Timor-Leste Petroleum Fund

Country: East Timor

Established: 2005

US$ Billion: 5

Origin: Oil, gas

Transparency Rating: 6

Summary:
Timor-Leste’s government announced the inception of the Timor-Leste Petroleum Fund in August of 2005. The Minister of Planning and Finance of the Government of Timor-Leste, is responsible for managing the fund. The Minister of Planning and Finance, however, signed an agreement with the Banking and Payment Authority to also take responsibility of the fund.

By late 2006, the Timor-Leste Petroleum Fund had reached U.S. $1,011,763,807. Due to the Bayu-Undan project, which yielded an estimated 25-year field life of wet gas, profitability increased. By the end of 2007, the fund’s balance was slightly over U.S. $2 billion.

The fund is currently mandated to invest only in US and other sovereign debt instruments.

Strategy & Objectives:
The Petroleum Fund Law requires that not less than 90 percent of the portfolio be invested in debt instruments and deposits denominated in U.S. dollars.

News and Updates

12/17/2008
East Timor wealth fund to diversify from US bonds
East Timor said on Thursday its $5 billion sovereign wealth fund plans to diversify away from U.S. Treasuries and invest in other government bonds as well as property.

The government is considering changing a law that requires 90 percent of the assets of the Petroleum Fund to be invested in U.S. Treasuries, which currently make up all of the fund.

"Our savings entrusted to the U.S. Treasury could be literally wiped out, throwing our people into even greater poverty and desperation," said President Jose Ramos-Horta in a speech in Singapore, pointing to the growing U.S. deficit and weakening U.S. dollar as reasons for the move.
read more: Thomson Reuters

5/27/2008
East Timor wants to diversify US$ 3 billion oil fund
The oil fund wants to generate investment returns higher than US treasuries to help rebuild the economy. According to Thomson Reuters, "East Timor will have $3 billion by end-2008 in a sovereign wealth fund and may hire fund managers to diversify its U.S. Treasury holdings into better performing assets, President Jose Ramos-Horta told Reuters on Saturday.

Ramos-Horta said the fund, which comes from the tiny Southeast Asian state's revenues from energy production, is losing money because of the fall in the U.S. dollar and low interest rates, and wants better returns to rebuild the country."
read more: Thomson Reuters

Website

Banking and Payment Authority of Timor-Leste

1. All figures quoted are from official sources, or, where the institutions concerned do not issue statistics of their holdings, from other publicly available sources.


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