31 March 2014

Labele evita produsaun petróleu atu tun

Kampu Kitan iha Area Konjunta ba Dezenvolvimentu Petróleu ne’e deskobre iha 2008, no kampu ne’e mak úniku ida ne’ebé hetan dezde halo esplorasaun barak hafoin Tratadu Tasi Timor ne’ebé ilegál vigora iha 1991.  Dezde 2007, na’in ba Kontratu Fahe Produsaun Kitan nian JPDA 06-105 mak operadór sira hanesan, Eni (40%, hosi Italia), Inpex (35%, Japaun) no Talisman Resources (25%, Canada).

Tinan kotuk, kompañia sira hotu rende ba area kontratu tomak 06-105, úniku de’it la inklui parte ba kampu Kitan nian. Eni, Inpex no TimorGAP asina Kontratu Fahe Produsaun foun, PSC, JPDA 11-106, atu esplora ba hodi buka kampu mina-rai adisionál balu ne’ebé bele fó lukru, maski susar atu hetan rezerva boot.

Kitan hahú nia produsaun ba petróleu iha 2011, no atinje nia produsaun másimu maizumenus loron neen hafoin loron produsaun primeiru. Kitan selu maizumenus tokon $900 no taxa sira ba Timor-Leste dezde Outubru 2011, maski kampu petróleu no gas Bayu-Undan selu dala sanulu ba Timor-Leste kompara ho nia durante períodu ne’ebé hanesan. Maski nune’e reseita Kitan nian ne’e signifikante, hodi taka fatin ba maizumenus 1/3 hosi osan sira ne’ebé Governu Timor-Leste gasta hosi Fundu Petrolíferu durante tempu ne’ebá.

Infelizmente, produsaun petróleu hosi Kitan hahú ona tun loloos dezde tinan rua kotuk nee, hanesan hatudu hosi liña mean iha gráfiku ne’ebé mai hosi Relatóriu Annual 2012 Autoridade Nasionál Petróleu (ANP). Kampu mina-rai tomak la’o hanesan ne’e – tanba bainhira foti sai petróleu hosi rai okos, nune’e rezerva ne’ebé sei iha ne’e nia presaun sei menus, hodi halo susar liu atu supa sai rezerva hirak ne’e. Barra iha gráfiku ne’e reprezenta gas ne’ebé sai hamutuk ho petróleu, maibé Kitan laiha gas ne’ebé natoon ba kompañia sira atu fan hodi hetan lukru, tanba ne’e mak sira sunu de’it gas ida nee ba iha atmosfera.

Indikasaun seluk tan ba produsaun Kitan ne’ebé atu tun mak montante hosi bee ne’ebé haketak hosi mina-matak bainhira sai hamutuk, ne’ebé sa’e hela husi fatór 10 durante 2012. ANP seidauk publika sira nia dadus ba 2013, maibé ohin loron provavelmente Kitan prodús ona bee barak duke mina-rai.

Bee ne’ebé sa'e hanesan ne’e iha Bayu-Undan halo ConocoPhillips no nia parseiru sira iha tinan kotuk halo projesaun ida ne’ebé tun maka’as liu ba reseita futuru hosi Bayu Undan, hodi redús tiha reseita ne’ebé espera atu hetan iha futuru hosi kampu ida ne’e maizumenus ho montante billaun $8, ka besik metade, no hein katak kampu ne’e sei remata nia produsaun iha 2021, tinan hat lalais liu kompara ho estimatizasaun anterior nian, hanesan hatudu iha grafiku hat ne'e husi Livru 1 OJE 2014. Produsaun iha Bayu-Undan sa'e boot liu iha 2007 no reseita sira boot liu iha 2012. Reseita sira ne’e tun lalais liu – royalty petróleu durante trimester ikus iha 2013 ne’e iha 43% ki’ik liu kompara ho trimester ikus iha 2011. Produsaun gas nian ne’e konstante liu – gas ne’e limita hosi kapasidade kadoras no planta LNG – maibé sei monu tun tan iha tinan balu oin mai.

Maski produsaun Kitan nia dadus ba 2013-2014 seidauk bele hetan, maibé pagamentu projetu ne’e ba Timor-Leste nia Fundu Petrolíferu ne’e tun ba maizumenus tokon $15 kada fulan, menus ¼ hosi sira nia valor iha inísiu 2013. Reseita too ona iha nia másimu iha Janeiru 2013, nia mai ikus liu kompara ho produsaun másimu nian, tanba presu mina-rai ne’ebé as iha merkadu mundiál no tanba Kitan selu taxa ki’ik to’o Setembru 2012, bainhira investimentu kompañia sira nian rekupera ona.

Livru 1 hosi OJE 2014 RDTL nian hein katak Kitan atu fó tokon $430 tan ba iha reseita estadu molok produsaun remata iha 2016; ida ne’e dala ruma bele akontese kari posu rua tan iha Kitan bele fornese mina-rai barak liu no menus bee, maski liu 2/3 hosi reseita kampu ne’e nian ita hetan ona.

Kompañia sira iha konsorsiu Kitan nian hatene katak kampu ne’e sei tun lalais liu kompara ho ida ne’ebé sira ekspeta. Tuir Relatóriu Annual Talisman nian iha 2013, “Durante 2013, Kitan iha Australia (sic) hetan impaktu hosi asuntu lala’ok posu nian, nudár rezultadu ida, Kompañia halo revizaun ida ne’ebé atu hatún estimasaun ba rezerva ne’ebé atu rekopera no halo gravasaun ba despeza ba hadi’ak sasán at nian tokon $55 molok kua hosi taxa (tun ba tokon $27 bainhira kua ona ba taxa).” Dezde Talisman hetan ¼ hosi kampu, ida ne’e reprezenta rezerva ida ba estimasaun redusaun nian ba Kitan tokon $22o iha 2013, ne’ebé sei redús Timor-Leste nia reseita maizumenus besik tokon $100.

Kontribuisaun boot hosi Kitan ba Timor-Leste loloos atu serve hanesan manu canary ida iha minériu fatuk karvaun nian, ho nia rezerva ne’ebé tun ne’e bele sai alerta ida ukun na’in sira ba realidade ida katak ita nia riku soin petróleu no gas ne’ebé naun renovavel sei la dura ba tempu ida ne’ebé naruk liu. Ulun boot sira tenke adopta polítika sira ne’ebé realistiku no halo esforsu ida ne’ebé sériu tebes atu dezenvolve ekonomia lokál ida ne’ebé produtivu atu troka rekursu petróleu no gas, duke nafatin sadere an ba mehi furak kona-ba posibilidade ba deskrobevimentu iha futuru. Alternativu sira ne’ebé klaru katak halo ita ta’uk duni.

Oil production inevitably declines

The Kitan oil field in the Joint Petroleum Development Area of the Timor Sea was discovered in 2008, and is the only commercially valuable field  discovered since the flurry of exploration after the illegal Timor Gap Treaty came into effect in 1991. Since 2007, Kitan Production Sharing Contract JPDA 06-105 has been owned by the operator, Eni (40%, from Italy), Inpex (35%, Japan) and Talisman Resources (25%, Canada).

Last year, the companies gave up all of the 06-105 contract area except the part immediately over the Kitan field.  Eni, Inpex and TimorGAP signed a new PSC, JPDA 11-106, to explore for additional profitable oil fields, although large reserves are unlikely.

Kitan began producing oil in 2011, and reached its peak of production about six months later. Kitan has paid about $900 million in royalties and taxes to Timor-Leste since October 2011, although the Bayu-Undan oil and gas field paid Timor-Leste ten times as much during the same period. Nevertheless, Kitan's earnings are significant, replacing about one-third of the money Timor-Leste's Government spent from the Petroleum Fund during that time.

Sadly, oil production from Kitan has been declining steadily for the last two years, as shown by the red line on this graph from the 2012 Annual Report of the National Petroleum Authority (ANP). Every oil field is like this -- as oil is removed from the ground, the remaining reserve has less pressure, making it more difficult to extract. The bars on the graph represent gas which comes out with the oil, but Kitan does not have enough gas for the companies to sell it profitably, so they just flare (burn) it off into the air.

Another indication of declining Kitan production is the amount of waste water which emerges mixed with the oil, which went up by a factor of 10 during 2012. The ANP has not yet published 2013 data, but today Kitan probably produces much more water than oil.

A similar increase in water from Bayu-Undan led ConocoPhillips and its partners to significantly downgrade their projections of future Bayu-Undan revenues last year, reducing expected future revenues from that field by about $8 billion, or nearly half, and expecting the field to end production by 2021, four years earlier than previously estimated, as shown in these graphs from 2014 Budget Book 1. Bayu-Undan production peaked in 2007 and revenues peaked in 2012. They are dropping fast -- oil royalties during the last quarter of 2013 were 43% lower than during the last quarter of 2011. Gas production is more constant -- it is limited by the capacity of the pipeline and LNG plant -- but will fall precipitously in a few years.

Although Kitan production data for 2013-14 is not yet available, the project's payments into Timor-Leste's Petroleum Fund have fallen to about $15 million per month, less than a fourth of their value in early 2013. Revenue peaked in January 2013, later than the peak of production, due to higher world oil market prices and because Kitan paid lower taxes until September 2012, when the companies' investment had been repaid.

Book 1 of the RDTL 2014 General State Budget expects Kitan to provide $430 million more in state revenue before production ends in 2016; this might be possible if two new wells at Kitan extract more oil and less water, although more than 2/3 of the field's revenues have already been received.

The companies in the Kitan joint venture know that the field is running out more rapidly than expected.  According to Talisman's 2013 Annual Report, "During 2013, Kitan in Australia (sic) was impacted by well performance issues and, as a result, the Company made a downward revision to estimated recoverable reserves and recorded an impairment expense of $55 million pre-tax ($27 million after tax)." Since Talisman owns one-fourth of the field, this represents a reserve estimate reduction for Kitan of $220 million in 2013, which will reduce Timor-Leste's revenues by nearly $100 million.

Kitan's biggest contribution to Timor-Leste could be to serve as a canary in a coal mine, with its imminent depletion alerting policy-makers to the reality that our non-renewable petroleum wealth will not last very long. Timor-Leste's leaders must adopt realistic policies and make a serious effort to develop a productive local economy to replace nonrenewable oil and gas reserves, rather than relying on wishful thinking about possible future discoveries. The alternatives are frightening indeed.
Update, April 2015
In the year since this blog was written, we are sad to report that revenues from Kitan have fallen even more drastically than we expected. Total Kitan revenues to Timor-Leste during 2014 were only $50.1 million, less than one-sixth of the amount received during 2013, partly due to lower oil prices but mainly because the field is nearing depletion. On 23 March 2015, INPEX announced that it was reducing its expectation of future returns from its 35% share of Kitan by $63 million mainly due to "deteriorating market environments."