affected the Project throughout 2007.
As noted previously, the presidential and parliamentary elections also led to long periods
where institutional capacity was much reduced due to absence of officials during election
campaigns and unwillingness to make decisions when departments were in caretaker mode.
The appointment of the new Government on 9th August signalled the first opportunity in 2007
to move petroleum administration forward with clear policy and direction.
The work in DNPG (former EMRD, later OGED) has focussed on the daily operation of the
petroleum business. Since award of 6 Production Sharing Contracts (PSCs) in late 2006
DNPG staff are managing the PSCs with increasing confidence, although low staffing levels
and vacancies due to education programmes are limiting factors.
Good progress has been made towards the Project goal of creating an administration that can
operate largely independent of advisers, but there is still a significant way to go.
After the first offshore bidding round in 2006 gave DNPG and the Timorese authorities
significant experience with bidding processes, it was hoped that we would move forward in
2007 with an onshore bidding round which could be performed with less guidance and
leadership from advisers. However all momentum for an onshore round has ceased, and there
are no indications as to when an onshore round is likely.
The establishment of the Lafaek database is a significant step forward in the ability for DNPG
to handle the administration of the petroleum sector. The database is now jointly used by both
DNPG and TSDA, and joint workshops led by NPD Stavanger ensure its continued
development.
Education support
The project has played a significant role in helping to organise and support staff development
and training, although some financial support also came from other sources such as TSDA
and Eni.
Focus in staff development has shifted away from English language and towards more
specific work related training:
Workplace training has included a Certificate in Business Skills course, with resulting
improvements in office practices
Helicopter Underwater Escape Certificate, enabling visits to the seismic vessel Geco
Eagle to observe the survey, and future visits to offshore facilities
ongoing training in database and GIS;
in-house seminars ranging from introductory topics in the petroleum sector to more
advanced economic and technical subjects;
Petrad deepwater seminar in Surabaya, and
a fourth Timorese participant (Amandio Gusmao) attended the Petrad 8 week course in
Petroleum Management.
The scholarship programme has continued, with one post-graduate student in Stavanger, one
undergraduate student at the University of Western Australia (UWA), three students
completing pre-university courses to enter their undergraduate courses at UWA and one
preparing for a certificate in civil engineering in TAFE WA.
Small grants have become wider-ranging, with many more applications than previously. As a
result the selection process has become a little more complicated and rigorous. 53 students
received tuition assistance. Some previous awardees have graduated and have been appointed
to temporary positions in the Secretariat of Natural Resources.
The project arranged a geological field trip with UWA for final year students in geology and
petroleum engineering.
Relations with local universities have further developed, with the placement of a final year
student as an intern in the office, the enrolment of one the team (Chris) in the Dili Institute of
Technology Petroleum Management course. Guest speakers from TSDA and the Project made
presentations to the students at DIT.
The Fiscal Policy and Petroleum Fund Advice Unit in the MoF is still short of local staff
and highly dependent on international advice. This results in the work of the Project Team
being more execution rather than knowledge transfer.
Since the advent of the new Government, the workload has been extremely high, due both to
the need for 2 budget exercises in a 5 month period and the high ambitions of the new Finance
Minister to improve the returns on Petroleum Fund investments.
The Petroleum Tax Division in the MoF is also short of local staff and is very vulnerable to
loss of staff and capacity.
Intensive training efforts are beginning to develop some minor local capacity, but the Division
is still totally dependent on foreign advisers to carry out its tasks. This is fully recognized by
the Minister, but makes the provision of an advisor essential.
The Petroleum Tax Advisor has responsibilities for revenues from JPDA as well as sovereign
areas, and much work has been necessary to try to get cooperation with Australian tax
authorities.
Cooperation with TSDA regarding JPDA tax revenues has progressed well, but there have
been some obstacles when it comes to cooperation with Australian tax authorities.
MoF still has a deficiency of capacity in the area of Petroleum Economics and Commercial
analysis, due to the departure of Alistair Watson (part-time consultant)
The Petroleum Fund Advice to BPA was suspended with the departure of Terje Iversen, but
no capacity had been developed to take over this role – local staff do not have university
degrees or other relevant qualifications and do not yet have capacity to administer the assets.
There now appears to be urgent pressure to reconsider financing an advisor for this position.
7.2
Use of inputs
The financial input has been used efficiently, and procedures for remuneration of NPD staff
and contractors have been followed.
Procedures for handling of local purchases and education/training expenses paid out of Dili
are well established. The details of the accounts are shown in Appendices 1 and 2 .
Inputs in kind (office facilities, utilities and logistics support from SoSNR and NPD) have not
been charged. The inputs in Dili have been consistently of low quality in the last year, due to
problems with utilities – particularly electricity supplies and internet access. This has at times
severely hampered the efficiency of communications and also led to delay im many planned
activities.
7.3
There are in general good working relationships within DNPG, between DNPG and other
units in the petroleum administration and between the Ministries and NPD and other
Norwegian authorities.
Problems previously noted of lack of coordination between Advisors (particularly between
Finance advisors and the Petroleum administration advisors) have been largely overcome.
Regular formal and informal meetings allow for good communications. In the latter half of
2007 the monthly reports from all advisors have been collated into a unified report to DNPG.
It is a general problem in Timor-Leste petroleum administration that staffing levels are low
compared to the activity level. This results in a situation where advisers feel that they are
unable to transfer sufficient knowledge to their Timorese counterparts, and that a large part of
their task is working as specialists and not as trainers.
As noted above, local security and political circumstances have hindered advisors receiving
clear policy and guidelines from time to time.
8.
The current project will, according to the current contracts and agreements, finish in
September 2008. The Steering Committee has not met since early 2007, and has therefore not
been able to prepare a work plan and budget for the rest of the project. NPD and the project
advisers in Dili have prepared a draft budget and work program for the finalisation of the
current project. The draft budget is shown in Table 6.
Based upon informal signals and formal statements from the previous and the current
Government of RDTL and from the Embassy, Norad and the Norwegian Government the
Project has assumed that an extension of the project into a new phase is very likely. The
course of actions in the project has therefore been chosen based on that concept. This has inter
alia included extensions of adviser positions and consultant contracts with the aim of
preparing for a project extension, not just the finalisation of the current project. This has been
done in general understanding with the Embassy, and to the degree possible with the current
Government of RDTL.
It has further been the Project’s understanding that it if the project is terminated as planned in
2008, an application for extra funds in order to finish the Project’s obligations in a good way
will be viewed positively. It was based on this understanding the Annual Meeting in January
2007 decided to reduce the remaining budget for the education program in order to budget for
continued adviser support to the finance sector.
The draft budget for the period up to 2008 is thus ca 3.5 million NOK higher than the
remaining grant of 44.5 mill NOK. Explanation is given under each budget item. In the annual
report for 2006 it was indicated that the budget overrun would be ca 5 million NOK.
Table 6
Suggested budget for 2008
Category
NOK
USD
Comment
Project Manager
1 000 000
182 000
Jan-Jun
Local Implementer
Advisor
495 000
90 000
Jan-Aug
120 000
22 000
Jan-Mar
Geological Advisor
0
0
Legal Advisor
0
0
Petroleum Fund Investment Advisor to
MoPF (Part-time)
0
0
100 000
18 000
Jan-Feb
Petroleum Fund Advisor to MoPF
1 000 000
182 000
Jan-Jun
Petroleum Taxation Advisor to MoPF
500 000
91 000
Jan-Mar
100 000
18 000
2 438 000
443 000
Data Management
0
0
Misc. Equipment
0
0
300 000
55 000
850 000
155 000
Travel assistance
0
0
Recruitment
0
0
100 000
18 000
Total
7 003 000
1 273 000
5.5 NOK/USD
Amount needed to finalize current
commitments
One last database workshop
Includes writing of final report and some
consultancy support
8.1
Project Manager
This represents an extension of the contract with the current project manager, Mr. Roger
White.
8.2
Project Implementer
This represents an extension of the current contract with Mr. Carlos A. Soares til the end of
the project, beginning of September 2008.
8.3
Workplace skills and HR Adviser
This represents the remaining contract period for Ms. Rebecca Denham
8.4
Geological Adviser
If the project is not extended, the position will not be filled
8.5
Legal Adviser
It is understood that SoSNR do not now require this position to be replaced, but in any case, if
the project is not extended, the position would not be filled
8.6
Petroleum Fund Adviser BPA
This assignment was finished in October 2007.
8.7
Petroleum Fund Investment Adviser to MoF (Part-time)
This represents the cost of two visits to Dili for the current Investment Adviser, Mr. Tørres
Trovik, whose work will cease after this period
8.8
Petroleum Fund Adviser to MoF
This item represents the costs of Vidar Ovesen until the expiry of his current contract.
8.9
Petroleum Taxation Adviser to MoF
This item represents part-year extension of current contract with Haavard Holterud.
8.10 Advisers’ travel expenses
meetings, conferences etc.
8.11 Training and Education
The 2008 budget includes:
general workplace training in Timor-Leste
Payment for six degree students overseas
Finalisation of Small-grants project
8.12 Data management
No more money will be spent on Data management
8.13 Miscellaneous equipment
Purchase of new office equipment is not included in this budget.
8.14 Workshops
One wrap-up workshop on data management will be held, probably in Dili
8.15 NPD Project assistance
This covers minor project support during final months, and also writing of the final Summary
report.
8.16 Travel
No money will be spent on minor travel expenses.
8.17 Miscellaneous
This item covers unforeseen contingencies.
9.
Total budget provision
Table 8a
Total budget provisions per year (1000 NOK)
2002
Year
-2003
Assist UNDP
71
71
assistance
97
97
2003
77
Petroleum Advisors
2004
2005
2006
2007
2008
Sum
451
528
746
746
Project Manager
12
1463
1224
1 659
1945
1000
7303
Local implementer
advisor
212
335
407
420
671
495
2540
222
625
63
325
120
1355
Geological Advisor
865
1082
0
1947
Legal Advisor
(Interim)
MoPF
to MoPF
924
1382
0
2306
593
444
0
1264
76
190
100
366
1615
1687
1000
4302
227
education needs
88
471
2032
500
3003
250
222
283
100
855
2438
459
547
307
1730
1512
1293
Data Management
46
365
571
0
982
355
593
Misc. Equipment
workshops
98
468
379
140
7280
2 534
1655
382
912
300
5783
623
544
832
1169
850
4865
Travel assistance
5
61
66
Recruitment
Miscellaneous and
contingency
242
721
86
1049
Total
713
3
-6
-2
21
0
100
116
792
7320
7272
10947
13917
7003*
47964*
* These numbers assume an additional grant of ca 3.5 mill NOK.
Table 8b
Total budget provisions per year (1000 USD)
2002
Year
-2003
Assist UNDP
13
13
assistance
18
18
2003
14
2004
2005
2006
2007
2008
82
Petroleum Advisors
Sum
96
136
136
Project Manager
2
266
223
302
354
182
1328
Local implementor
advisor
39
61
74
76
122
90
462
40
114
22
246
11
59
Geological Advisor
157
197
354
Legal Advisor
(Interim)
MoPF
to MoPF
168
251
419
108
81
230
14
35
18
67
294
307
182
782
41
education needs
16
86
369
91
546
45
40
51
18
155
235
443
83
99
56
315
275
Data Management
8
66
104
Misc. Equipment
workshops
18
85
69
25
108
461
301
69
166
55
1051
113
99
151
213
155
885
1
Recruitment
Miscellaneous and
contingency
44
713
179
65
Travel assistance
Total
1324
11
12
131
16
191
1
-1
0
4
0
18
21
792
7320
7272
10947
2530
1273*
8721*
* These numbers assume an additional grant of ca 3.5 mill NOK.
10.
Appendices
Appendix 1: Account of local expenditures
Balance Statement 01 January to 31 December 2007
REVENUE
Balance carried forward from 2006
23,608.67
Receipts for 2007
105,811.71
$
129,420.38
Revenue
EXPENDITURE
Purchases
Expenditure
Balance
Petty Cash on Hand
Total balance
Receipts for the period
Date
Details
1/1/2007 Balance carried forward from 2006
5/29/2007 Transfer from NPD
Cheque from Norwegian embassy for accommodation
6-Nov-07
in Dili
27-Dec07
Transfer from NPD
63,400.18
$
63,400.18
$ 66,020.20
$ 1,078.94
$ 67,099.14
Amount
23608.67
45190
4600
55890
Interest Jan
12.64
Interest Feb
8.50
Interest March
8.44
Interest April
7.05
Interest May
6.05
Interest June
20.12
Interest July
15.73
Interest August
13.89
Interest September
10.32
Interest October
9.67
Interest November
7.47
Interest December
11.83
Total Receipts
Receipts for 2007
Total
$ 129,420.38
$
23,608.67
$
105,811.71
$
129,420.38
Purchases for the period
Expenditure
Bank fee
Salary
Computer
S/H-ware
Office
Equip.
Monthly
Tel. &
Internet
24
2160
2749.38
7956
6569.69
01 January to 31 December 2007
Wkshops/
Training &
Meetings
Overseas
Travel
Training
6051.15
25482.98
Petty
Cash
withdrw
al
11281.6
Total
Expenses
$ 63400.18
Revenue
Purchases
In the Bank
Petty Cash
$ 129,420.38
$ 63,400.18
$ 66,020.20
$ 1,078.94
Balance 2007
$ 67,099.14
Appendix 8.
for the period January – September 2008
for the cooperation between Timor-Leste and Norway
Assistance in developing the management of the petroleum sector
in Timor-Leste
Note: This is the sixth and final Annual Report to the Norwegian Embassy regarding the
project.
This report closes out Phase 1 of the Project, which formally ended on 10 September
2008. For administrative convenience, all accounts were closed as at end September
2008.
The Phase 1 Project is succeeded by a new Programme (Phase 2). The Institutional
Cooperation Contract for the new Programme was executed on 29 August 2008 in Oslo.
A separate report will be prepared for the period October – December 2008 for the Phase 2
Programme, in a new format covering environmental matters as well as new performance
indicators.
General Background to the work during 2008
The progress of the project was influenced by periods of civil unrest up to 11th February 2008
(the date of the assassination attempts on the President and Prime Minister). Since then the
security situation has been relatively quiet.
Policies of the new Government have become much clearer in the petroleum sector (as
regards SERN and Ministry of Finance), but are still developing in some areas.
Plans for reorganisation of the petroleum sector were unveiled by SERN early in 2008 and the
Decree law for the new National Petroleum Authority (ANP) was passed on 19th June, which
led to the official formation of ANP on 1st July 2008.
All senior positions in ANP are filled by Timorese, and ANP is now the single Regulatory
Authority for both JPDA and Sovereign Areas of Timor-Leste.
In the Natural Resources area administration activities have improved as new staff are
recruited and trained. However, local staff capacity has remained scarce in the Finance
Ministry, and this has been exacerbated by departure of several staff on overseas studies.
Table of Contents
List of abbreviations ................................................................................................................... 7
1. Introduction ........................................................................................................................ 9
2. Summary of results and recommendations ...................................................................... 10
3. Goals and objectives ......................................................................................................... 11
3.1 Indicators ................................................................................................................... 12
3.2 Planned outputs .......................................................................................................... 12
4. Input.................................................................................................................................. 12
5. Organisation of the Project ............................................................................................... 13
5.1 The structure ................................................................................................................... 13
5.1.1 The Annual Meeting ........................................................................................... 13
5.1.2 Steering Committee ............................................................................................ 13
5.1.3 Project Management Committee ........................................................................ 13
5.1.4 Project Manager ................................................................................................. 14
5.1.5 Project Implementer ........................................................................................... 14
5.1.6 NPD Project Coordinator ................................................................................... 14
5.2 Assessment of the project organisation .......................................................................... 14
6. The Project history and activities ..................................................................................... 15
6.1 Cooperation partners and important stakeholders .......................................................... 15
6.1.1 Timorese cooperation partners ........................................................................... 15
6.1.2 Norwegian cooperation partners ........................................................................ 17
6.2 History of the project ...................................................................................................... 19
6.2.1 Discussions, 2001-2002........................................................................................... 19
6.2.2 The planning phase, 2002-2003 .............................................................................. 19
6.2.3 Project start-up, 2003 .............................................................................................. 20
6.2.4 2004 ......................................................................................................................... 21
6.2.5 2005 ......................................................................................................................... 24
6.2.6 2006 ......................................................................................................................... 27
6.2.7 2007 ......................................................................................................................... 29
6.2.8 The final year, 2008................................................................................................. 31
7. Accounts ............................................................................................................................... 33
8. Interim reviews ..................................................................................................................... 35
9. Project results ....................................................................................................................... 36
9.1 Resource management .................................................................................................... 36
9.2 Data management .......................................................................................................... 38
9.3 Finance management ..................................................................................................... 39
9.4 Environment management ............................................................................................. 40
9.5 Education and training.................................................................................................... 40
9.6 Planned outputs and indicators vs. Results .................................................................... 42
9.7 Problems encountered ................................................................................................... 43
9.7.1 Lack of cooperation partner in the planning phase ................................................. 43
9.7.2 Lack of coordination between advisers ................................................................... 43
9.7.3 Lack of clarity on the roles and responsibility of the advisers ................................ 44
9.7.4 Insufficient emergency preparedness in connection with the civil unrest ............... 44
10.
List of Appendixes ....................................................................................................... 47
Project Name
1.
Implementing institution in Timor-Leste is the Secretariat of State for Natural Resources.
The work was carried out through an institutional cooperation between the Ministry of
Natural Resources, Minerals and Energy Policy (now the Secretariat of State for Natural
Resources (SERN)) and the Norwegian Petroleum Directorate (NPD).
The day-to-day implementation of the project was done through cooperation between the
NPD and the National Directorate for Oil and Gas (DNPG), as well as the Ministry of Finance
(MF). Since July 2008 the cooperation has also included the National Petroleum Authority
(ANP).
2.
Project design
2.1
Goal
advisers.
2.2
Objective
3.
Outputs
administration
4.
Use of inputs
4.1
Financial input
The initial grant from NORAD was NOK 30 million (ca USD 4.6 million) to cover the
timeframe 2003 to 2008.
In 2006 it was agreed to include new advisers in DNPG and in the Ministry of Planning and
Finance (MoPF) in the Project at a cost of NOK 13.9 million. At the request of NORAD, the
cost of a quality control survey of the marine baseline, carried out by the Norwegian Mapping
Authority, was also included in the project expenses.
The total additional grant was NOK 14.5 million, which increased the total grant to NOK 44.5
million. Table 1 shows the overall project costs.
Timor-Leste under the umbrella of the current cooperation between Norway and Timor-Leste
in the petroleum sector. This arrangement continued until September 2008.
Table 1
Overall project costs
NOK
Expenses 2002-2003
Expenses 2004
Expenses 2005
Expenses 2006
Expenses 2007
Expenses 2008
Total, 2002-2007
Budget overrun, covered by the new programme for 2008-2013
4.2
USD
(6.50 NOK/USD)
44 500 000
1 609 247
7 318 335
7 272 070
10 947 355
13 916 891
8 355 703
49 419 601
6 846 154
247 576
1 125 898
1 118 780
1 684 208
2 141 060
1 285 493
7 603 016
-4 919 601
-756 862
Input in kind
The MNRMEP (and later SERN) provided office facilities for advisers, consultants, seminars
and workshops and necessary logistic support during the different meetings and workshops
held concerning Natural Resources.
The T-L Ministry of Finance provided office facilities for the financial Advisors.
Norad/Petrad provided hotels, support and logistics for a delegation from Timor-Leste
Consultative Council for the Petroleum Fund, during a visit to Oslo, Bergen and Stavanger
25-29 May.
NPD Stavanger, in cooperation with NORAD and Petrad, provided hotels and logistics
support for the SERN delegation which visited Stavanger at end August to attend ONS 2008
and the signing ceremony for new the Institutional Cooperation Contract.
4.3
Budget for 2008
A budget for 2008 was approved at the Annual Meeting on 25th January 2008 (see Table 2
below).
The budget presented in Table 2 was premised upon the idea that the project might not be
continuing beyond the end of the current contract (10th September 2008). The budget was
therefore only for part of 2008, and showed an orderly wind-down of the project and its staff.
Table 2
Budget for 2008
Category
NOK
USD
Comment
5.5 NOK/USD
Project Manager
Local Implementer
Advisor
1 000 000
182 000
Jan-Jun
495 000
90 000
Jan-Aug
Jan-Mar
120 000
22 000
Geological Advisor
0
0
Legal Advisor
0
0
MoPF (Part-time)
0
0
100 000
18 000
Jan-Feb
Petroleum Fund Advisor to MoPF
1 000 000
182 000
Jan-Jun
Petroleum Taxation Advisor to MoPF
500 000
91 000
Jan-Mar
100 000
18 000
2 438 000
443 000
Data Management
0
0
Misc. Equipment
0
0
300 000
55 000
850 000
155 000
Travel assistance
0
0
Recruitment
0
0
100 000
18 000
7 003 000
1 273 000
Total
Amount needed to finalize current
commitments
One last database workshop
Includes writing of final report and some
consultancy support
Although proposals for an extension of the project had been in progress since May 2007, the
change of government in August 2007 meant that we had not received a formal request for
extension of support to the Timor-Leste Petroleum Sector at the time of the Annual Meeting.
The formal request for extension was made on 27th February 2008.
Subsequent to receipt of the request to extend cooperation between Norway and Timor-Leste,
programme proposals and draft budgets were prepared to cover the complete year, with a clear
division between Phase 1 and the new Phase 2 project, split between the first 3 quarters of
2008 and the last quarter for financial convenience.
The new budget was briefly discussed between SERN and NPD at meetings in Dili May 21 –
28, 2008, but no formally Steering Committee meeting was held to prepare or approve the
new budget, but the proposed budget is enshrined in the new Agreements and Contracts.
The provisional budget (in NOK 000’s) for the total programme contained in the Programme
Agreement (dated 20th May 2008) is as follows:
YEAR
Quarter
2008
1
2
2009
3
4
1
2
2010
3
4
1
2
2011
3
2012
2013 TOTAL
4
1.Advisors
Resources Sr Advisor/PSC Spec
Geo/seismic
Database & IT
HR and Scholarships
Finance Taxation
Macroeconomics
Part-Time Advisor
BPA Investment Advisor
550
175
115
550
150
175
115
500
500
195
150
500
195
Environment Advisor
D'base &trg
Workshops
Consultancy
2.HRD & Scholarships Current Scholarships
New Scholarships
Trg and Workshops
Conferences
Internships
3. Consultancy
ad hoc consultancy
4. Project Mgmt
Local Admin & travel
Governance (NPD etc)
External reviews
sub total
Contingency
Total
Annual
Phase 1 2008 funds
Phase 2a funds 2008
Total
550
500
175
115
550
500
175
115
550
500
185
130
550
500
185
130
550
500
185
130
550
500
185
130
550
500
200
130
550
350
200
130
550
500
500
195
500
500
500
195
500
500
500
195
500
500
650
195
500
500
500
195
500
500
500
195
500
500
500
195
500
500
500
195
500
325
325
325
340
45
110
325
340
45
110
325
340
45
110
325
340
45
110
285
515
155
15
20
310
515
155
15
20
205
515
155
15
20
260
515
155
15
20
110
110
325
340
45
110
460
180
490
155
15
155
15
155
15
180
515
155
15
20
360
515
155
15
20
155
155
2975
2185
3785
2975
2185
3785
200
130
6050
4000
2615
1760
200
130
375
260
195
500
195
500
780
325
340
45
110
325
325
1300
45
110
45
110
180
440
130
515
155
15
20
260
515
155
15
20
130
515
155
15
20
515
1540
620
60
80
260
0
620
60
80
0
0
460
45
60
4025
6175
3560
345
400
780
780
4550
2040
540
1540
65
65
65
65
65
65
65
65
65
260
260
130
1235
230
155
230
155
230
155
230
155
230
155
230
155
920
620
5395
5320
5310
5030
3970
5320
5650
5310
5030
3970
2790
50
2840
17150
11840
7950
50
8000
8000
920
620
340
3940
50
3990
3990
615
465
180
2735
50
2785
2785
4525
3410
985
67235
5395
230
155
155
5395
50
5445
21810
230
155
4805
50
4855
13800
-3500
10300
230
155
155
5650
26415
26415
67235
67235
155
2008 Phase 1 = 3500, phase 2a = 10500
2009 phase 2a = 22610
2010 phase 2a = 5510, phase 2b = 12440
Phase total costs
8945
31875
Phase Budgets
3500
37320
Estimated remaining phase 1 expenditure = 8945, remaining budget = 3500, therefore 5445 needs to be provided for from phase 2a
The portion of this budget for the remaining work until end 3rd quarter 2008 (Phase 1 Project)
is shown as NOK 8,945,000.
As noted in Table 2 above, the remaining grant from Phase 1 of the project amounted to NOK
3,436,103 – therefore, for completion of Phase 1 with full continuity into the new Programme,
an amount of NOK 5,508,897 would be required to be appropriated from the grant for the new
programme. This was rounded to NOK 5,510,000.
We therefore assume that the budget for the completion of the Phase 1 project (covering the
first 3 quarters of 2008 may be taken to be NOK 8,945,000. Unfortunately there has not been
any meeting of the Steering Committee during 2008 at which the budget could be updated or
approved.
In order to report the actual work carried out against the budget breakdown of Phase 1, we
have modified table 2 to reflect the revised budget as shown below in Table 2a
Table 2a
Revised Budget for completion of Phase 1 project (January – September 2008)
Category
NOK
3Q reduction
Comment
(embassy funds)
Project Manager
1 650 000
1 650 000
Jan- September
Local Implementer
Advisor
525 000
525 000
Jan-September
345 000
345 000
Jan-September
Geological Advisor
650 000
650 000
July - September
0
0
500 000
0
Legal Advisor
MoF (Part-time)
Petroleum Fund Advisor to MoF
Petroleum Taxation Advisor to MoF
4650
5150
4680
5000
585 000
585 000
1 500 000
1 500 000
650 000
650 000
not mobilised by IMF
T. Trovik
Jan-September
Jan-May only
67235
Part-Time Environment Advisor
325 000
0
Environmental consultancy
110 000
110 000
Data Management
Misc. Equipment
45 000
45 000
1 130 000
1 130 000
0
0
not mobilised
was conferences
Current scholarships
0
0
465 000
465 000
Training + data mgt. workshop
465 000
465 000
NPD + external reviews
Travel assistant
0
0
Recruitment
0
0
Total
0
0
8 945 000
8 120 000
It was already apparent by August that this budget would be underspent, due to ongoing
delays in executing the Institutional Cooperation Contract and delays in recruitment of some
Advisors. The Embassy was informed that the programme would require less funding in 2008.
However, the Steering Committee was not in place and could not be informed.
4.4
Project accounts
The procedure for handling of the Project funds is described in Annex 2 of the
Institutional Contract between NPD and MNRMEP (later SERN). It states that NPD handles
all disbursements in this Project. Project funds are then transferred from Embassy to NPD
based on invoices of actual costs.
These accounts include the costs included in invoices sent to the Embassy for payment in
the calendar year 2008. The invoiced amounts are shown in Table 4
Table 4
NPD invoice no.
Amount (NOK)
Jan – March 33080030
April–June 33080061
July – Sept 33080094
1 998 134.06
4 847 722,28
1 509 846,32
Sum
8 355 702,66
The invoices are approved by the DNPG.
Table 5 shows the NPD cost overview for the cooperation in 2008.
expenses and scholarships. Money is transferred to these bank accounts from NPD based upon
written requests in accordance with the agreed budget and work plan.
Detail accounts of the local expenditures are shown in Appendices 1 and 2.
Table 5 – Cost Overview
Note: this table has been adjusted to align with NPD accounting system for ease of administration. It may need to be re-adjusted next
year to align with different Ministry systems
Project costs, 2008 (NOK 000’s)
Budget
Item
Natural Resources
Category
Cost (NOK)
(to Sept.)
Project Mgr. & Petroleum Adviser (R. White)
1 337 506
1 650 000
540 000
525 000
245 531
345 000
648 847
650 000
0
500 000
214 710
585 000
1 416 612
1 500 000
536 130
650 000
Environmental Advisor (Part-time)
0
325 000
Workshops & Consultancy
0
110 000
2 026 540
1 130 000
145 046
45 000
Project Implementer (C. A. Soares)
HR & Scholarships Adviser (R. A. Denham)
Geological Adviser (A. O. Ramirez)
Finance
Petroleum Fund Adviser to BPA
Petroleum Fund Investment Adviser to MoF (part-time) (T. Trovik)
Salary and travel expenses
PF Investment Adviser to MoF (V. Ovesen)
Petroleum Tax Adviser to MoF (H. Holterud)
Environment
HRD & Scholarships
Scholarship Expenses (transferred to Dili account)
Travel assistance and local expenses
465 000
NPD tech. assistance (42 hours worked)
Correction
Project Mgt.
32 041
-44 295
465 000
Adm. and assistance (347.5 hours worked)
464 625
Planning of Programme extension (173 hrs worked)
140 885
Recruitment new advisers
34 950
Consultants
487 085
129 489
Total – January – September 2008
8 355 703
8 945 000
5.
Project Extension work
In 2008, proposals for extension of the Project progressed rapidly, following special meetings
in Dili 22nd to 25th January to define the Timor-Leste Government’s requirements, and
Norway’s willingness to fund extra scholarships and environmental assistance as part of the
Programme.
At the Annual meeting in Dili on 25th January a timetable for extension of the Project was
prepared, bearing in mind that several institutions (in both countries) were involved and
several agreements had to be in place before the current Project expired in September 2008.
It was agreed that the new Programme of assistance would cover Natural Resources, Finance
and Environment sectors.
The new Programme was discussed between SERN and NPD at meetings in Dili May 18 –
24, 2008.
On 27th February, Timor-Leste issued a formal Request to extend Norwegian support and
cooperation for the Timor-Leste Petroleum Sector, in time to be considered in Norway at the
Steering Committee for Oil for Development on 6th March, who consented to allocate
necessary funds for the Project extension.
On 20th May, the MoU on Development Cooperation was signed in Dili, between The
Governments of Timor-Leste and Norway. Zacarias Albano da Costa (Minister of Foreign
Affairs) signed for Timor-Leste, and Erik Solheim (Minister for International Development
Cooperation and Environment) signed for Norway.
At the same time, both Parties signed the Programme Agreement concerning Assistance in
Management of Petroleum resources which contained a summary of the Programme and a
tentative budget of NOK 67,235,000 for the period 2008-2013.
Subsequent to the signing of the above documents, work commenced to prepare a detailed
Programme Description and to define the Institutional Cooperation Contract between the 6
institutions involved in the new Programme:
a. Norwegian Ministry of Petroleum & Energy and
T-L Secretariat of State for Natural Resources
b. Norwegian Ministry of Finance and
T-L Ministry of Finance
c. Norwegian Ministry of the Environment and
T-L Secretariat of State for the Environment
An important part of the Institutional Cooperation Contract was the new management
arrangements required for the Programme, and the appointment of a Project Coordinator
(funded directly by NORAD/ OfD) to coordinate all the parties involved.
After several iterations of discussions and legal inputs, the Institutional Cooperation Contract
for the new Programme was signed in Oslo on 29th August 2008. Alfredo Pires, Secretary of
State for Natural Resources, signed on behalf of all 3 Timor-Leste Institutions, whereas each
of the Norwegian Ministries signed individually.
The Program Description does not form part of the Contract, in order that it may be modified
and updated throughout the duration of the Contract, if so agreed by the Steering Committee.
All the above documents were in place before the expiry of the Phase 1 Project contracts on
10th September 2008, thus ensuring seamless continuity of the Programme.
6.
Progress of implementation - Advisors
The provision of new and replacement Advisors has been difficult in 2008 - due initially to
candidates having fears about security in Dili, and later due to the high world-wide demand
for qualified staff and over-heating of the job market.
Two advisors had left the project in 2007 – geologist Rosalind Waddams and legal advisor
Anne-Lene Midseim. Although recruitment efforts took place for both positions and suitable
replacement candidates were found, the positions were not filled pending SERN’s decision on
long-term needs for these positions.
In early 2008 the geologist position was confirmed, and was eventually filled by Abryl
Ramirez, who mobilised to Dili on 14th July 2008.
The legal advisor position was not taken up, but recently there has been a request for a
commercial/economic adviser to aid ANP as part of the new Programme.
Terje Iversen, the IMF Advisor to BPA (Project funded) who had departed from Dili in
October 2007, was initially not requested to be replaced, but in early 2008, BPA requested a
replacement Advisor, which proved difficult to recruit – IMF could not recruit suitable
candidates. Eventually another Norwegian was recruited (by Terje) and will be mobilising late
October 2008, as part of the new programme.
Haavard Holterud (Petroleum Tax Advisor) left Dili in May. His planned replacement (Petter
Myrvold) was unable to take over the position at that time. Subsequently it has been agreed
that Haavard and Petter will share the position on part-time basis, hopefully as from
November this year.
Erling Kvadsheim (NPD Project Coordinator in Stavanger) left NPD and the Project in
February 2008. Else Ormaasen was appointed as new NPD Project Coordinator in Stavanger
for Phase 1. Kvadsheim continued on a consultant basis for NPD until the end of Phase 1.
Rebecca Denham’s contract (as Workplace Skills and HR Adviser) was extended from March
2008 until September 2008 and then again until December 2008 (but at the request of SERN,
her work emphasis changed to HR support and Scholarships Administration). Currently,
further extension of her contract is being negotiated.
Vidar Ovesen’s contract (as Fiscal policy and Petroleum Fund Adviser) was due to expire end
July, but was extended by 6 months until end December 2008. It has recently been agreed to
further extend his contract until August 2009.
6.1
Project Manager & Petroleum Adviser (R. White)
Roger White has been Project Manager since March 2006. He is employed on a consultancy
contract which was extended until January 2009
Roger has 42 years experience in the Upstream Oil business in 10 different countries, with
particular emphasis on implementation of large oil and gas projects, economics, and staff
development.
His main task was to support DNPG (the national oil and gas authority to develop into a well
functioning public administration unit for the sovereign areas of Timor-Leste. He has acted as
a resource person and adviser to the Government, the TSDA and other relevant public sector
units on petroleum related issues in general.
Since the formation of ANP in July, SERN has not required him to continue these tasks in the
new organisation. He has therefore concentrated on developing training courses for new staff,
as well as project administration.
Roger’s tasks in 2008 have included:
Plans for extension of this Project
Support to DNPG administration and management of the 6 production sharing
contracts in sovereign areas of the Timor Sea
Assistance to DPNG with evaluation of farm-in proposals
Advice to TSDA and SERN on Sunrise Field development plans, including
investigation of possible landing sites for pipeline and terminal
Advice on potential supply base sites
Assistance to SERN policy director to analyse various T-L downstream activities, such
as fuel supply, power generation proposals etc.
Capacity development for new DNPG staff, including giving new induction course
Development of training material for new staff in downstream activities
assistance and training for EITI staff
General project management and liaison with project advisers in the financial sector
6.2
Project Implementer (Carlos Soares)
This role has been carried out by Mr. Carlos Soares since 1.7.2003. He is employed on an
open-ended consultancy contract.
Carlos’ multilingual abilities and cross-cultural skills have made it possible to overcome
cultural and practical barriers that otherwise would have been challenging obstacles to the
success of the Project.
His tasks have included
assistance in the organisation and day-to-day running of the project
main responsibility for IT and database issues in DNPG, TSDA and now ANP
organising of workshops and travel and translation,
day-to-day assistance to the other advisers and the Project Coordinator
administration of finances, bank accounts and petty cash
6.3
Geological Adviser (Abryl O. Ramirez)
Ms. Abryl Ramirez began joined the project in July 2008, and was allocated by SERN to
assist ANP.
Abryl is on secondment from NPD, and has 8 years experience in regulatory authority work
mainly in exploration geology and licensing work.
Her work in ANP until September has included:
Advice on offshore exploration activities within active PSCs
Assisting the Directors in meetings with Operators and Stakeholders in active PSCs
Advice on proposed seismic acquisition from external parties within open acreage in
Timor exclusive waters and JPDA
Training and knowledge transfer in the geosciences in ANP. However, due to lack of
ANP geoscientists (apart from the ANP President) this has been difficult
Accompanied and assisted the delegation from Timor-Leste during their visit to
Norway for ONS 2008 and the signing of the new Institutional Cooperation Contract.
6.4
Workplace Skills and HR Adviser (Rebecca A. Denham)
Ms. Rebecca Denham was appointed to this position in March 2007. She is employed on a
consultancy contract. She had previously worked with the project as an English language
teacher on secondment from AVI, and is highly knowledgeable in all aspects of education
systems as well as T-L government practices.
Her work has covered:
support to HR officer
administration and support to scholarship students
selection and administration of small grants
staff development programmes
liaison with oil companies and PETRAD to provide training courses and seminars
organising and supporting staff in offshore visits, conferences and field trips
support on Local Content and Local Preference matters
6.5
Petroleum Fund Adviser to BPA (vacant)
The position has been vacant since Terje Iversen left in October 2007. The request from BPA
to renew the position was delayed until early 2008.
Despite intensive recruitment efforts, it was not possible to find suitable candidates until 3Q
2008. Mr. Torgrim Roll will now take up the position as of mid-November 2008, as part of
the Phase 2 programme.
Torgrim has extensive experience in Fund management, in both private and public sectors. He
is employed through IMF on a consultancy contract.
The work includes
Internal finance courses twice a week
Education programmes for BPA staff (English, numeracy, finance)
Assistance with BPA quarterly reports - especially the market commentary section
The petroleum fund investment workload has increased dramatically given the rapid increase
in the size of the petroleum fund. The anticipated changes in investment strategy and
operational complexity (new custodians, external managers) add to the need for more capacity
in BPA.
6.6
Fiscal Policy and Petroleum Fund Adviser to MoF (V. Ovesen)
Mr. Vidar Ovesen has been adviser to the Macroeconomic and Tax Policy Unit (MTPU) in
the MoF since July 2007.
He was a member of the Investment Advisory Board of the Petroleum Fund until January
2008, when he resigned from the Board and was appointed by the Minister of Finance to sit
on the Secretariat of the Board.
Most focus in this period has been on assessing the current investment strategy of the
Petroleum Fund, advising on changes of the investment strategy, including outsourcing funds
to external managers, considering the future strategic asset allocation and amendments to the
Petroleum Fund Law.
Fiscal Policy:
The Estimated Sustainable Income is the benchmark of long-term sustainable spending of
petroleum revenues and the calculation of Estimated Sustainable Income (ESI) is key in the
budget process. In the Mid-Term Budget 2008 the Government proposed withdrawing an
amount exceeding the Estimated Sustainable Income from the Petroleum Fund.
Discussions of fiscal envelope and ability of the economy to absorb expected growth.
Calculations of Petroleum Wealth prior to Budget 08 and Mid-Term Budget 08.
Assistance with preparation of Budget 08 and Mid Term Budget 08, providing
documentation about the ESI, budget text for the petroleum sector and relevant
analysis and projections.
Calculations of Petroleum Wealth prior to Budget 2009 and relevant analysis in that
regard, including budget text and justifications.
Calculations (and justification) of Estimated Sustainable Income (ESI) and ensuring
the Independent Auditor’s (Deloitte) certifications of the calculations.
Assisted the Minister on queries from the Parliament regarding the ESI and given
lectures to the Consultative Council of the Petroleum Fund on ESI-calculation
methodology.
Together with TSDA (now ANP) hired Poten & Partners to review the international
LNG-market and future LNG-prices, which affect the Estimated Sustainable
considerably,
Discussions with ConocoPhillips about the outcome of the negotiations with the LNGbuyers.
Petroleum Fund:
The Petroleum Fund investment strategy has been reviewed during the period and
negotiations initiated with non-commercial external managers (World Bank and Bank for
International Settlement (BIS)) in order to outsource a substantial part of the portfolio with the
aim of diversifying the investments to other asset classes than US Government bonds. A
Working Group appointed by the Minister submitted its report to the Minister in August 2008.
Mr. Ovesen coordinated the work and Mr. Torres Trovik (see below) also made considerable
contribution to this process.
Negotiations with non-commercial external managers have taken considerable time and lasted
longer than expected. The Minister of Finance ceased the negotiations with the World Bank in
June 2008 due to inconclusive negotiations. The negotiations between BPA and the BIS are,
at the time of writing, still making slow progress. $1 billion may be outsourced to the BIS.
The investment guidelines and amendments to the Management Agreement between the MoF
and BPA, are approved by the Minister and include, for the first time, investments in
government bonds issued in other currencies (AUD, EURO, YEN and GBP).
Furthermore, the Minister wishes to further diversify the portfolio to other asset classes,
including equities. A proposal to invest a minor part of the portfolio in equities has been
submitted by Vidar to the Investment Advisory Board for consideration before giving advice
to the Minister on this matter.
As the Petroleum Fund will soon be $4 billion, it is important to consider the appropriate
long-term Optimal Asset Allocation for the investments, in order to ensure a balanced
expected return/risk of the portfolio, whilst taking into account local operational skills and
capacity, the Government’s risk profile and major stakeholders’ understanding of the
international financial market and the fact that higher risk means higher volatility in the shortterm.
This work has been led by the Minister’s adviser on investments, Olgario de Castro, but the
work has been mainly undertaken by Vidar Ovesen. The work has drawn on analysis and
options made available by UBS, Singapore. A comprehensive analysis, including various
options for future strategic asset allocation with focus on downside risks as well as
implementation strategy, has been presented to the Minister of Finance, the Council of
Ministers and the President.
The Minister of Finance and the Council of Ministers are now contemplating the future
investment strategy. Simultaneously, work is being undertaken to redraft the Petroleum Fund
Law in order to take into account relevant changes in the investment strategy.
Provision of memos and presentations re investment strategy and management to the
Minister, including quarterly updates of the performance
Discussions with the Minister and the Minister’s adviser on investment, Mr. Olgario
de Castro, on future investment strategy
Coordinating the work in the Minister’s Working Group and providing a report to the
Minister
A comprehensive assessment on the current investment strategy as well as future
Strategic Asset Allocation, including draft amendments to the Petroleum Fund Law
A presentation of long-term Strategic Asset Allocation Options for the Minister,
Council of Ministers and the President, including an implementation strategy.
Coordinating the negotiations with the World Bank and BIS regarding investment
guidelines for potentially outsourced investment mandates.
Establishing the Secretariat of the Investment Advisory Board as an important means
of cooperation between the MoF and BPA - the Secretariat provides documentation,
draft notes and submissions to the Board on relevant issues. The Board may then
advise the Minister of its own concerns or on issues where the Minister seeks advice.
Compilation of the Annual Report of the Petroleum Fund for the Transition Period
2007
Representation on EITI working group as Ministry Observer
Attending two workshops in Baucau and Viqueque organized by the Consultative
Council of the Petroleum Fund on petroleum sector issues, including giving
presentations.
Mr Ovesen has spent most of his time advising the Minister (and her investment adviser
Olgario de Castro) on fiscal policy and Petroleum Fund issues. Due to the current staffing
Macroeconomic and Tax Policy Unit.
6.7
Petroleum Fund Investment Adviser to MoF (T. Trovik, part-time)
Mr. Tørres Trovik is engaged as Petroleum Fund Investment Adviser to MoF. He joined the
World Bank in August 2008 but has been allowed to continue his engagement in the
Investment Advisory Board (IAB). As he is currently situated in Washington D.C. he has not
be able to travel to Dili during this period, but has been attending IAB-meetings by phone,
and been actively operational on e-mail as well as conference calls.
His work has included
Attendance at meetings of the Investment Advisory Board ca 4 times per yr.
Participation in meetings with Mercer, together with the Minister, Mr. Olgario de
Castro and Mr. Vidar Ovesen, in Melbourne in January 2008 to discuss issues related
to the investment strategy
Participation in the Minister’s Working Group
Participation in conference calls with the BIS re definition of the investment
guidelines in the external management contract.
On-going participation in discussions with Olgario de Castro and Vidar Ovesen re
short- and long-term investment strategies as well as other PF-management related
issues.
Advising on operational issues such as active/index management, specific features of
the investment guidelines to the BIS, amendments to the Management Agreement
between the MoF and BPA and PF Law changes.
Assisting in assessment of the long-term Strategic Asset Allocation Options and
Implementation Strategy.
6.8
Petroleum Taxation Adviser to MoF (H. Holterud)
Mr. Håvard Holterud was engaged as Petroleum Taxation Adviser in the Petroleum Tax
Division, Ministry of Planning and Finance until May 2008.
His work included:
Training staff in the Petroleum Tax Division on petroleum tax and accounting
Advising MoF on effects and implementation of new consolidated tax law
Advising SERN on effects of new tax legislation regarding petroleum activities
Meetings with SERN task force regarding taxation of pipeline and onshore LNG plant
Analyzing possible tax effects and revenue effects regarding gas pipeline to TimorLeste and LNG plant onshore (in cooperation with Norwegian advisor to DNPG) and
informing relevant SERN staff of key issues.
Reviewing new tax return filed by some oil companies. The new form seems to be
implemented according to expectations and no serious problems have been reported by
the companies. The new tax return form, combined with joint venture billing and PSC
returns, is expected to improve ability to monitor overall validity of tax liability
Continued follow up of LNG contract
Follow up of advice from PWC regarding interpretation issues
Debriefing of follow up issues and information spreadsheets with team manager PTD
Other issues
February 2008 6 staff members were transferred from domestic tax. Some have
knowledge of accounting so the increase may create a slightly better basis for training and
capacity building.
Several key staff in PTD are seeking scholarships for graduate studies at universities
abroad. It is very positive that staff seek this challenge, but concern remains of the ability
of remaining staff to increase competence at the speed necessary to cope with the
challenges ahead. These concerns and the need for a strategic plan to address these
challenges have been discussed with the commissioner.
7.
Progress of implementation – Administration and support
7.1
NPD spent 520.5 hours on project administration, travel and recruitment in 2008.
The majority was spent by Ms Else Ormaasen, Project Coordinator, and also by several other
NPD technical and support staff, including Director Tormod Slåtsveen, and Mr. Øystein
Kristiansen. Hours spent by NPD staff on technical assistance in Data Management is
reported separately, below.
Some costs were also incurred for consultant fees for services of Erling Kvadsheim who
continued to assist the project Coordinator after he left the project in January.
The Project Coordinator carried out two visits to Dili in 2008; January 21 – 28 and May 18 –
24, accompanied by Mr. Erling Kvadsheim
SERN visit to Norway
SERN and ANP staff participated in ONS, Stavanger August 25 -29 2008.
During this visit SERN and ANP had meetings with NPD and visited a Supply Base in
Stavanger, and had meetings with StatoilHydro, MoF and NORAD in Oslo.
7.2
Recruitment
NPD’s main recruitment effort in 2008 was the appointment of Ms. Abryl Ramirez to the
position of Geoscience Advisor.
Efforts to recruit a Petroleum Tax advisor were unsuccessful through international
advertising, and reverted to personal contacts of Mr. Holterud, the previous incumbent.
Eventually it has been proposed that the position should be shared by Mr Holterud and Mr
Petter Myrvold as from November 2008 – they will be seconded to the Project from the
Norwegian Finance Ministry.
Similarly, IMF failed to recruit a BPA Advisor through international advertising, and it was
left to Terje Iversen to locate his own successor. Torgrim Roll will be employed on a direct
contract with IMF, funded through the new Programme.
7.3
Includes all travel expenses for the advisers apart from relocation costs and cost related to
consultancy visits with NPD in Stavanger. (ref tables 2 and 3).
7.4
See 5.4 above for work carried out by the Workplace Skills and HR advisor
A separate designated bank account is maintained in Dili for the Education programme
(see Appendix 2).
Approximately 2 million NOK was transferred in 2008.
7.5
Travel assistance and local expenses
This includes various office and computer equipment and some local travel expenses
(including cost of some visitors’ tickets Bali-Dili). A separate bank account is maintained
in Dili to cover these items. See Appendix 1 for details
7.6
Data management
Mr. Kjell-Reidar Knudsen and Mr. Odd Oksvold of NPD have continued the work of
building the Lafaek database and populating it with real data from both the sovereign
areas of Timor-Leste and from the JPDA.
During the visit to Stavanger August 25-29 2008, SERN and ANP had workshop with NPD
on status and further plans of the cooperation on Data Management.
7.7
Miscellaneous
Emergency response plans and procedures were developed for project staff in March 2007 in
response to ongoing security problems. The Embassy Section in Dili drew up a new
Emergency Response Plan in early 2008 which covers all Norwegians in Dili as well as nonNorwegian Project staff.
Ongoing questions related to security and safety have been further developed and clarified,
with the assistance of the Norwegian Embassy Section in Dili. Insurance (for offshore trips
and particularly re automobile insurance) are still outstanding issues.
Funds from the budget for “miscellaneous” items were reassigned on an ad hoc basis to other
items, notably the HRD program and the NPD administration.
8.
Assessment
8.1
Activities
Timor-Leste has been affected by civil unrest since May 2006. The progress of the project
was influenced by periods of civil unrest right up to 11th February 2008 (the date of the
assassination attempts on the President and Prime Minister). Since then the security situation
has been relatively quiet.
Regulatory policies of the Government (as regards SERN and Ministry of Finance) have
become much clearer, and administration activities have improved as new staff are recruited
and trained in the Natural Resources area. Local staff capacity has remained scarce in the
Finance Ministry, and this situation has been exacerbated by departure of several staff on
overseas studies.
Project work in support of Natural Resources (SERN)
For the first 6 months of 2008 project work focussed on the daily operation of the petroleum
business of DNPG (former EMRD, later OGED), and management of the 6 Production
Sharing Contracts (PSCs) in the sovereign areas. DNPG staff managed the PSCs with
increasing confidence throughout this period.
Plans for reorganisation of the petroleum sector were unveiled by SERN early in 2008 and
this led to the Decree law for the new National Petroleum Authority (ANP) being passed on
19th June, and the official formation of ANP on 1st July 2008.
The staff of ANP have been drawn from DNPG and the TSDA (Timor Sea Designated
Authority). ANP is now the single Regulatory Authority for both JPDA and Sovereign Areas
of Timor-Leste. All senior positions in ANP are filled by Timorese.
As from 1st July 2008 ANP is now the primary focus of the Advisors allocated to the
Secretary of State for Natural resources.
Abryl Ramirez has been allocated full-time to support ANP, but initially had no geological
counterparts. She has been involved in many different aspects of ANP work besides geology.
ANP has a large workload to manage some 14 PSCs.
Exploration in 9 offshore areas during 2008 has mainly involved acquisition of 2D and 3D
seismic, and interpretation of geological data. Well picking is in progress by the end of 2008,
and the Contractors have an obligation to drill 10 wells in 2009.
Eni made a significant discovery in block 06-105 – the Kitan field, and work is in progress to
prepare development plans.
In addition, Woodside are progressing with Development plans for the Greater Sunrise fields,
and ANP is heavily involved with these plans.
Some work has been done on possible offshore licensing rounds for next year, pending
Government decisions whether to go ahead.
As regards, possible onshore licensing, it appears there is no political will to progress this at
the present time.
The Lafaek database is used by ANP, and workshops led by NPD Stavanger ensure its
continued development.
ANP moved into new offices in Palacio at beginning of August, and Carlos has been heavily
involved assisting them with IT and database support. He is allocated 50% to ANP support
and 50% to SERN.
Project work on Education Support
HR development (particularly scholarships and training) is a major focus of SERN. Rebecca
Denham has made a huge contribution to help her HR counterpart (Ana Ribiero) to organise
the new scholarship programmes.
The project funded scholarship programme has continued, with one post-graduate student in
Stavanger, 4 undergraduate students at the University of Western Australia (UWA), and one
completing a certificate in civil engineering in TAFE WA in preparation for a Diploma in Oil
and gas Engineering.
The project’s small grants programme was discontinued in early 2008, but there are still 35
students receiving up to $785 each to complete their degrees.
The small grants programme has been replaced by several programmes funded by SERN.
Some previous small grant awardees graduated and were employed by SERN – however their
English was inadequate, and they were sent for extra language tuition in Australia for 6
months.
There are 2 new SERN funded scholarship programmes:
1. Transferencia - where students already studying in Indonesia are given grants if they
transfer to one of the 3 “approved” universities which have good academic standards.
Rebecca and a number of SERN staff inspected the Universities and arranged special
contracts with them to agree fees and funding arrangements for the students. A total of
64 students are taking part in this programme.
2. Ulan Mamar – scholarships to study in Australia. Students aged 17-21 were selected
from high schools country-wide. Some 730 students applied, and independent tests
were made of their academic abilities by a team of Indonesian professors. A total of 33
students have received these prestigious scholarships.
Rebecca has been instrumental in arranging the above programmes and extended her contract
in order to finalise them.
In addition, many SERN staff have been sent on short training courses overseas – to Malaysia
and Korea as part of bilateral aid from these countries.
Focus in staff development shifted back to English language. Vicente Pinto, Joachim de Jesus
Amaral and Amandio Gusmao went to NZ and Australia for up to 6 months of English tuition.
These courses were funded and arranged by SERN.
The project arranged a geological field trip with Francisco Ferreira for students in geology
and petroleum engineering from ITATS and DTI.
Project work in support of the Ministry of Finance
The Fiscal Policy and Petroleum Fund Advice Unit in the MoF is still short of local staff and
highly dependent on international advice. This results in Vidar’s work being more execution
rather than knowledge transfer. Vidar’s workload has been very high, due to ambitious budget
exercises and the desire of the Finance Minister to improve the returns on Petroleum Fund
investments.
The Petroleum Tax Division in the MoF is short of local staff and is very vulnerable to loss of
staff and capacity. The Division is still very dependent on foreign advisers to carry out its
tasks. This is fully recognized by the Minister, but staff are still often sent for overseas
training which exacerbates the staff shortages.
The Petroleum Tax Advisor has responsibility for revenues from JPDA as well as sovereign
areas, and much work has been necessary to try to get cooperation with Australian tax
authorities. This has proved very difficult
MoF still has a deficiency of capacity in the areas of Petroleum Economics and Commercial
Analysis, due to the limited availability of Alistair Watson (part-time consultant)
8.2
Use of inputs
The financial input has been used efficiently, and routine procedures have been followed for
remuneration of NPD staff and contractors.
Procedures for handling of local purchases and education/training expenses paid out of Dili are
well established. The details of the accounts are shown in Appendices 1 and 2.
Inputs in kind (office facilities, utilities and logistics support from SERN and NPD) have not
been charged. The inputs in Dili have been consistently of low quality, due to problems with
utilities – particularly electricity supplies. Internet access became so bad that the project installed
its own satellite dish and internet connection in May 2008 and this facility was also used by
SERN and ANP.
8.3
After the change in Government in August 2007, it took some time before all the necessary
policies were in place in both Ministry of Finance and SERN.
Administrative changes in Norway (the decision that NPD would not undertake work for
other Ministries) led to some confusion on Governance responsibilities. This has now been
clarified, but future governance and reporting will be more complex than previously.
A major problem is that Advisors are frequently not able to act in an advisory role – they are
often expected to be active “doers” – especially in the Ministry of Finance (and BPA). Also in
SERN and ANP there are insufficient or inadequate “counterparts” to be trained or to develop,
and this has hindered capacity building.
It is a general problem in Timor-Leste petroleum administration that staffing levels are low
compared to the level of activity. This results in a situation where advisers feel that they are
unable to transfer sufficient knowledge to Timorese counterparts and that a large part of their
task is working as specialists and not as trainers.
9.
Phase 1 of the project formally ended in September 2008. This is the close-out report.
The Phase 2 Programme will require different reporting formats, with different
performance indicators and expected outputs.
The first Steering Committee for the new Programme will meet on 25th November 2008,
in order to prepare in timely manner for the Annual Meeting targeted for 1 st quarter of
2009. This Steering Committee has to prepare a work plan and budget for next year.
The project advisers in Dili have prepared a draft 2009 budget and work program for
consideration by the new Steering Committee.
There is therefore no work plan and budget for next year included in this report.
10. Total cost allocation
A breakdown of the total cost of the project per year is shown in tables 8a and 8b. This is
included for completeness sake, and for comparisons with previous Annual Reports.
Table 8a
Total cost allocations per year (1000 NOK)
2002
Year
-2003
2003
2004
2005
2006
2007
2008
Sum
Assist UNDP
71
71
97
97
assistance
77
Petroleum Advisors
Project Manager
451
528
746
746
12
1463
1224
1 659
1945
1337
7640
316
335
407
420
671
540
2689
222
625
63
325
245
1480
Geological Advisor
865
1082
649
2596
Legal Advisor
924
1382
2306
593
444
1264
Local implementer
advisor
(Interim)
227
76
190
215
481
MoPF
1615
1687
1417
4719
to MoPF
471
2032
536
3039
250
222
283
307
1730
1512
1293
46
365
571
0
982
355
593
education needs
88
Data Management
Misc. Equipment
98
workshops
468
379
459
6868
1655
382
912
-12
5471
623
544
832
1169
1093
5108
61
145
211
5
713
2026
2 534
Recruitment
Total
547
140
Travel assistance
Miscellaneous and
contingency
755
242
721
86
35
1084
3
-6
-2
21
0
129
145
896
7320
7272
10947
13917
8355
49420
Table 8b
Total cost allocations per year (1000 USD, Exchange rate 6.5 NOK/USD)
2002
Year
-2003
2003
2004
2005
2006
2007
2008
Sum
Assist UNDP
11
11
15
15
assistance
12
Petroleum Advisors
69
81
115
115
2
225
188
255
299
206
1175
49
52
63
65
103
83
414
34
96
10
50
38
228
Geological Advisor
133
166
100
399
Legal Advisor
142
213
355
91
68
194
12
29
33
74
MoPF
248
260
218
726
to MoPF
72
313
82
468
34
44
Project Manager
Local implementer
advisor
(Interim)
35
38
education needs
14
Data Management
15
Misc. Equipment
workshops
72
58
71
266
233
7
56
88
22
312
1057
151
55
91
255
59
140
-2
842
96
84
128
180
168
786
9
22
32
1
110
199
390
Recruitment
Total
84
47
Travel assistance
Miscellaneous and
contingency
116
37
111
13
5
167
0
-1
0
3
0
20
22
138
1126
1119
1684
2141
1285
7603
11. Appendices
Appendix 1: Account of local expenditure
Balance Statement
01 January to 30 September 2008
REVENUE
Transfer to local account in 2008
$
Revenue
$ 102,721.90
Expenditure
74,310.63
$ 74,310.63
Balance
$ 28,411.27
Petty Cash on Hand
Total balance
$
725.73
$ 29,137.00
EXPENDITURE
Purchases
Date
1-Jan08
14Feb-08
17-Jul08
66,020.00
36,701.90
Receipts from 1st January to 30th September 2008
Details
Amount
66020
Transfer from Hans Peter, Ticket from Bali to Dili to
Bali
Transfer - Norway for Ticket for S. of State delegation
Norway
Interest Jan
Interest Feb
Interest March
Interest April
Interest May
Interest June
Interest July
Interest August
Interest September
Total Receipts
989
35521.9
33.62
29.63
30.53
18.59
17.95
15.24
18.52
14.53
12.39
$ 102,721.90
Expenditures from 1st January to 30th September 2008
Bank
fee
Salary
Computer
S/H-ware
Office
Equip.
Monthly
Tel. &
Internet
Wkshops/
Training &
Meetings
Overseas
Travel
Training
Petty Cash
withdrawal
Total
Expenses
16
2615
7949
1212
8270.03
343
40638.6
7000
74310.63
Appendix 2
SUMMARY YTD expenditure.
Education Fund 2008 Expenditure
By Area
Scholarships
Small grants
Workshops in Timor
Workshops overseas
Adviser expenses
Miscellaneous
Total
$173,959.93
$29,530.00
$7,630.20
$24,339.33
$1,918.27
$314.42
$237,692.15
By Type
Flights
Accommodation
Living Expenses/Per diem
English tuition
Foundation Courses
University tuition
TAFE or Other tuition
Conference Fees
Materials
Health
Bank Fees
Consultants Fees
Room Hire
Catering/Entertainment
Equipment
Miscellaneous
TOTAL
$18,548.16
$13,376.78
$88,722.68
$17,298.21
$15,720.00
$59,733.53
$12,158.92
$0.00
$2,444.03
$557.42
$808.00
$4,500.00
$0.00
$0.00
$0.00
$3,824.42
$237,692.15
Appendix 9.
Appendix 10.
REPÚBLICA DEMOCRÁTICA DE TIMOR-LESTE
Ministry of Development & Environment
Energy and Mineral Resources Directorate
Agreed
Minutes of the 2nd Annual Meeting between Timor-Leste and Norway, held in the
E&MR conference room, Fomento Building, Dili on 26th January 2005.
NORAD/NPD Petroleum Project
1.
Opening statements
The chairperson, Mr. Eusebio Jeronimo, Director of NDPEAC-MoPF opened the meeting at
10.00am after a delay due to power problems in Fomento. Mr. Eusebio Jeronimo welcomed
the participants and highlighted the objectives and the benefits of this project for Timor-Leste.
All participants briefly introduced themselves. Attendance Sheet – Attachment 1.
2.
The agenda was approved.
3.
Documents presented
Annual Report to NORAD for the period of 2004
A national integrity system
Proposed work plan for January to December 2005
4.
Presentation of 2004 annual report
Mr. Ytreland covered the highlights of the report and invited for any questions or
clarifications as he proceeds. Points raised about the report were:
Mr. Sund referred to a paragraph in the project agreement that gives flexibility to
change the implementation of the project to adapt to the changing needs.
Mrs. Roti stated that costs incurred for the work done by the Norwegian Mapping
Authority will be reimbursed in a formal manner in the form of an addendum to the
agreement.
Mr. Ytreland talked about the project’s involvement in trying to determine viability to
bring the Sunrise gas to Timor-Leste. The project in now suspended due to an impasse
of negotiations between Australia and Timor-Leste. It would cost an estimated 1
million USD to do seabed condition survey.
Mr Sund asked about the commercial consequences for the postponement of the
development of Sunrise field.
Mr. Geir said that the best person to provide an accurate reply would be Mr. Einar
Risa, Executive Director of JPDA. Mr. Sund is scheduled to meet with JPDA later in
the day.
In relation to additional costs to do a sea bed condition survey to determine the
viability of building a gas pipeline to Timor-Leste, Mr. Sund indicated a possibility of
getting additional funding for such survey as continuation of this project. He said that
the money is there it’s a mater of prioritizing what is important now. He added that it
is an issue that should be raised in the steering committee meeting.
Mrs. Roti raised a point that 2004 budget was approved in the annual meeting but then
it was changed by the steering committee.
Ms. Liv Marte asked what if the changes are important and necessary. Mrs. Roti
agreed that changes can be made but it has to be reported to the embassy. The embassy
has taken on the responsibility to monitor such projects.
Mrs. Roti asked for clarification about significant difference between the budget and
the embassy’s records of expenditures. Also stated that this difference could be due to
the fact that not all invoices for 2004 have been submitted by NPD.
Mr. Ytreland briefly mentioned the petroleum fund which is being managed by the
IMF. Mr. Sund added that the Petroleum Fund was an initiative by Timor-Leste to
adopt the Norwegian model. It is a good initiative if well managed and followed up it
will benefit Timor-Leste.
In concluding the presentation of the annual report, Mr. Ytreland commended the great
support given by NPD to the project and is confident that this support will continue.
5.
A National Integrity System
Mrs. Liv Marte presented the National Integrity System and highlighted the institutions that
are already established and those that are yet to be established according to the constitution.
She also emphasized the importance of the balance of power between these institutions and
noted that at present, it is not well balanced.
Both, Mrs. Roti and Mr. Sund said that it was a very good summary of the current governance
issues and institution building situation of Timor-Leste. This type of report will help the
Ministry of Foreign Affairs get a better understanding of the development in Timor-Leste.
Mr. Sund asked to have it recorded in the minutes that such presentation become a regular
item in the future agendas to report general development in Timor-Leste.
6.
Work plans and budget for the following year
Mr. Geir presented the work plan for 2005 covering the time line for the licensing round of
the offshore area and plans for proposed workshops, meetings and reviews for this year.
Ms. Liv Marte covered in details the plan for implementing training abroad and the
announcements and the process of awarding scholarships to public servants and non public
servant candidates, small grant assistance for students outside Timor-Leste and coordination
of study assistance provided by other organizations.
7.
Other business
The issue of possible financing of a Senior Timor Sea Revenue Advisor was raised, and it was
suggested that NPD could administer and recruit the position, depending on the overhead cost
of this relative to financing the position through UNDP. Mrs. Roti stated that she would make
a cost comparison between the two options.
Mrs. Roti asked for information on how to get in contact with major NGO. It was suggested
that NGO Forum is the best place to get accurate information about all NGO in TL. Mrs. Roti
was provided with NGO Forum contact information.
8.
Conclusion
The budget was approved.
Mrs. Roti stated that country to country projects are now managed by the Ministry of Foreign
Affairs.
The meeting closed at 12:40pm.
Prepared by: Carlos Soares
Attachment 1
List of Attendants
Name
Eusebio da C. Jeronimo
Position
Director of NDPEAC
- MoPF
Phone#
7230114
Email Address
[email protected]
Marit Roti
Norwegian Embassy
Jakarta
[email protected]
Mr. Even Sund
Technical Dept.
NORAD, Oslo
[email protected]
Mr. Vicente da C. Pinto
Director of E&MR MDE
7236320
[email protected]
Mr. Geir Ytreland
Advisor/Project
Manager
7255133
[email protected]
Liv Marte Nordhaug
Education & Good
Governance Advisor
7269118
[email protected]
Mr. Carlos Soares
Project Implementer
7234982
[email protected]
Appendix 11.
Appendix 12.
Appendix 13.
List of key participants, project staff, advisers and consultants
1.
Project Steering Committee
Mari Alkatiri. Prime Minister 2002-2006. Minister of Development and Environment
2002-2005. Minister for Natural Resources, Minerals and Energy Policy 2005-2006.
Chairman of the project steering committee 2003-2005.
Jose Teixeira. Sectretary of State for Natural Resources, Minerals and Energy Policy
2005-2006. Minister for Natural Resources, Minerals and Energy Policy 2006-2007.
Chairman of the project steering committee 2005-2007.
Alfredo Pires. Secretary of State for Natural Resources from 2007. Chariman of the
project steering committee 2007-2008.
Bente Nyland, Director, Norwegian Petroleum Directorate. Member of the Steering
Committee 2002-2004
Tormod Slåtsveen, Director, Norwegian Petroleum Directorate. Member of the
Steering Committee 2004-2007
2.
Project managers
Barid Manna (UNDP), 2003
Geir Ytreland, 2004-2006
Roger White, 2006-2008
3.
NPD Project Coordinators
Erling Kvadsheim, 2002-2008
Else Ormaasen, 2008
4.
Politicians and staff directly involved in the project
MDE – MNRMEP – SERN
Mari Alkatiri, Prime Minister 2002-2007, Minister 2002-2006
Jose Teixeira, Secretary of state, 2005-2006, Minister 2006-2007
Alfredo Pires, Secretary of State, 2007Vicente Pinto, Acting Director for Oil and Gas, 2002-2004
Amandio Gusmao, Director for Oil and Gas, 2004Francisco Monteiro, Special Adviser to the Secretary of State, 2007List of relevant staff
MoPF – MoF
Madalena Boavida. Minister of Planning of Finance 2002-2007
Emilia Pires, Minister of Finance 2007-2008
Cristino Gusmao, Director for the Macroeconomic and Tax Policy Unit, Ministry of
Finance, 2003NN, Director of East Timor Revenue service
Angelo de Almeida, Technical Officer, Petroleum Tax Division
Directorate for the Environment
NN, Director
Antonio Lelo Taci, Leader of the Environmental Impact Assessment Unit
Timor Sea Office
Manuel de Lemos, Director
Banking and Payments Authority
Abraao Vasconselos, Director
Timor Sea Designated Authority
Einar Risa, Managing Director 2002-2006
Jose Lobato, Managing Director 2006-2007
Gualdino da Silva, Managing Director 2007
Nick Kyranis, Technical Director
Nini Borges, Legal Director
Maria Jose Campos, Lawyer
… Azevedo, Adviser to the Managing Director, 2006-2007
Other key Timor-Leste participants
Afonso Alexio, Project coordinator at CIDA and Norwegian Embassy project office
2002-2004. Key point of contact and organiser for Norwegian visits and missions.
Resident advisers
The following resident advisers were engaged by and paid by the Project:
Barid Manna. Energy Adviser (UNDP) and primary point of contact up to end 2003
and Interim Project Manager, January to March 2004.
Geir Ytreland. Project Manager and Resource Management Adviser, MDE –
MNRMEP, 2004 to 2006.
Carlos Soares. Implementer, MDE – MNRMEP – SERN, July 2003 to end of Project
Liv Marte Nordhaug. Education and Good Governance Adviser, MDE – MNRMEP,
2004 to 2005
Samuel V. Robinson. Petroleum Fund Adviser, BPA, 2005 to 2006
Sigurd Klakeg. Fiscal Policy and Petroleum Fund Adviser, MoPF, 2005 to 2007
Tørres Trovik. Petroleum Fund Investment Adviser (part-time), MoPF, 2005 to end of
Project.
Roger White. Project Manager, MNRMEP – SERN, 2006 to end of Project.
Håvard Holterud. Tax adviser, MoPF, 2006 to 2008
Rebecca Anne Denham. Education adviser, MNRMEP – SERN, 2006 to end of Project
Anne-Lene Midseim. Legal adviser, MNRMEP, 2005 to 2006
Rosalind Waddams. Geology adviser, MNRMEP, 2005 to 2006
Vidar Ovesen. Fiscal Policy and Petroleum Fund Adviser, MoPF, 2007 to the end of
the Project.
Abryl Ramirez. Geology Adviser, SERN, February 2008 to the end of the Project
Resident advisers funded by Norway, indirectly associated with the project
The following resident advisers were working through other organisations, but in close
contact with the Project. They were all financed by Norway.
Halvard Enoksen (UNDP), Tax adviser, MoPF, 2003-2004
Tore Bjordal (UNDP), Resource Management Adviser, MDE, 2003-2004
Einar Risa (UNDP, later direct financing via the Embassy), Managing Director,
TSDA, 2003-2006.
Terje Iversen (IMF), Petroleum Fund Adviser, BPA, 2005-2007
Thomas Ekeli (IMF), Fiscal Policy and Petroleum Fund Adviser, MoPF, 2003-2004
Azevedo (Direct financing via the Embassy), Adviser to the Managing Director of
TSDA, 2006-2007
Key non resident consultants
The following is a selection of key consultants from a long list of people who have been
involved
Elke Ender, HR consultant, engaged in 2003 to carry out a mapping of the HRD
potential in EMRD.
Alistair Grey, Geophysicist, engaged in 2004 and 2005 to carry out regional
geophysical mapping and planning of further seismic acquisition.
Sverre Lund, Pipeline specialist, engaged in 2004 to carry out a review of existing
options for a gas pipeline from the Sunrise Field to shore. Occasionally engaged in
2005 and 2006 for follow-up work.
NPD staff
The following NPD staff have visited Timor-Leste as part of the Project activities or have
otherwise been directly involved in the Project:
Erling Kvadsheim, Project Coordinator up to January 2008
Else Ormaasen, Project Coordinator January 2008 to the end of the Project
Bente Nyland, Member of Steering Committee, 2002 to 2004
Tormod Slaatsveen, Member of Steering Committee, 2004 to 2007
Tore Bjordal, Resident UNDP adviser 2003-2004, later consulted on several occasions
on field development and pipeline issues.
Abryl Ramirez, Resident Geology Adviser, 2008
Øystein Kristiansen ,NPD’s Norad coordinator, also involved in the planning of the
Project
Kjell Reidar Knudsen, Data management specialist
Odd Herman Oksvold, Data management specialist
Mari Kvaal, Petroleum Economist
Jan Stenløkk, Geologist and adviser on petroleum related environmental issues
Jorunn Romsbotn, Document management and archive specialist
Britha Skjellevik, NPD personnel management

Assistance in developing the management of the petroleum sector in

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