Subject: East Timor Prepares to Launch Landmark Oil Licensing Round

International Oil Daily

April 7, 2005

East Timor Prepares to Launch Landmark Licensing Round

East Timor hopes to launch its first-ever licensing round midyear, following the completion of preparatory seismic work.

The schedule -- described by industry sources as tight but feasible -- envisages releasing data packages at the end of June. Companies would then be given six months to evaluate the data, with bids likely due at the end of the year. Awards would follow in the first quarter of 2006, sources said.

Late last year, a senior East Timor official spoke of awarding licenses by the end of the second quarter of 2005 (IOD Dec.08,p4). The bid round will cover offshore areas ranging from the coast to water depths of 3,000 meters. The number and size of the blocks to be offered will depend on analysis of seismic work, which is currently under way.

Around 6,700 kilometers of 2-D seismic was shot in January and February by a partnership of Norway's Geo Global Services and PetroChina subsidiary BGP (IOD Feb.18,p9).

The survey mapped the area of the Timor Sea within East Timor's exclusive economic zone, north of the Joint Petroleum Development Area shared with Australia. It does not cover areas subject to a maritime boundary dispute between the two countries (IOD Oct.29,p5).

Late last year, East Timor introduced legislation to govern new licensing, aiming for a competitive and transparent regime (IOD Dec.22,p7). Local sources already report interest from companies in the tender, including from Chinese firms.

Hopes are high among East Timor officials and are backed by preliminary indicators. Speaking at the Seapex 2005 exploration conference in Singapore, Chris Kenyon, geologist with UK Premier Oil, said East Timor's geological structures have parallels to those in parts of West Africa, particularly Mauritania, where Australian Woodside has had good drilling results.

Still, little is known about the real potential of the area being readied, with promoters describing it as effectively virgin acreage. The last significant work was in 1974-75, when Australia's Timor Oil and Woodside Burmah Oil shot 1,500 km of seismic and drilled one well, Mola-1, which found non-commercial volumes of gas. Activity ground to a halt after the Indonesian occupation of 1975. Exxon and Pertamina shot more seismic in 1992, as did US services company Veritas in 1996, as part of regional work in the Timor Gap.

Onshore East Timor, 22 wells were drilled between 1914 and 1975, of which around one-quarter showed signs of oil or gas. Early wells tried to exploit oil seepages, which are mostly located on the southern coast of East Timor. In 1956, with the founding of Timor Oil, a serious exploration and drilling campaign began onshore. In 1967, the first offshore well was drilled below the southern coast, with inconclusive results.

East Timor won independence in 2002, leading to the current licensing round by the new government.

David Pike and Christian Schmollinger, Singapore

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