Dili, 03 March 2023

TIMOR GAP Statement Regarding False Claims by Timor Resources PTY LTD

TIMOR GAP always meets its contractual obligations and completely rejects any false claims by Timor Resources Pty Ltd, a privately owned Australian oil and gas company, that it owes any money under the Joint Operating Agreement.

TIMOR GAP operates with the highest standards of integrity and transparency and remains committed to the rule of law and fulfilling all of its contractual obligations.

In reference to the article published by Lusa, on 2nd of March 2023, titled “Timor Resources will sue Timorese oil company for lack of payment on project”. The news contains several statements made by the company Timor Resources that are entirely false and damaging to TIMOR GAP’s good name. Therefore, we hereby clarify the following:

1. Pursuant to the contracts signed by Timor Resources with the State of Timor-Leste (Production Sharing Contracts – PSC) and with TIMOR GAP (Joint Operating Agreements – JOA) for the Blocks A and C (the “Blocks”), Timor Resources has assumed the full obligation to fund 100% of the costs incurred in the referred blocks, including the costs associated with TIMOR GAP’s participating interest (50%) during the exploration and development phase and until the first oil production. This obligation, which is commonly referred to in the oil industry as “Carry”, is usually assumed by foreign oil companies in relation to national oil companies, as is the case of TIMOR GAP.
2. In this respect, Timor Resources is contractually required to cover all costs incurred, and to be incurred, in the referred blocks until first oil production is achieved, should the ongoing exploration activity be successful and result in a declaration of commercial discovery.
3. This Timor Resources’ obligation, and respective Carry, is established in absolutely unequivocal terms in the referred contracts, PSC and JOA.
4. Considering the above, TIMOR GAP has no contractual obligations of paying any exploration and development costs, and therefore, TIMOR GAP is not in default as falsely alleged by Timor Resources.
5. On the contrary, it is Timor Resources that is in serious breach of its contractual obligations by refusing to fund in full the petroleum operations.
6. In addition, as of November 2022, Timor Resources has prevented TIMOR GAP from participating in the Operations Committee meetings, and has blocked TIMOR GAP’s access to any geological, technical, or financial information, which is also a serious breach of its obligations under the JOA.
7. It should be noted that during the negotiation of the referred PSCs and JOAs, Timor Resources made several statements, including by its CEO, assuming the commitment to funding the entire exploration and development operations, claiming to have the financial resources to do so.
8. On the other hand, Timor Resources is obliged before the State of Timor-Leste to continue operations in the said Blocks, pursuant to the provisions set forth in the PSC, regardless of any dispute with TIMOR GAP, and cannot suspend those operations as has been announced by Timor Resources.
9. Any unjustified suspension or interruption of operations would result in a serious breach of the PSC, which may result in the termination of this contract by the State of Timor-Leste.
10. As Timor Resources’ partner, TIMOR GAP expects that Timor Resources manages to gather the financial resources to continue the activities in the Blocks and to honor its obligations as a foreign investor to TIMOR GAP and the State of Timor-Leste.