How long will the Petroleum Fund carry Timor-Leste?

Oil and gas provides about 95 % of Timor-Leste state revenues and four-fifths of GDP. Income from exporting non-renewable petroleum wealth is channelled through a Petroleum Fund which contains US$15 billion. Many expect that the Fund’s balance and investment earnings will pay for state activities after the oil and gas fields are exhausted, which could be by 2020 if the Greater Sunrise project remains stalled. Unfortunately, the Petroleum Fund may be empty five years after that. This paper describes a model to estimate how long the Petroleum Fund will be able to finance state activities. The model incorporates historical and projected data, including recurrent and capital spending, domestic revenue, loans and repayments, petroleum income and return on Petroleum Fund investments. It allows changes to these parameters as well as to anticipated oil market prices, interest rates and Sunrise development options. The prospect that the Petroleum Fund could be gone in a decade underscores the urgency to develop Timor-Leste’s non-oil economy, increase domestic revenue and use public funds wisely. Oil and gas provided more than 95 % of Timor-Leste state revenues2 and comprised 81 % of GDP (RDTL DGS 2013) in 2012. Income from exporting non-renewable petroleum wealth is channelled through the Petroleum Fund, which contains US$15 billion. Many believe the Fund will pay for state activities afte