Beneath the waters of the Timor Sea lies a wealth that is hard to fathom. Timor-Leste is estimated to hold oil reserves of 8.3 billion barrels and gas reserves of 324 billion cubic meters. In addition, the Greater Sunrise gas field alone is valued at more than US$33 billion.
Yet on land, 42 percent of its population lives below the poverty line. Nearly half of children under five are malnourished.
This is no small irony. It is the condition of a country that has spent two decades awash in oil revenues, yet has failed to translate that wealth into broad prosperity. How is that possible?
The Money Exists, But It Flows into the Wrong Channels
When the Bayu-Undan gas field began production in the early 2000s, Timor-Leste received a windfall that few small nations ever experience. To its credit, the government did not spend it all at once. In 2005, it established the Petroleum Fund of Timor-Leste, a reserve fund designed to store surplus oil and gas revenues.
By the end of 2025, the fund was worth around US$18.91 billion, a figure that appears substantial. But since 2008–2009, the government has almost every year withdrawn more than what is considered sustainable.
In 2025, the national budget was set at US$2.6 billion, more than double the safe withdrawal limit. The money is there, but it is being spent faster than it should be. And the source that once replenished it has already dried up.
In June 2025, Bayu-Undan officially ceased operations. The field, which produced 114,000 barrels per day in 2019, is no longer active.
For the first time, Timor-Leste is no longer truly an oil-producing country. What remains is a shrinking reserve fund, with the International Monetary Fund warning that it could be depleted by the late 2030s.
The Next Source of Wealth Is Still Stuck in Negotiation
Hopes now rest on the Greater Sunrise project. The government holds a 56.6 percent stake and has long viewed it as a lifeline. Yet as of the end of 2024, development remains stalled.
The issue is simple, but deeply contentious: where should the gas be processed? The government of Timor-Leste insists it be processed on its southern coast, arguing that it would drive domestic industrialization.
Woodside Energy, the project operator, has proposed processing near Darwin or offshore—options that are, in fact, more financially beneficial for Timor-Leste: an 80 percent upstream revenue share, compared to 70 percent if processed domestically.
By the end of 2024, Australia even offered to increase Timor-Leste’s share to 90 percent. That offer still hangs in the balance.
As negotiations drag on, time keeps moving. And the Petroleum Fund continues to shrink.
At Home, the Young Choose to Leave
That pressure is felt most directly by the younger generation. Half of those aged 18 to 34 say they plan to work abroad in 2025. They are heading to Australia, Europe, South Korea—anywhere that will take them.
The impact is visible in remittance figures: from 4.5 percent of GDP in 2022, rising sharply to 11.8 percent in 2024. Remittances have become the country’s second-largest source of capital inflows, not because the economy is expanding, but because its people are seeking livelihoods elsewhere.
At home, the formal economy is barely moving. The private sector employs only 13 percent of the workforce, while nearly 80 percent of the population depends on slow-growing agriculture.
At the same time, unresolved land ownership issues—a legacy of long periods of colonization—continue to deter investment and leave productive land underutilized.
Frustration That Finally Boiled Over
In September 2025, students took to the streets. The trigger was a parliamentary plan to purchase new cars for its members. In late August 2025, parliament approved a budget of around US$4.2 million for 65 Toyota Land Cruiser Prado units (about US$61,500 each), citing that existing vehicles were no longer fit for use.
Public pressure, led by students, eventually forced the government to back down. But the demands quickly expanded to include the abolition of lifetime pensions for public officials, an old issue that had long remained unresolved.
In the end, parliament canceled the car purchase and scrapped the lifetime pension scheme.
It was a step forward. But the larger challenges remain firmly in place. The 2026 budget continues to face heavy criticism from civil society and the International Monetary Fund.
Routine spending keeps swelling, while investment in agriculture, education, and healthcare remains far from adequate.
An Unanswered Question
The wealth beneath the sea is real. The Petroleum Fund of Timor-Leste still exists, though time is running out. The Greater Sunrise gas field could still offer hope, even as negotiations remain unresolved.
But as long as the structure does not change, as long as state revenues are spent more on routine expenditures than on building a self-sustaining economic foundation, the paradox will persist.
A country rich beneath the sea, yet poor on land. And its young people will continue to leave.
