The Crass Stupidity of Timor Leste Politicians

abarrelfullabarrelfull wrote on 10 Mar 2011 12:57

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Imagine you are a politician in a nation with GDP per head of $2,600, and total GDP of $3 Billion. A consortium of international companies is developing a massive LNG project which will have a massive impact on the economy. Woodside's estimate is:

Timor Leste will earn approximately US$13 billion over the life of the project for its 18% share.

You would expect the local politicians to be falling over backwards to make sure the project goes ahead. Yet they are doing the opposite

EAST Timor is threatening to cancel its historic treaty with Australia covering the Greater Sunrise liquefied natural gas development unless the Woodside Petroleum-led venture agrees to local processing

The reason is that Timor wants a land based LNG processing plant, not FLNG. Woodside and partners think otherwise:

TLNG, however it has the highest capital cost by approximately $5 billion compared to FLNG and presents significant technical risks.

The reason for Timorese intransigence is that they want the economic activity a land based project would bring:

"We feel that one pipeline (from Bayu-Undan) has gone already to Australia and has provided a number of benefits to the people of Australia, particularly Darwin, and it is only fair that the next one does the same things for the people of Timor Leste."

Yet if the cancel the treaty, they will get nothing at all. The benefits of a Timor based plant are also questionable. The kind of staff employed by such projects are highly trained and experienced, and are unlikely to be found in countries with the level of development of Timor. So in effect they are fighting for the right to bring in foreign workers. The number of workers employed in such plants once running is also very low, considering the capital cost, so the benefits here are very limited. Finally virtually all the raw materials would be imported, as the country does not have the kind of supplier based needed.

Politicians are generally stupid and love grandstanding, but there is something about natural resources that exacerbates these tendencies, and the small impoverished island nation of Timor Leste, is just the latest in a long line of examples. The only certainty is that they will not be the last.

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