The national state owned oil company has signed its first exploration joint venture agreement.
And the government has secured the land for the start of its onshore processing base.
Landowners have agreed to hand over more than 11-hundred hectares for a ten per cent share of future profits.
The deal was signed before legislation setting out the rules governing land acquisition has been passed in East Timor.
Correspondent: Karon Snowdon
Speakers: Francisco de Costa Monteiro, TimorGap's President and CEO; Charles Scheiner, Researcher with La'o Hamutuk, the East Timor Institute for Development, Monitoring and Analysis
SNOWDON: Timor Gap is the name given to the two year old East Timor national oil company. The physical Timor Gap is the area between East Timor and Australia which is the source of the small country's current economic survival and some of its challenges, relating to its treaty and production sharing agreement with Australia.
Last month, the company signed up for a 24 percent stake in its first joint venture with Italian and Japanese partners to explore an area 240km from Dili and 500km from Darwin. It's East Timor's first direct participation in developing resources in the Joint Petroleum Development Area it shares with Australia.
Francisco de Costa Monteiro is TimorGap's President and CEO.
MONTEIRO: For us this is one of the biggest milestones not only of course for the country but for the company and for us to mark our presence in the industry.
SNOWDON: The exploration area is close to the oil producing Kitan field and is thought to be very prospective. Onshore activity has also been productive. One of Timor Gap's jobs is to help get the government's major national development project off the ground. That's a corridor of petroleum infrastructure involving on oil refinery, an LNG Plant, a marine supply base with airport and a highway linking all three.
The Suai Supply Base on the south west coast is the first phase. Landowners have given over 1100 hectares of land for the promise of ten per cent share of profits.
Charles Scheiner is a researcher with La'o Hamutuk, East Timor's Institutue for Development, Monitoring and Analysis. It's looked at publically available budget and other government data and spoken to some community members.
SCHEINER: We're not sure there will be profits. Our analysis shows that it's a very questionable project from an economic point of view and of course ten per cent of zero is zero. So we're wondering whether the community, the people whose leaders handed over their land - the individual landowners, or farmers who live on that land and fisherpeople, we think they believe they are getting some kind of fair compensation but it's not at all clear to those who know more about the project that that's true.
SNOWDON: Francisco Monteiro describes the agreement as an "in-principle one" for up to ten per cent of operational profits of the supply base. But he goes further saying it's an idea the government is only looking into.
MONTEIRO: The government is also committed to look into the possible sharing of the profits of the supply base itself, up to ten per cent of the profits. Its an in principle agreement that the government is work(ing) on, the details of that are still to come.
SNOWDON: The relevant minister the Minister for Petroleum and Mineral Resources Alfredo Pires is yet to respond to a request for an interview.
He could have cleared up some confusion. The government's press release issued a week ago seems to be unequivocal about the benefits to the local commnunity.
It says..... "Besides the benefits to come in the form of jobs for local people during both the construction and operational phases, landowners are to be recompensed through a 10% share of profit from the project."
It then adds: "This is a far more significant share than has been offered to traditional landowners in other countries including Australia."
SNOWDON: But Australia's traditional land owners have something East Timor's people don't. Their land rights are protected under the law. The community land in the Covalima District includes four cemetaries and three sacred sites along with the farmland providing livelihoods.
Charles Schiener says there appears to have been a rush to finalise the agreement before adequate legislation covering the takeover of traditional land is finalised.
SCHEINER: The Ministry of Justice actually just tow days ago released its final version of its propsed land laws that would govern these kinds of land transfers and taking land for national projects from local communities. And why there's such a rush to do this land transfer before the laws are passed is worrisome to us.