Dili doctrine deters development

AND so, as delegates to the annual SEAAOC conference sniff their chardonnay on a Darwin balcony, and nibble from a passing tray of canapés, one of the world’s more bizarre oil industry stand-offs, not far from the scene of their indulgences, drags into Act 5 – or possibly Act 6, or is it 7? (Or does anyone really care?).

Location of the long and sad saga providing conversational fodder for the chattering class at the South East Asian Australian Offshore Conference is about 600km to the north-west, in Dili, capital of the self-declared “world’s poorest country”, East Timor.

It is there, far from the chardonnay and barramundi on a skewer, that Mari Alkatiri and his faithful offsider, Jose Ramos-Horta, do their impersonation of two men who haven’t got the first clue about how business and the real world works.

To be kind, Slugcatcher reckons their ignorance might be a result of spending too much time in the hills of Timor fighting the invading army of Indonesia.

To be less kind, perhaps it’s a result of too much socialist indoctrination, and a failure to understand that while they won their little battle, the bigger war of socialism v capitalism was lost in Moscow and Berlin sometime around 1989.

Whatever the cause of the problem there seems little doubt that while they’ve done well, and can now live comfortably under United Nations sponsorship, and tour the world on the occasional speaking tour, the people of East Timor remain condemned to a life of poverty.

Until now, Indonesia and the wider world, could be held accountable. But, the longer the dynamic duo from Dili drag on their debate over who gets what from developing oil and gas fields near East Timor, the more the blame can be sheeted home to the chaps in charge.

For those unfamiliar with what’s afoot, the Slug explains. A long time ago Woodside Petroleum and partners discovered oil and gas in a slice of the Timor Sea called the Zone of Cooperation. When East Timor won independence this zone was challenged. In effect, all bets were off, kick-starting a period of haggling over a new treaty with near-neighbour, Australia.

After many false starts, and walk-outs, a deal was announced. It remains to be signed, and the Timor twosome are now muttering that they want more changes, such as the right (as a government) to decided where onshore gas processing takes place.

The Slug now introduces a few key questions that everyone in this government-to-government farce, seems to be overlooking: (a) who paid for the discovery of the gas;(b) who has the right to develop the gas; (c) who will pay the few billion dollars to extract and process the gas; and (d) who is sitting on the sidelines shaking its corporate head and muttering “you can’t do business on this basis”.

The answer to questions a-to-d is ‘Woodside’. This company is condemned by Ramos-Horta as “arrogant” because it claims the right to develop the gas plant on the Australian side of the Timor Sea – or, to put it in even simpler terms, Woodside claims the right to spend its shareholders money where it thinks best.

The Slug has been a regular critic of the way East Timor and its friends have conducted negotiations over oil and gas developments, and believes that what you’re now seeing is just a continuation of the same problem.

The sad part is that whatever is agreed on a government-to-government basis there remains the critical issue of whether an investment in East Timor by a public company, using scarce shareholder funds, will be classified as wise or profitable – or safe.

It seems to the Slug that the chaps in Dili are making noises that are one step short of declaring the nationalisation of all resources, a possible event which will not have escaped the attention of Woodside’s management.

But, as they say at SEAAOC, “Pass the canapés, dear boy, and how about topping up that excellent chardonnay”.

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