Timor-Leste has made significant improvementin the last couple of years, with th e pillarsof democracy now physically

present andbeginning to function, a leading economist hassaid.In this issueMapping the Country s Rich Biodiversity...3A Secon d Chance to Learn for Adults...4Promoting Rural Development...5Embracing Biogas Technology...6Continued on page 2....installing a bridge in Viqueque. Despite re cent political setbacks, Professorright track to sustainable social and economic development.UN Adviser optimisticabout Timor-LesteTimor-Leste -------------------------------------------------------------------------------Page 2 The resources that are being accumulated in thePetroleum Fund give Timor-Leste a real opportunityto achieve economic growth that will benefit thelives of all it s citizens in the not-so-distant future, hesaid.The highlight of his visit was a public lecture at theUniversity of Timor-Leste where he said that Timor-Leste mu st avoid the pitfalls of high growth but highinequality characteristic of emerging economiesin Asia. Asia is good at producing growth but notgood at distributing i t, he said, calling for inclusive growth that benefits all segments of society ascri tical in the war against poverty and inequality. Meanwhile, he said, the country faces manychallenges chiefly in the quantum and quality ofhuman resources and the refore, the success inimplementation of any development progammewill hinge on suc cess in implementing humanresources development. The country needsto explore the possibility of outsourcing andhiring expertise in critical areas. This should be accompanied with a clear policy of substitutingovertime with local personnel as w ell as vastlyexpanding the scholarship programme. In a mission report, he recommen ded for a movetowards a national currency for Timor-Leste inthe next three years , introduction of legislationstrengthening the Central Bank to perform initially the functions of banking regulation and supervisionand eventually to monetary po licy. The legislationshould ensure autonomy of the Central Bank toconduct monetar y policy with the prime objectiveof price stability. During his visit, Professor P asha who is the formerDirector, UNDP Regional Bureau, Asia-Pacific (RBAP)held a series of consultations with among others, thePresident, José Ramos-Horta, Prime Minister, XananaGusmão, and the Speaker, Fernando La Sama deAraújo, as well as senior government officials, formerPrime Minister, Mari Alkatiri and former Mini ster ofState Administration, Ana Pessoa, representatives ofinternational agencie s, academia, and members ofthe civil society organizations in Timor- Leste.2 Con tinued from page 1...NA typical market day in Oecusse. Target groups for moreinc lusive growth include women, youth, self employed ininformal sector as well as u nskilled and casual workers.Photo by Sammy Mwiti/UNDPVolume III September 2008ew sQuarterlyProfessor Pasha with UNDP s Rui Gomes (right) and Dr. Benjamin Corte-Rea l, Rector, UNTL, during the public lecture.Photo by Renato da Costa/UNDP -------------------------------------------------------------------------------Page 3 Timor-Leste has shown tremendous foresight insigning the international environmen tal treaties andtaking up environmental concerns even in its earlystages of deve lopment, said the UNDP CountryDirector, Akbar Usmani. He cited the designationof the Nino Santana National Park as a protectedarea in Los Palos, as a step in the right direction. This is the only park in Timor-Leste with both marineand terrest rial eco-systems, he said.With Timor-Leste being a signatory to the Conventionon Biological Diversity, the unveiling of the NBSAPis timely, systematically assess ing and addressingcapacity gaps for biodiversity planning andmanagement as a maj or constraint to effectiveconservation of the country s rich biodiversity.Among th e project s counterparts is the Secretariatof State for Environment (SoSE).Due to its unique geological and meteorologicalconditions, Timor-Leste is known to have goodquality and rare terrestrial, lake and marineecosystems. However, this uniq ue potential hasnot been adequately studied and mapped. Inaddition, the country is prone to natural---and man-made disasters--- like floods, landslides and land erosion. Therefore, the undermining of forest coverand subsequent land degradati on are consideredas the most pressing environmental problems in thecountry.Susta inable use of natural resources like forest andsea species is the focus of a new project whichwill be implemented by the Government with thesupport of the UNDP and the Global EnvironmentFacility (GEF).The 18 months, US$ 295,200 project will

culminate inthe production of a National Biodiversity Strategyand Action Plan ( NBSAP) for conservation andsustainable use of biodiversity, preparation ofTimorLeste s First and Third National Report to theConvention on Biodiversity and the e stablishment ofan operational Clearing House Mechanism (CHM),tasked with buildin g on national capacities andnetworking with respective local and internationalpa rtners.The project document s endorsement ceremonywas held at the office of the Mi nister for Economyand Development, Joao Goncalves, in Dili, on2 September 2008. It was signed by ministerGoncalves and Akbar Usmani, the UNDP CountryDirector. Thr ough this plan of action we can define ourbiological diversity status around the territory, theminister stated, adding that the Government will work more closely w ith line agencies, NGOs andother civil society to conserve our natural resources in a sustainable way. Mapping the Country s Rich Biodiversity3 ewsQuarterlyVolume II I September 2008UNDP Country Director Akbar Usmani with Economy and Development Minister Joao Goncalves, during thesigning ceremony of the biodiversity project document. Photo by Renato Da Costa/UNDParterly -------------------------------------------------------------------------------Page 4 Working in an old office block located in the VilaVerde area of Dili, capital of Timor-Leste, Danielle Boonreflects on how best to enable adults and adolescents who missed out on formal education to acquire basicreading, writing and numeracy skills. Our aim is to give a second chance to people whowant to learn but who are not part of the formal schoolsystem she says, passionately.Danielle, UNDP Adult Literacy Adviser Timor-Leste since2003, works with a group of Timorese colleague s basedat the National Directorate of Non-Formal Educationof the Ministry of Edu cation, developing curriculum,text books and training of trainers and teachers, inan effort to improve literacy rates among adults andadolescents in the country .Theirs is no mean task. The literacy rate in the countryis about 47 per cent, sta tes Adalfredo De Almeida,Coordinator at the Non-Formal Education Directorate.Bes ides, he says, there is need to socialize the adultpopulation on the importance of education. To some mountain people, education is a luxuryas they rarely interac t with the outside world but forencouragement we tell them education will lead t o alonger life, he quips.Ideally, the non-formal education system is structuredin to four phases, which takes about eight years. The firstyear involves training i n basic and advanced literacy,followed by several equivalence programs: three ye arsof primary school, two years of pre-secondary schooland finally, two years of secondary school.Timorese nationals at the ministry work togetherwith internati onal advisors to provide young andadult learners in Timor-Leste with this comple tenon-formal education system. With Cuban advisorsthey rolled out a national lit eracy campaign with 3months of basic literacy, with Danielle they haveimplemente d a national literacy program with oneyear of reading, writing and numeracy trai ning, andwith advisors from Brazil they are working on theequivalence programs f or primary and secondaryeducation.Danielle s workis concentrated on the newone yea r literacy program now implementednation wide, using new, contextualized, Timorbased literacy/numeracy manuals in Tetum andPortuguese. Her contribution goes ba ck to 2004by starting a needs assessment, developing adraft adult literacy curri culum and writing andtesting the first manuals: Hakat ba Oin (Stepforward) for b eginners and Iha Dalan (On the way)for advanced literacy learners. Since 2005 sh ecoordinates the three-year Timor-Leste Adolescentand Adult Literacy Project in collaboration with theeducation ministry as well as local and internationaldevel opment agencies.By the end of 2008 her coordination and capacitybuilding tasks w ill be finished and the Timoresecolleagues, trainers and teachers at the ministr ywill continue the national literacy program ontheir own. Every six months, more than 5000 newparticipants can enroll in this program o buildreading, writing an d numeracy skills.A SECOND CHANCE TO LEARN FOR ADULTS4Continued on page 8...Volu me III September 2008ewsQuarterly -------------------------------------------------------------------------------Page 5 The construction of five bridges in Viqueque andLautem districts will act as a c atalyst for the socialand economic development as well as the provisionof educat ion, commercial, agriculture, and healthservices in the region, Juan Carlos Rey,

the EuropeanCommission Ambassador to Timor-Leste has stated. I believe this type of contribution is extremelyimportant for the development of this part of thecou ntry which needs a more substantial support fromthe international partners, he sa id.The Ambassador made these remarks on 4 August2008 when he accompanied a highlevel delegationto the construction sites of the bridges under theAccess Improve ments to Markets (AIM) project. The 6.6 million AIM project is financed by the Eu ropeanCommission and the Government of Timor-Leste andimplemented by UNDP and UN OPS.Other dignitaries that visited the sites included,Domingos Cairo, Secretary of State for Public Worksand Deputy Special Representative of the SecretaryGener al (DSRSG) and UNDP Resident Representative,Finn Reske-Nielsen. Colombo Guglielm o, the ECTechnical Advisor and Akbar Usmani, UNDP CountryDirector were also pres ent.Meanwhile, David Chillaron-Cortiz, UNOPS PortfolioManager has praised the st rategic partnershipbetween UNOPS and UNDP, saying it offers the perfect formula for collaboration when the volume of the project is large and involving ahuge amount of funds. He said that without thisarrangement, the construction of the five brid geswould have been mission impossible, given thelogistical and practical constra ints that dogged theproject since its inception.In addition, the Minister for In frastructure Pedro Layhailed the good collaboration between his Ministryand UNDP , saying the regular steering committeemeetings provided a good forum for sharin ginformation and effective communication. I alsomeet regularly with the Country D irector, remarkedthe minister in Dili.The AIM project is expected to come to a cl osein November 2008, when the last phase of theconstruction is fully accomplishe d. Accordingto UNOPS Field Inspector Casimirio dos Reis, anestimated 2000 person days of employment wouldhave been provided during the project s lifeline,which is a major boost to the local economy. The working arrangement was organized insuch a way that communities within the vicinityof construction sites shared the emplo ymentopportunities on a rotating and equal basis, heexplained.Promoting rural dev elopment bylinking producers to markets5 N ewsQuarterlyVolume III September 2008 arterly -------------------------------------------------------------------------------Page 6 When earlier this year Aires Eddie de Almedia, atechnical consultant with the Pa rticipatory RuralEnergy Development Pilot Project of UNDP sought tointroduce bio gas technology in Kaibar, a remote areain the Maubara sub-district of Liquica th e villagerswere quite puzzled and cynical, saying they wantednothing to do with it. They implied that I was out of my mind, asking: howcan you make electricity ou t of cow dung? recallsAires, adding it was only after news of the first biogaspow ered stove in the village spread when it dawnedon them that cow dung, whose acce ss they havein plenty, has the potential to transform their livesdramatically, e specially in the kitchen front. Now everybody in the village wants biogas, Airessay s.And in a ceremony on 5 September 2008 to markthe handover of the biogas plants provided underthe project to local beneficiaries, it was song anddance galore a s residents turned out in largenumbers to welcome Government dignitaries andUNDP in commemorating the milestone event in thecommunity s history. Among those prese nt were;the Vice-Minister for Economy and Development,Rui Manuel Hanjam; Secreta ry of State for EnergyPolicy Avelino Coelho and his Environment andReforestation counterpart Abilio de Jesus Lima. UNDPwas represented by Deputy Country Directo r, HirokoTakagi. We are extremely thrilled, observed AugustoGonzalves, a villager a nd community developmentworker. The technology is quite simple and since wehave l ots of cows here we will put their waste into verygood use. The three-and-a-half-y ear US $ 410,000 ParticipatoryRural Energy Development Pilot Project implemented in close collaboration with the Government,involves the tapping of solar power, gas producedby decomposition of livestock manure, andimproved cooking stoves to meet the domesticenergy needs of communities located in isolatedareas of Liquica , Manatuto and Ainaro districts aswell as villages in the periphery of the count ry scapital, Dili. In the rural areas, people depend on firewoodfor energy and ther efore, the introduction of biogas technology is very useful as it will reducedep endence on wood and the cutting oftrees, said the Vice-Minister for Economy andDe velopment, Rui Manuel Hanjam. He expressedgratitude to UNDP for initiating the p roject, sayingit would complement Government efforts inproviding alternative ene

rgy to remote areaswhere access to electricity is difficult.Describing as excelle nt the Governmentleadership in this effort, UNDP Deputy CountryDirector Hiroko Ta kagi said the enthusiasm withwhich the beneficiaries had received the projectcou ntrywide augurs well for its future sustainability.Hiroko singled out the determ ination of 23-yearold Joao De Brito da Costa of Manatuto who afteracquiring the necessary skills was now ably sharingthis knowledge with his peers in Liquica an d eagerto continue helping other communities. Wehope in this community, there are similar youngand energetic people committed to learning thisnew technology and sharing their experienceswith other communities in the country, stated theDeputy Country Director.According to the Secretary of State for EnergyPolicy, Avelino C oelho, biogas provision is includedunder the rural energy plan but the support o fdevelopment partners like UNDP is crucial inreaching out to more people.EMBRACI NG BIOGAS TECHNOLOGY6 arterlyVolume III September 2008Photo by Joana Lima/UNDPlo gueN ewsQuarterly -------------------------------------------------------------------------------Page 7 ewsQuarterlySenior representatives of every political party in Timor-Leste will benefit from a training course in Basic FinanceSkills organized by the National Electoral Commission(CNE) in collaboration with the UNDP Support to theTimorese Electoral Cycle Project.The politicians will get acquainted with basic financean d accounting systems in the context of the Lawon Political Party Funding System which came intoeffect in June 2008. The six-week course ends on19 September, 200 8. It includes 45 training hours inessential skills such as budget, reporting, p rocurement,salaries and Microsoft money. President of CNE, Dr Faustino Cardoso, UNDP CountryDirector, Mr. Akbar Usmani and Chief TechnicalAdvisor to the UNDP el ectoral project, Mr. Andres DelCastillo were among the guests who attended theop ening ceremony of the training session, held atthe CNE Headquarters in Dili on 7 August 2008. Eachof the main political parties in the country has twoparticipan ts, bringing the total number to about 40people.Dr Cardoso stressed the signific ance of the new trainingcourse, which he said, is a further demonstration ofthe e nduring collaboration between the NationalElectoral Commission and UNDP. One of ou r main priorities this year is to continue tobuild the capacity of the political parties and we aregrateful for the support UNDP is giving us in this area.I hop e that this course will be successful and that wewill maintain our strong relati onship with the UNDP. In his remarks, UNDP Country Director Mr. Akbar Usmanihighli ghted the importance of UNDP partnershipEnhancing the Capacity of Political Part ieswith the CNE saying the training will give theneeded skills and knowledge to e nable the politicalparties to prepare accurate financial reports andtransparent accounting systems. UNDP considersthat this cooperation will effectively contrib ute tothe political stabilization of the country, and to builda democratic and t ransparent electoral system. The State budget includes US $1 million to bedistribu ted among the political parties withparliamentary representation, with the CNE t askedwith the responsibility of disbursing and monitoringthe use of these funds. 7 Volume III September 2008Peace via dialogueManuel da Costa dialogue staff Meti naro SubDistric Team, gestures during the formal launch ofthe Strengthening Insti tutional Mechanisms andStructures for Dialogue project in Dili on 8 September2008 . The US $ 0.7 million project which is facilitatedby UNDP in collaboration with the Ministry of SocialSolidarity, will engage a total of 8 teams in communitydi alogue to foster peace and reconciliation in thepost-conflict phase. It is part of a range of initiativesand support mechanisms currently being developedby the Government within the framework of theNational Recovery Strategy (NRS) Hamutuk Ha ri iFuturu to provide the internally displaced people(IDPs) with viable options for relocation from campsand reintegration into their communities. Minister ofSocia l Solidarity Maria Domingas Fernandes Alvesand UNDP Country-Director Akbar Usman i wereamong dignitaries who graced the event.Photo by Renato Da Costa/UNDP.Presi dent of CNE, Dr Faustino Cardoso (centre) makes aspeech during the opening cerem ony of the training courseas Akbar Usmani, UNDP Country Director and Andres DelC astillo Chief Technical Advisor to the UNDP electoralproject look on.arterlyewsQ uarterly The core institutional infrastructure of a democratic sovereignstate, essential

for the running of a market-based economyhas been established, observed Special U N Adviser, ProfessorHafiz Pasha, adding that Timor-Leste currently has a multi-p artysystem and democracy is functioning well compared to manycountries in the reg ion with longer history of independence. Optimistic that Timor-Leste can achieve m ost of the MillenniumDevelopment Goals (MDGs) by the year 2020, he said that for the country to move forward rapidly, there s need to organizewhat he described as the spontaneous capacity of people through social mobilization, decentralization an d promotion ofprivate sector development.Professor Pasha made these remarks in a lively exchange withstaff of the United Nations in Timor-Leste on 14 August 200 8.He was speaking at the end of a one-week visit to Timor-Lesteat the invitation of the United Nations as a Special Adviser onMacroeconomic Policy.And in a pres s conference in Dili, the former UN AssistantSecretary General reckoned that des pite Timor-Leste being inthe Least Developed Countries (LDCs) category ranking l ow inhuman development, the substantial flow of oil revenues givesthe country a r eal opportunity to progress rapidly towards theattainment of MDGs. Stressing the n eed to avoid the resource curse that hasbedeviled many oil-based economies, he des cribed the Timor-Leste Petroleum Law as extremely good saying the creationof the P etroleum Fund which accumulated to US $ 3.4 billionin July 2008, was a critical s tep towards transparency, goodgovernance and future economic development. mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm The resources that are being accumulated in thePetroleum Fund give Timor-Leste a real opportunityto achieve economic growth that will benefit thelives of all it s citizens in the not-so-distant future, hesaid.The highlight of his visit was a public lecture at theUniversity of Timor-Leste where he said that Timor-Leste mu st avoid the pitfalls of high growth but highinequality characteristic of emerging economiesin Asia. Asia is good at producing growth but notgood at distributing i t, he said, calling for inclusive growth that benefits all segments of society ascri tical in the war against poverty and inequality. Meanwhile, he said, the country faces manychallenges chiefly in the quantum and quality ofhuman resources and the refore, the success inimplementation of any development progammewill hinge on suc cess in implementing humanresources development. The country needsto explore the possibility of outsourcing andhiring expertise in critical areas. This should be accompanied with a clear policy of substitutingovertime with local personnel as w ell as vastlyexpanding the scholarship programme. In a mission report, he recommen ded for a movetowards a national currency for Timor-Leste inthe next three years , introduction of legislationstrengthening the Central Bank to perform initially the functions of banking regulation and supervisionand eventually to monetary po licy. The legislationshould ensure autonomy of the Central Bank toconduct monetar y policy with the prime objectiveof price stability. -------------------------------------------------------------------------------Page 8 Sierra Leonean Idrissa Kargbo is the new UNV Timor-Leste Programme Officer.Idris sa brings to the country office a wealth of relevant experience spanningnearly 2 0 years,mostly international assignments including Kyrgyztan as a UNVProgramme O fficer and in various advisory positions with UNDP programmesin Kyrgyzstan and A fghanistan. He also worked as a Gender Consultant withUNIFEM Commonwealth of Ind ependent States, CIS, (former Soviet Union)Regional Office in Almaty, Kazakhstan . In addition, he also served with the AgaKhan Foundation in Tajikistan as Progr amme Manager/Chief Technical Advisorfor two years. He has expertise in Community Development, Local Governance, Area BasedDevelopment, Capacity Development, Gen der, Micro Credit and Livelihoods,Civil Society Development, etc. He is also flu ent in Russian. Idrissa holds a MSc. in Agriculture Development and Rural Financ e (Bradford University, UK);Post Graduate Diploma in Rural Policy and Project Pl anning (Institute of SocialStudies, The Netherlands); M Sc. Agricultural Economi cs (Belarus AgricultureAcademy, Belarus Republic, Former Soviet Union). His hobb ies include readingand traveling. Photo by Ana da CostaUNV acquires new chiefHav ing worked in similar programs involving immigrant communities in her native Hol land, Danielle wassailing in familiar waters, but the initial shortage of traini ng materials, language constraints and limited fundsfrustrated her best efforts.

Through their creativity and sense of humour, my Timorese colleagues helped meto overcome these difficulties, she says, smiling.The project coordination and capa city building activities are financed through UNDP by New ZealandAid,courtesy of the Temporary Advisory Services Initiative (TASI). With the support of organiza tions like UNICEFand USAID, the project is credited with the production of nearl y a dozen training manuals, the training ofhundreds of teachers countrywide, the mentorship of 10 national ministry staff and 14 district coordinators andthe in volvement of a range of national NGO s.The Hakat ba Oin and Iha Dalan manuals on b asic and advanced literacy have proved especially popularand are now also being incorporated in youth employment promotion strategies by some agencies and inlit eracy programs delivered in most districts by NGO s.As demonstration that the non formal education system is now on a sound footing in the country, Aldafredocites the estimated 10,000 students who will be formally awarded with a diploma on 28 November aftersuccessfully completing one of the non-formal education courses.C ontinued from page 4... We are calling for more support fromorganizations like UND P and others who arewilling to help us with advisors to enable usmanage the incr easing demand for non-formal education in Timor-Leste, he says.8 Volume III Septe mber 2008ewsQuarterlyNewsletter Published by:Communications OfficeUNDP Timor-Les teEditorial Team:Sammy Mwiti,Communications Officer;Renato da Costa,Media Associ ate;Ana da Costa,InternCaicoli Street, Dili,Timor-LesteTel: +670 331 2210 begin_ of_the_skype_highlighting +670 331 2210 end_of_the_skype_highl ightingFax: +670 331 3534www.undp.org.tlDesign: Renato da CostaGraphic Designer, UNDPThis is not an officialUN document. Theopinions expressed donot reflect off icial UNpolicy.is Fuca s colleague, Lucilda.

................................................................................ ...........................................When earlier this year Aires Eddie de Almedia, atechnical consultant with the Participatory RuralEnergy Development P ilot Project of UNDP sought tointroduce biogas technology in Kaibar, a remote ar eain the Maubara sub-district of Liquica the villagerswere quite puzzled and cyn ical, saying they wantednothing to do with it. They implied that I was out of my m ind, asking: howcan you make electricity out of cow dung? recallsAires, adding it was only after news of the first biogaspowered stove in the village spread when it dawnedon them that cow dung, whose access they havein plenty, has the potent ial to transform their livesdramatically, especially in the kitchen front. Now eve rybody in the village wants biogas, Airessays.And in a ceremony on 5 September 20 08 to markthe handover of the biogas plants provided underthe project to local b eneficiaries, it was song anddance galore as residents turned out in largenumber s to welcome Government dignitaries andUNDP in commemorating the milestone event in thecommunity s history. Among those present were;the Vice-Minister for Economy and Development,Rui Manuel Hanjam; Secretary of State for EnergyPolicy Avelino Coelho and his Environment andReforestation counterpart Abilio de Jesus Lima. UN DPwas represented by Deputy Country Director, HirokoTakagi. We are extremely thril led, observed AugustoGonzalves, a villager and community developmentworker. The te chnology is quite simple and since wehave lots of cows here we will put their wa ste into verygood use. The three-and-a-half-year US $ 410,000 ParticipatoryRural E nergy Development Pilot Project implemented in close collaboration with the Gove rnment,involves the tapping of solar power, gas producedby decomposition of live stock manure, andimproved cooking stoves to meet the domesticenergy needs of com munities located in isolatedareas of Liquica, Manatuto and Ainaro districts aswe ll as villages in the periphery of the country scapital, Dili. In the rural areas, people depend on firewoodfor energy and therefore, the introduction of biogas te chnology is very useful as it will reducedependence on wood and the cutting oftr ees, said the Vice-Minister for Economy andDevelopment, Rui Manuel Hanjam. He exp ressedgratitude to UNDP for initiating the project, sayingit would complement Go vernment efforts inproviding alternative energy to remote areaswhere access to e lectricity is difficult.Describing as excellent the Governmentleadership in this e

ffort, UNDP Deputy CountryDirector Hiroko Takagi said the enthusiasm withwhich t he beneficiaries had received the projectcountrywide augurs well for its future sustainability.Hiroko singled out the determination of 23-yearold Joao De Brito da Costa of Manatuto who afteracquiring the necessary skills was now ably sharin gthis knowledge with his peers in Liquica and eagerto continue helping other com munities. Wehope in this community, there are similar youngand energetic people c ommitted to learning thisnew technology and sharing their experienceswith other communities in the country, stated theDeputy Country Director.According to the Se cretary of State for EnergyPolicy, Avelino Coelho, biogas provision is includedu nder the rural energy plan but the support ofdevelopment partners like UNDP is c rucial inreaching out to more people llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll llllllllllllllllllllllllllllllllllllll GAS PIPELINES FROM THE TIMOR SEA CORRECTIONS TO THESE FACTS, NOTED IN RED, WERE PROVIDED BY PETROTIMOR. What does the Timor Sea Treaty say about a gas pipeline to Timor-Leste? The Treaty explicitly allows for a pipeline to Timor-Leste. Who decides to which country the pipeline should go? Under the Treaty, the decision on a pipeline destination is left to the investin g companies and subject to the approval of a Joint Commission, established under the Treaty. The companies who are experts in petroleum development are in the b est position to determine which pipeline option will maximize the revenues for t he project overall (and thereby maximise tax and royalty revenues for Timor-Lest e). THE GOAL OF PETROTIMOR IS TO MAXIMIZE THE BENEFIT OF TIMOR SEA ACTIVITIES FOR TI MOR-LESTE, IN SUPPORT OF ITS 1974 EXPLORATION AND PRODUCTION CONTRACT. What factors affect pipeline decisions? Investing companies, when evaluating alternatives will look at technical feasibi lity, risk and costs. Based on these factors, is a pipeline to Timor-Leste possible? Most reports received by the Government of Timor-Leste so far indicate that, a p ipeline to Timor-Leste is technically possible. However, there are some serious challenges. For example, the depth of the Timor Trough is 1500m to 3200m, potent ially subjecting any pipeline to very high pressure. It is likely that any pipel ine to Timor-Leste would require the use of expensive new technology. Reports al so indicate that there is seismic activity in the Timor Trough, and strong curre nts. These factors indicate that a pipeline to Timor-Leste would be relatively e xpensive to install, maintain, repair and insure. BASED ON BOTH THE INTEC REPORT OF 2002 AND THE J P KENNY REPORT OF 1996 (COMMISI ONED FOR BAYU UNDAN). A PIPELINE TO TIMOR-LESTE FROM BAYU UNDAN WOULD COST LESS THAN A PIPELINE TO DARWIN FROM BAYU UNDAN. A DEEPWATER PIPELINE ACROSS THE TIMOR TROUGH IS A LITTLE MORE COSTLY PER UNIT LE NGTH, BUT BECAUSE ONLY HALF THE DISTANCE AND A SMALLER DIAMETER IS REQUIRED, THE OVERALL CAPITAL COST OF THE PIPELINE IS SIGNIFICANTLY LOWER THAN A PIPELINE TAK ING THE ALTERNATIVE SOUTHERN ROUTE TO DARWIN.

THE CURRENTLY PLANNED PIPELINE FROM BAYU-UNDAN TO DARWIN IS REPORTED TO COST US$ 500 MILLION DOLLARS. THIS PLANNED 480 KM PIPELINE IS BELIEVED TO BE OF SIZE 24-I NCH DIAMETER AND HAVE A CAPACITY OF 0.5 BILLION CUBIC FEET OF GAS PER DAY (BCF/D ), SUITABLE FOR A SINGLE TRAIN 3 MILLION TONNE/YEAR (MTPA) LNG PLANT. THE INTEC REPORT INDICATES THAT THE CAPITAL COST OF A 230 KILOMETER 28-INCH PIPELINE FROM BAYU-UNDAN ACROSS THE TIMOR TROUGH TO TIMOR LESTE, CAPABLE OF TRANSPORTING TWICE THIS CAPACITY (I.E., 1 BCF/D FOR A 2-TRAIN 6 MTPA LNG PLANT) IS US$343 MILLION. MANY EXPERTS BELIEVE THE TIMOR TROUGH HAS NO MAJOR SEISMIC OR CURRENT HAZARDS.TH E WORLD'S LEADING GEOLOGICAL EXPERTS ON THE TECTONICS OF THIS REGION ADVISE THAT THERE IS NO MORE SEISMIC ACTIVITY IN THE TIMOR TROUGH THAN THERE IS IN THE SHAL LOWER JPDA GENERALLY. A SEISMIC MAP PREPARED BY CONSULTANTS TO THE SUNRISE OPERA TOR WOODSIDE SUPPORTS THIS CONCLUSION. ("EARTHQUAKE HISTORY IN THE SUNRISE GAS F IELD AREA SINCE 1900", FIGURE 6-4, PROJECT NO.: DE2090.100, FIGURE PREPARED BY T .LEE, DATE PREPARED: 16/10/01, SINCLAIR KNIGHT MERZ. DRAFT ENVIRONMENTAL IMPACT STATEMENT FOR WOODSIDE ENERGY LTD, DECEMBER 2001.) On the other hand, the ocean between the Bayu-Undan field and Australia is only 160m at its deepest point. Reports indicate that the seabed is stable. The cost of building, maintenance and insurance appears to be much lower.. Where the opti ons for an investing company are i) a high risk, costly and technically challeng ing operation, or ii) a low risk, much less costly and technically easy operatio n, the likely investment decision is obvious. Why doesn't Timor-Leste push for a pipeline to Timor-Leste? Surely this will be where most of the economic benefit will be for Timor-Leste? As mentioned above, a pipeline to Australia is much less expensive than a pipeli ne to Timor-Leste. THIS IS INCORRECT THE INTEC REPORT COMMISSIONED BY PETROTIMOR CLEARLY STATES THA T A PIPELINE FROM BAYU UNDAN TO TIMOR-LESTE WOULD COST LESS THAN A PIPELINE FROM BAYU UNDAN TO DARWIN. NO OTHER TECHNICAL REPORTS HAVE BEEN MADE PUBLIC. WHY CAN 'T THE PUBLIC HAVE THE BENEFIT OF SEEING THE REPORT BY J P KENNY FOR BAYU UNDAN THAT WAS PREPARED IN 1996? THE J P KENNY AND INTEC REPORTS HAD VERY SIMILAR CONC LUSIONS. Therefore, the only way Timor-Leste would be able to persuade a company to build a pipeline to Timor-Leste is for Timor-Leste to subsidize the pipeline. This me ans in effect that Timor-Leste will have to pay the company to cover the extra c ost of the pipeline to Timor-Leste. It also means, therefore, that overall reven ues to Timor-Leste would be significantly lower because the project would be les s profitable. THIS IS INCORRECT. BECAUSE IT WOULD COST LESS TO BUILD A PIPELINE TO TIMOR-LESTE , THERE WOULD BE NO NEED FOR A SUBSIDY. PETROTIMOR BELIEVES THAT A PIPELINE TO T IMOR-LESTE AND AN LNG PLANT THERE FOR GAS EXPORT MAY HAVE BETTER PROFITABILITY T HAN THE DARWIN PLAN. IN FACT, THE CURRENT OPERATOR OF THE BAYU-UNDAN FIELD (CONNOCOPHILLIPS) FOUND TH E COST OF THE PROPOSED PIPELINE TO DARWIN MADE THE LNG EXPORT PROJECT SUB-ECONOM IC FOR THE QUANTITIES OF GAS AVAILABLE, AND THEREFORE IN SEPTEMBER 2001 SENT DEL EGATIONS TO DILI IN ORDER TO NEGOTIATE TAX CONCESSIONS FROM THE TRANSITIONAL GOV ERNMENT OF TIMOR-LESTE. THESE TAX CONCESSIONS ARE DOCUMENTED IN THE "BAYU-UNDAN UNDERSTANDINGS AGREEMENT" OF DECEMBER 2001. THEREFORE, ACCORDING TO THESE AGREEM ENTS, TIMOR-LESTE MAY SUBSIDIZE A PIPELINE TO DARWIN BUT NOT TO HER OWN SHORES. THIS IS A CONTRADICTORY POSITION AND CLEARLY NOT IN EAST TIMOR'S INTERESTS. It is important to remember that, as of now, there has been no final decision ma de on the destination of any pipeline from the Treaty area. For the Bayu-Undan f

ield, for example, ConocoPhillips (the developer of the field) has not yet submi tted its gas development plan and therefore, the Joint Commission has not yet ap proved any pipeline for the project. Development concepts for other possible pip elines (for instance, from the Greater Sunrise field) also remain undecided. CONOCO-PHILLIPS SEEMS TO BE WELL ADVANCED IN THEIR PLANS TO BUILD A PIPELINE TO DARWIN AND TO BUILD LNG FACILITIES THERE. AUSTRALIAN PERMITS HAVE BEEN OBTAINED FOR THIS PLAN. THE ALTERNATIVE OF LAYING A PIPELINE TO TIMOR-LESTE AND BUILDING THE LNG PLANT IN TIMOR-LESTE HAS NEVER BEEN DISCUSSED PUBLICLY, AND IT APPEARS T HAT THIS POSSIBILITY HAS NEVER BEEN STUDIED. CONSIDERING THE POTENTIAL BENEFIT T O TIMOR-LESTE, PETROTIMOR STRONGLY URGES SUCH AN OPTION TO BE STUDIED. THIS WOUL D BE A PROJECT FOR GAS TO BE EXPORTED TO WORLD MARKETS NOT A DOMESTIC SUPPLY PRO JECT. Anticipating the likelihood of a Darwin pipeline from Bayu-Undan, UNTAET insiste d that the Treaty prevent Australia from vetoing any subsequent proposal for a p ipeline to Timor-Leste (see Article 8 of the Timor Sea Treaty). What feasibility studies have been done and by whom? ConocoPhillips: In 1996, ConocoPhillips (then called Phillips Petroleum) conduct ed an extensive feasibility study of a pipeline from the Bayu-Undan field to Tim or-Leste. The decision of ConocoPhillips to build a pipeline to Australia is bas ed on the results of this study. The study recognised that a pipeline to Timor-L este was technically feasible, but found that a Timor-Leste pipeline was not eco nomic. The ConocoPhillips assessment was based on market demand for gas, seismic activity in the Timor Trough, subsequent pressure on the pipeline, the risk of the pipeline breaking, and the high cost of insurance for high risk operations. IF THIS IS TRUE, WHY WILL CONOCO-PHILLIPS NOT MAKE THE 1996 J P KENNY STUDY PUBL IC? WHAT DO THEY HAVE TO HIDE? THE CONCLUSIONS OF THE 1996 AND THE 2002 REPORTS ARE SIMILAR. THIS SHOULD BE EXP ECTED SINCE PIPELINE TECHNOLOGY IS FAIRLY STRAIGHTFORWARD AND THERE HAVE BEEN NO MAJOR TECHNOLOGICAL CHANGES SINCE 1996. PHILLIPS PETROLEUM COMMISSIONED INTERNATIONAL PIPELINE CONSULTANTS J P KENNY TO CONDUCT THIS STUDY. THE STUDY BRIEF GIVEN BY PHILLIPS TO THE CONSULTANT WAS TO I NVESTIGATE THE FEASIBILITY OF A 36-INCH PIPELINE ACROSS THE TIMOR TROUGH. THIS D IAMETER WAS GENERALLY KNOWN TO BE IMPRACTICAL AT THE TIME DUE TO EXCESSIVE "LAYI NG STRESS". HOWEVER A TECHNICAL REPORT WAS REQUIRED TO CONVINCE THE TIMOR GAP JO INT AUTHORITY (IN WHICH INDONESIA AT THE TIME HAD A 50% INTEREST) THAT A PIPELIN E TO DARWIN WAS THE ONLY FEASIBLE OPTION. THE CONSULTANTS HOWEVER RECOMMENDED TW IN 28-INCH PIPELINES ACROSS THE TIMOR TROUGH AS THE FEASIBLE ALTERNATIVE AND PRO VIDING THE SAME LARGE CAPACITY. AT THE TIME OF THE STUDY A LARGE 36-INCH DIAMETE R PIPELINE WAS BEING CONSIDERED TO SUPPLY A 9 MTPA LNG PRODUCTION FACILITY IN DA RWIN PLUS DOMESTIC SALES. WHEREAS AT THE PRESENT TIME A 24-INCH PIPELINE IS BEIN G PLANNED TO SUPPLY A 3 MTPA FACILITY IN DARWIN. THEREFORE CIRCUMSTANCES HAVE CH ANGED AND IT WOULD BE PRUDENT FOR THE ALTERNATIVE TIMOR LESTE PIPELINE PLAN TO B E RE-EXAMINED AGAINST UPDATED TECHNICAL AND ECONOMIC DATA REGARDING THE LNG PROD UCTION PLANT FACILITY SIZE. Woodside Energy: Woodside Energy have investigated the possibility of a gas pipe line from the Greater Sunrise field to Timor-Leste. Their findings indicate that the depth of the Timor Trough, and seismic activity in the Trough, make it impo ssible for a pipeline to be built from Greater Sunrise to Timor-Leste. IF THIS IS TRUE WHY WILL WOODSIDE NOT MAKE THE STUDY PUBLIC? IS THERE SOMETHING TO HIDE? WHO CONDUCTED THESE STUDIES?

Petrotimor: Finally, Petrotimor, a Portuguese-registered company owned by US-bas ed General Atomics, and which holds no interests in the Timor Sea, paid for anot her study into the feasibility of a pipeline to Timor-Leste from the Bayu-Undan field. PETROTIMOR IS A PORTUGUESE-REGISTERED COMPANY OWNED BY OCEANIC EXPLORATION, A U. S. PUBLIC BASED COMPANY IN DENVER, COLORADO, WHICH IS SUPPORTED BUT NOT OWNED BY GENERAL ATOMICS. PETROTIMOR WAS AWARDED A PETROLEUM CONSESSION BY PORTUGAL COVE RING THE ENTIRE AREA NOW OCCUPIED BY THE TIMOR SEA TREATY'S JOINT PETROLEUM DEVE LOPMENT AREA, BEFORE EAST TIMOR'S OCCUPATION BY INDONESIA. THE TIMOR SEA TREATY IS A PRODUCT OF THE ILLEGAL INVASION OF TIMOR LESTE BY INDONESIA. THIS CLAIM IS BEING PURSUED BY LEGAL PROCESS. UNDER THE ORIGINAL AGREEMENT, 20 % OF PETROTIMOR IS OWNED BY THE GOVERNMENT OF EAST TIMOR. The study was conducted by another company called INTEC. The study found that be cause the distance between the Bayu-Undan oil field and Timor-Leste is much shor ter than between Bayu-Undan and Australia, the cost of building a pipeline to Ti mor-Leste is lower. However, this study examined the cost of the piping alone, a nd did not consider the existence of the Timor Trough and the difficulties posed by it. INTEC IS A GLOBAL COMPANY WITH MUCH MORE EXPERIENCE IN DEEP WATER PIPELINES THAN CONOCO-PHILLIPS ND WOODSIDE. THE INTEC REPORT FULLY AND CLEARLY ADDRESSED THE D EEP WATER CHALLENGES. INTEC HAS DESIGNED A NUMBER OF DEEP WATER PIPELINES. A , S D COPY OF THE INTEC REPORT IS PUBLICLY AVAILABLE FROM WWW.PETROTIMOR.COM . IN IT INTEC CONCLUDES THAT "LAYING A PIPELINE IN A WATER DEPTH OF 2,500M TO 3,000M I NOT A SIGNIFICANT PROBLEM WITH CURRENT TECHNOLOGY. PIPELINES ARE BEING DESIGNE FOR INSTALLATION IN A WATER DEPTH GREATER THAN 3,000M. SIMILAR PIPELINES [TO A TIMOR TROUGH PIPELINE] HAVE BEEN LAID IN THE WORLD IN SIMILAR COASTAL ENVIRONME NTS AND DEEPWATER." A SIMILAR DEEP WATER PIPELINE IN THE BLACK SEA WAS RECENTLY COMPLETED. THAT PIPE LINE TRAVERSES MUCH MORE CHALLANGING SEABED CONDITIONS THAN THE TIMOR TROUGH AND REACHED WATER DEPTHS OF 2100 METERS ALONG ITS 360 KM UNDERWATER ROUTE. These include for example, higher insurance and maintenance costs and higher ris k that the pipeline could be damaged or broken. The report also did not take int o account the fact that there are not enough buyers in East Timor for the gas. THIS IS INCORRECT. THE INTEC STUDY AND PETROTIMOR'S RECOMMENDATIONS DID NOT VISU ALIZE A PRIMARY MARKET FOR NATURAL GAS IN TIMOR- LESTE. THE PETROTIMOR CONCEPT I S TO TRANSPORT THE GAS TO TIMOR-LESTE AND BUILD A LNG FACILITY IN TIMOR-LESTE AN D THEN EXPORT THE LNG FROM TIMOR-LESTE TO FOREIGN BUYERS. THIS WOULD BRING THE D IRECT FOREIGN INVESTMENT, THE THOUSANDS OF JOBS AND THE INFRASTRUCTURE BENEFITS TO TIMOR-LESTE INSTEAD OF TO DARWIN. THE ECONOMIC MULTIPLIERS THAT RESULT FROM T HIS MAY EXCEED TAXATION INCOME. A CHEAP AND CLEAN ENERGY SOURCE FOR TIMOR-LESTE IS AN IMPORTANT SIDE BENEFIT. INSURANCE QUOTATIONS FOR THE DEEP WATER ROUTE WERE NOT OBTAINED BUT PETROTIMOR I S WILLING TO OBTAIN THEM IF REQUESTED. THESE FACTORS ARE RELEVANT BUT NO MORE SI GNIFICANT THAN FOR OTHER DEEPWATER PIPELINES ALREADY OPERATING. DEEPWATER PIPELINE TECHNOLOGY IS REALLY RATHER SIMPLE. ALL THAT IS NEEDED IS PIP ELINE STEEL WITH THE REQUIRED STRENGTH AND AN INSTALLATION BARGE WITH ADEQUATE T ENSIONER CAPACITY. BOTH ARE COMMERCIALLY AVAILABLE FROM SEVERAL SOURCES. Why doesn't Timor-Leste have an independent study done? It is possible that Timor-Leste may commission its own study into the feasibilit

y of pipelines to Timor-Leste. However, pipeline feasibility reports are expensi ve. A FEASABILITY STUDY FOR A DEEP WATER PIPELINE CAN BE COMMISSIONED FOR LESS THAN US$20,000. THIS IS BECAUSE THE TECHNOLOGY IS SIMPLE AND OFF THE SHELF . THE OPONENT S OF A PIPELINE TO TIMOR-LESTE ARE GROSSLY OVERSTATING THE COMPLEXITY AND COSTS OF THE PIPELINE AND THE STUDIES TO DETERMINE FEASIBILITY. With regard to Bayu-Undan, in any event, independent petroleum fiscal experts an d technical experts have already confirmed that a pipeline to Darwin is the most sensible way in which the first Timor Sea gas deposits can be exploited. WHO ARE THESE INDEPENDENT EXPERTS AND WHY ARE THEIR REPORTS NOT AVAILABLE TO THE PUBLIC? THIS CONCLUSION IS INCORRECT BASED ON THE INTEC REPORT. PETROTIMOR HAS ALSO SEEN LEAKED COPIES OF THE J P KENNY REPORT OF 1996 WHICH STATES THAT PIPELINES TO TI MOR-LESTE ARE TECHNICALLY FEASABLE. THAT REPORT ALSO GIVES THE COST OF SUCH PIPE LINES, WHICH ARE LESS COSTLY THAN THE PUBLICLY QUOTED COST OF A LARGER PIPELINE TO DARWIN FROM BAYU UNDAN. PETROTIMOR CANNOT UNDERSTAND WHY THERE IS SUCH RESISTANCE TO THE TIMOR-LESTE OPT ION FOR GAS PROCESSING AND EXPORT FACILITES. ONE POSSIBILITY IS THAT THE OPERATI NG COMPANIES WERE UNDERSTANDABLY FEARFUL OF THE POLITICAL RISKS IN THE PAST. NOW THAT THOSE CONDITIONS HAVE IMPROVED, PETROTIMOR RECOMMENDS A FULL AND OPEN STUD Y OF THE "TIMOR-LESTE" OPTION. THE FINANCIAL AND EMPLOYMENT BENEFITS TO TIMOR-LESTE WOULD REPRESENT A ONE-TIME OPPORTUNITY TO ADVANCE THE NATION BUILDING PROCESS AND PROPEL TIMOR-LESTE OUT OF POVERTY AND INTO THE "DEVELOPING NATION" CATEGORY RAPIDLY. THIS OPPORTUNITY IS SIMPLY TOO IMPORTANT TO BE SWEPT AWAY IN THE INTEREST OF EXP EDIENCY AND THE FINANCIAL BENEFIT TO AUSTRALIA. END. pppppppppppppppppppppppppppppppppppppppppppppppppppppppppp DILI: Timor-Leste's government may invite Malaysia's Petroliam Nasional Bhd (Pet ronas), not Australian energy firm Woodside Petroleum and partners, to develop t he offshore Greater Sunrise gas field, a ministry official said yesterday. Timor-Leste, also known as East Timor, separately announced yesterday that it ha s rejected Woodside's plan to develop the offshore Greater Sunrise gas field wit hout building an onshore plant to liquefy the gas. "Our government will not approve their (Woodside's) proposal because they just h ave two options: one is to bring the pipeline to Darwin and the other is onshore development, and these kind of options do not benefit our country and people," Manuel Mendonca, director of communications in the natural resources ministry, s aid. "From East Timor's side, we just want to bring the pipeline to East Timor, and w e have differences in position on the options so we will contract another compan y to develop Greater Sunrise", if Woodside does not change its position," he add ed.

Mendonca, who is also a party to the negotiations, said Petronas could develop G reater Sunrise instead.

"The Malaysian company Petronas is qualified to develop the Greater Sunrise fiel d," he said. "We have good relations with Petronas and Petronas has helped us do much in the oil sector and they are ready to build LNG plant," said Mendonca. Proposals to exploit Greater Sunrise - estimated to hold 240 million barrels of light oil and 5.4 trillion cu ft of natural gas - must be approved by both sides , a 2007 treaty between Indonesia and Australia states. The deal gives the parties until 2013 to agree upon a joint development plan. Bu t Timor-Leste's latest position shoots down all proposals put forward so far by the group headed by Woodside. In their toughest stance to date, Timor Leste says it will not support Woodside' s development plan, possibly rendering the 2007 treaty meaningless. "The current proposed plans of Woodside and the consortium partners to pipe gas from the Greater Sunrise field to either Darwin or a floating LNG (liquid natura l gas plant) would not be approved by the government," Secretary of State Agio P ereira said in a statement. "The executives of Woodside have underestimated the government's priority in ens uring that the resources owned by the people of Timor-Leste are properly managed ," Pereira said. Woodside, which leads the consortium including Royal Dutch/Shell, Osaka Gas and ConocoPhillips, has argued that piping the resources to an existing processing p lant in Darwin, more than 500km away, is the most commercially viable option. It has also researched a floating gas processing plant, which would be the first i n the world and cost billions of dollars. But Timor Leste wants to run a deep sea pipeline to its coast, about a third of the distance of a pipeline to Darwin in Australia's Northern Territory. Woodside said in a statement yesterday that it is still considering development options with its joint venture partners and will seek to "develop the reservoir to the best commercial advantage, consistent with good oilfield practice". It said "the development of Sunrise will deliver significant social and economic benefits, including petroleum revenues, taxes and training and employment oppor tunities to both" countries. - Reuters, AP

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