June 26, 2015 11:03 pm JST
Seeding domestic industry

East Timor prime minister favors country's coast for LNG facility

SADACHIKA WATANABE, Nikkei staff writer

Prime Minister Rui Araujo

DILI -- East Timor Prime Minister Rui Araujo expressed his eagerness to liquefy natural gas from a joint project with Australia onshore, with plans to use the resource to help develop an industrial zone in his country.

     Araujo spoke to The Nikkei Friday at the Government Palace. The discussion included the Greater Sunrise liquefied natural gas project planned in waters between East Timor and Australia.

    "We want the pipeline to come onshore," Araujo said.

     The joint project with Australia also includes Japan's Osaka Gas as an investor. Stakeholders have yet to reach a consensus on where to put the liquefaction facility.

     "We can develop our oil and gas industry, a big supply base, on the south coast," Araujo said, suggesting that this is a long-term goal. He indicated that East Timor seeks to use natural gas from the Greater Sunrise project to help establish an industrial zone.

     Other stakeholders see offshore liquefaction as more practical, considering the distance to land and ocean depth of the gas field. If East Timor goes ahead with liquefaction onshore, that would mean more risk and less profitability for Australian and Japanese companies.

     Araujo mentioned the $700 million order the government has placed with South Korea's Hyundai Group for facilities, underscoring his resolve to develop the country's south coast.

     East Timor relies on a fund of about $16 billion, financed by resource-related income, for most of its national budget. To lessen its dependence on resource revenue, the country plans to develop agriculture and tourism, Araujo said. He added that legal frameworks on investment, bankruptcy, taxation and other areas should be reviewed to promote investment from abroad.

     East Timor won independence from Indonesian occupation in 2002, and applied in 2011 for membership in the Association of Southeast Asian Nations.

     Araujo said there is no political opposition within ASEAN to East Timor's membership. He said the issue is more a matter of when ASEAN countries will accept that East Timor is ready economically.

Osaka Gas Co., Ltd.

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