Source: http://www.laohamutuk.org/OilWeb/LegalDoc/PetrolRegime/LH%20sub1En.htm
Timestamp: 2019-04-20 12:11:10+00:00

Document:
This submission is in three parts. This narrative discusses the subjects where we believe the draft legislation requires re-examination, additions, or amendments. We are appending annotated texts of the draft Timor-Leste Petroleum Act and the draft Model Production-Sharing Contract. These two appendices contain detailed wording for some proposed revisions, as well as additional questions and comments not included in this narrative in order to focus on our main points and keep it a reasonable length. We are not including annotated texts of the TSDA Petroleum Mining Code or TSDA Model PSC, but we intend our narrative comments and annotations regarding the Timor-Leste Act and PSC to also apply to the analogous articles and issues in the draft TSDA documents. In the text and footnotes of this submission, we refer to a number of laws and documents. We are making this submission in English because that is the common language of the people who are drafting this legislation. We hope, in short order, to have Portuguese and Bahasa Indonesia versions of this submission available.
1. Full texts (no redactions or deletions) of all Authorisations (PA §6 - 9) (including PSCs) and any amendments or annexes thereto.
2. Full texts of all Ministerial Approvals (PA §15), Directions (PA §28), Exemptions and Variations (PA §18), consents to flaring (PSC §5.5), and other instructions or permissions granted by the Petroleum Ministry. These should also be publicly announced when they are issued.
3. Full texts of invitations, Terms of Reference and any other announcements prior to a bidding or tender round for any authorization or other contract (PA §10). If an Authorisation is granted without inviting applications (which we recommend against), the notice (PA §10.6(b)) should be included in the register.
4. Full texts of any Proposed Plans for Health, Safety, Environment (PA §10.3), local employment and services (PA §10.4), and decommissioning (LH’s recommendation for a new PA §10.4½, also PSC§4.14) submitted by persons obtaining Authorisations.
5. Full texts of every quarterly and annual Production Statement (PSC Annex C §5), Value of Production And Pricing Statement (PSC Annex C §6), Cost Recovery Statement (PSC Annex C §7), Statement of Expenditure and Receipt (PSC Annex C §8).
6. All payments of $1,000 or more made to the TSDA, the Government of Timor-Leste (or to any agency or agent of that government or Authority) by any person (which should be defined in PA §1 to include a corporation or other business), including the parent companies of joint venture participants or limited-liability corporations established for the purpose of signing a PSC, within or outside of Timor-Leste, should be included in the registry within 150 days. This includes not only all payments in connection with the Statements referred to in the previous paragraph, but any other payments (including bonuses, finder’s fees, etc.) within or outside of Timor-Leste, for the purpose of facilitating or implementing Petroleum activities in Timor-Leste. Each payment report should include the date the payment was made, the amount, the payer, the payee, the purpose of the payment, and any services or goods received in return. Timor-Leste’s law should be at least as strict as Extractive Industry Transparency Initiative and Publish What You Pay principles.
Timor-Leste’s government has already indicated that it will implement the principles of the U.K. government’s Extractive Industries Transparency Initiative (EITI). We expect that the Petroleum Regime, Petroleum Fund, and subsequent regulations and practices will do that. We also encourage Timor-Leste to legislate the goals of the Publish What You Pay  campaign, which calls on governments and stock exchanges to require petroleum and mining companies to publicly release information about all payments they make to governments.
In many countries, on-shore petroleum facilities have an unfriendly relationship with the local community. To protect their investment, contractors employ barbed-wire fences and armed guards, and sometimes hire local police and military officers to guard their property, often leading to violent clashes, injuries, or even death. We recommend that Timor-Leste prohibit active-duty police and military officers from accepting such work, even during their off-hours. We also suggest that Timor-Leste require companies to follow the Voluntary Principles on Security and Human Rights governing the relationships between extractive industry facilities, their public or private security forces, and the rights of local people and communities. This document was adopted in 2000 by the U.S. and U.K. Governments, NGOs, and several extractive industry companies, including Conoco and Shell.
In comparison with other Southeast Asian petroleum laws, Timor-Leste’s draft regime appears extremely favorable to industry, providing a very simple and centralized process for approvals and regulation through one ministry and almost no restrictions on company activities within Timor-Leste. However, other countries in Southeast Asia, including Indonesia’s 2001 petroleum law , include checks and balances in the approval and dispute resolution processes. Similar provisions in Timor-Leste’s law would make it more consistent with our region, and would make it more likely that those protections already in the law are enforced. In addition, greater human rights protections, both in procedural guarantees and greater community involvement, would ensure that the people of Timor-Leste share in the gains of petroleum development, and are insulated against its potential harms.
1. There should be a separate article in the Petroleum Act specifically discussing environmental responsibilities and implementation under the Petroleum Regime. At present, this is scattered across various articles of the Act and the PSC, and is neither clear nor comprehensive.
2. Environmental assessment proposals (PA §10.3(b) and PSC §5.1(b)(i)) need to be clearly delineated and made binding. Environmental Impact Assessments (EIAs) should not be prepared by the company alone, but by independent consultants or NGOs, or by an agency of the Government of Timor-Leste independent of the Petroleum Ministry. There should be a public and community consultation process, including alternative EIAs or other mechanisms for incorporating indigenous and local knowledge, before an EIA is approved, as well as a provision for judicial review.
3. Decommissioning and Environmental Restoration proposals and plans should also be required, both in advance of the granting of any Authorisation and to be updated regularly. We are proposing a new PA §10.4½ to require such plans. Following closure of a project, companies should restore the environment to at least as good a state as it was before the project started. This requires restoration, not just “clean-up”, and is a better standard than “minimizing pollution and environmental harm” (PA §10.3(b)).
4. PA §7.5 should require Ministry approval of Environmental, Decommissioning, and Restoration plans prior to granting any Work Approval.
5. PA §19.1(a) should include environmental protection as an essential component of petroleum production work practices.
6. Failure of a company to comply with environmental laws, plans or standards; or pollution or other environmental damage caused by such failure or by willful, reckless or negligent actions by the company or its employees or subcontractors; is the responsibility of the company. It should carry civil (and sometimes criminal) penalties, and the company should be required to clean up and remediate any damage at its own expense, not as a recoverable cost ultimately paid by Timor-Leste. Premiums for insurance for policies which would cover non-recoverable costs (such as these) should not be recoverable.
7. Timor-Leste must take special precautions to preserve unique habitats and endangered species, both by signing the relevant international conventions and by ensuring that projects that would threaten such areas not be allowed to proceed.
8. The responsibility of protecting Timor-Leste’s environment from petroleum predation cannot be left within the Petroleum Ministry. A separate government agency, independent from agencies responsible for petroleum, economic development, or industry, should manage this process, approve or reject environmental plans and actions, and be responsible for enforcing environmental laws and regulations in Timor-Leste.
9. Until Timor-Leste has established an Environment Ministry and enacted our own environmental laws and regulations, Indonesian environmental law is in effect here. The Government should effectively enforce this law, and the companies should be informed that they are expected to follow it, and provided with Portuguese and/or English translations of the law.
1. As in the other parts of the Petroleum Regime, a presumption for transparency should be included here, as well as mechanisms for public disclosure and accountability of all revenues received. A similar democratic mechanism must be created for managing the revenues after they have been received, but that is beyond the scope of this act and must be addressed in separate legislation.
2. Article 3 (Scope) should refer to the Timor-Leste Maritime Zones Act of 2002, in anticipation of a maritime boundary settlement.
3. Article 12.1 could be abused if the Contractor expresses overly optimistic recovery rates in additional development plans, and standards for approval by the Petroleum Ministry or DA should be spelled out in a Regulation.
4. Article 25 should include a list of the subjects for Regulation which could be enacted by the Finance and Petroleum Ministries, in order to ensure flexibility in taxation, since technology, corporate control, and oil prices will change.
1. All submissions to the drafting process, including ours and those from petroleum companies, should be made available to the public.
2. A concerted effort should be made to socialize these issues among the Timor-Leste population both within and outside of Dili. In addition to public meetings, material in accessible languages should be distributed through churches, schools, local community groups and other channels. After people understand the issues and decisions this legislation involves, there should be a mechanism for their input to be considered.
3. After submissions and community input have been considered and the legislation is redrafted, the drafting committee should publish a report describing the suggested changes they received, and explaining why each one was incorporated or rejected. The Director of the Timor Sea Office has promised La’o Hamutuk that this will be done.
4. Once that report is published, another public hearing should be held in Dili, and perhaps in a few of the districts. These meetings should allocate most of the time for the public to present testimony, make suggestions and ask questions. The primary purpose should be to receive input, rather than to justify or explain the legislation’s rationale.
5. After that meeting, another round of redrafting should be undertaken before the bills are considered by the Council of Ministers, and another report published.
6. During the Parliamentary approval process, there should be further opportunities for public input.
7. After this and related legislation has been in effect for two or three years, before any on-shore development contracts are signed, Government and Parliament should conduct an extensive review and revision process of all relevant legislation, This process must include public participation.
 Oil Revenue Management Law for São Tomé and Principe, version of July 2004. La’o Hamutuk can provide the Portuguese original, as well as an English translation and explanatory notes in English.

References: §6
 §15
 §28
 §18
 §5
 §10
 §10
 §10
 §10
 §10
 §5
 §6
 §7
 §8
 §1
 §10
 §5
 §10
 §10
 §7
 §19