East Timor Forges Ahead on Deepwater Oil Drilling

By AUBREY BELFORD

Published: October 21, 2010

DILI, EAST TIMOR — To Demetrio do Amaral de Carvalho, the explosion last spring on the BP-leased Deepwater Horizon rig in the Gulf of Mexico — and theoil that then gushed for months into the surrounding waters — held alarming portents for his young, fragile nation.

The disaster in the gulf spilled an estimated 4.9 million barrels of oil, prompting the United States to impose a moratorium on deepwater drilling that was provisionally lifted only last week.

But while much of the world, including the European Union, is rethinking the risks and benefits of drilling at ever greater ocean depths for oil and natural gas, East Timor, among the poorest nations in Asia, is just beginning to authorize it — and Mr. de Carvalho, director of the local environmental organization Haburas, worries that a reckless rush is on.

“If a country like America, with all its technical ability, financial resources and expertise,” felt obliged to suspend the practice, he said recently, “then I think Timor-Leste’s government should reflect on that.” Mr. de Carvalho used the official name of East Timor, a former Portuguese colony in the Indonesian archipelago that gained formal independence only in 2002, after a bloody 24-year occupation by forces of the government in Jakarta.

At issue in East Timor are two separate plans for exploratory drilling more than a kilometer, or 0.6 mile, deep in waters south of its territory, the first projects of their kind for the country. According to government officials, the plans received environmental approval last month.

One project, a joint venture led by India’s largest private conglomerate, Reliance, will create a test well about 1,200 meters, or 4,000 feet, below the surface in a nearby region known as Block K.

Of particular concern to environmentalists is that the project is to be carried out by the Deepwater Frontier, a ship belonging toTransocean, the same drilling contractor that owned the Deepwater Horizon. The April 20 explosion on that rig happened while it was drilling an exploratory well at about 1,500 meters.

The other project, a joint venture led by the Italian oil company Eni, will create an exploratory well in about 1,900 meters of water in the Cova-1 region in East Timorese waters north of Australia. Both projects are still awaiting the final green light from East Timor’s National Petroleum Authority. Eni has also submitted an early proposal for up to three deepwater test wells near the Cova-1 site, which is yet to receive any government approval.

Backers of the plans say they are essential for overcoming poverty in this tiny country of about one million people. But Mr. de Carvalho and other opponents say that drilling at such depths is inherently risky and that, if an environmental disaster were to occur, the country would be unable to cope.

The East Timor minister for economy and development, João Gonçalves, acknowledged in an interview that there were environmental dangers to the plans. But, he said, both outside companies had provided assurances that those would be at an “acceptable level.” He said he had signed off on environmental approval for the projects on Sept. 20.

“We are well aware, and we are going to deal with all these environmental problems that we have to deal with,” he said. “But we cannot stop the country from development, you know, from progress.”

Much of East Timor lives off subsistence agriculture, and there is negligible industry nor many exports. Many roads outside Dili, the capital, are barely passable by most cars.

The one exception is billions of dollars earned from offshore oil and natural gas production — money that is being used to build infrastructure and subsidize basic food needs. East Timor’s Petroleum Fund, which holds money in foreign investments, was worth $6.3 billion as of June 30, according to the latest quarterly report.

With an inducement like that, East Timor is under huge pressure to approve projects that are potentially hazardous but also potentially lucrative, despite the “wake-up call” of the Gulf of Mexico disaster, said Charles Scheiner, a member of a local development monitoring group, La’o Hamutuk.

“The oil companies are a thousand times bigger than the Timor-Leste government,” Mr. Scheiner said. This is the first time the government has had to approve deepwater drilling in its territorial waters, he said. “This is a test for Timor-Leste’s regulatory authorities.”

For Mr. Scheiner, East Timor has also had a much more local warning. Late last year, the Montara well, run by a subsidiary of the Thai company PTT in relatively shallow Australian waters south of East Timor, leaked tens of thousands of barrels of oil for more than 10 weeks. After four failed attempts, a relief well was finally drilled.

In East Timor, the risks are amplified by the country’s “weak emergency response capability, legal framework and oversight institutions,” Mr. Scheiner said.

Of particular concern, he said, is an apparent failure by Reliance to take seriously the possibility of a spill or to plan for a cleanup in versions of its environmental impact assessment that have been seen by stakeholders.

“It’s almost like a college term paper, right?” he said. “Somebody went out and looked at what’s the usual way that deepwater drilling is done and they did some research on the Internet and so on and then they wrote it down.”

He added, however, that he had not seen a final version of the document submitted to the National Directorate for the Environment. Reliance did not reply to requests for comment or to provide the latest copy of its environmental impact assessment.

Mr. Gonçalves, the economy minister, said both companies had addressed any environmental concerns. He said environmental groups were criticizing the plans without adequate information.

A spokesman for Eni, Filippo Cotalini, said: “Eni would not enter into any activity where it believed the risks were not manageable.”

“Moreover, Eni in Australia has recently reviewed and updated its emergency response and incident management procedures as part of its additional preparation for the upcoming deepwater drilling program,” he said.

Proponents of deepwater drilling say it is crucial to the world’s energy future. Last week, the head of the International Energy Agency, Nobuo Tanaka, said that if there were any significant interruption in the practice, “the impact could be huge.” About a third of the world’s oil production occurs offshore, he said, and by 2015, that share could be half.

Augusto Pinto, the director of East Timor’s environment directorate, said that as a consequence, the country would be prey to environmental danger no matter what.

“Even if East Timor doesn’t do anything, if Indonesia and Australia are still destroying the environment, we’ll get the effects,” Mr. Pinto said.

“You have to remember that we need to develop our country,” he added. “Our people need to get prosperity.”

http://www.nytimes.com