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East Timor wants to tap oil and gas near Australia, so why is it courting China?
- The young Southeast Asian nation is almost entirely dependent on oil and gas revenue as well as aid from richer neighbours
- But international energy firms have left the country in the lurch by pulling out of a critical offshore project near Darwin, leaving Dili with only one place to turn
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Geopolitical tremors were felt in the region when reports surfaced that East Timor’s state-owned energy company was considering a US$16 billion loan from China to develop an offshore oil and gas field.
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Many saw it as the latest example of China’s growing diplomatic and economic clout in the 17-year-old nation, which lies just 500km off the north coast of Australia.
Timor Gap was swift in denying the reports, which had claimed the Export-Import Bank of China would help finance its US$50 billion Greater Sunrise project, following the withdrawal of international fuel companies Royal Dutch Shell and ConocoPhillips.
But despite the denial, experts say the country has few options other than to turn to China for a project which is vital to its struggling economy.
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The oil and gas field is worth an estimated US$50 billion – more than twice the US$22 billion East Timor says it has generated since 2005 from its Bayu-Undan and Kitan fields. The Greater Sunrise site, located about 150km southeast of Beaço in East Timor and 450km northwest of Darwin in northern Australia, holds estimated gas reserves of 5.1 trillion cubic feet and up to US$12 billion worth of oil.
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