(Corrects location in paragraph 4 to presidential palace, not parliament)
By Nelson Da Cruz
DILI, Oct 3 (Reuters) - East Timor President Francisco "Lu Olo" Guterres swore in the remaining members of the new cabinet on Tuesday and urged the first minority government since independence to focus on improving living conditions and avoiding political upheaval.
The new administration led by Prime Minister Mari Alkatiri faces pressure to lift flagging oil production in the nation of 1.3 million people, where unemployment and poverty remain rife.
Alkatiri, who was East Timor's first prime minister after independence in 2002, stood down in 2006 following a wave of unrest sparked by the sacking of 600 soldiers. His Fretilin party won the most votes in July's election but failed to get an outright majority.
Guterres said in a speech at the presidential palace that the country expected good governance without waste.
"The improvement of well being in our land isn't achieved with political upheaval. It's achieved with work, with the participation of everyone and with dedication," said Guterres.
Dwindling output from existing oil and gas fields, compounded by weaker commodities prices, have hit the government's budget and crimped its ambition to develop manufacturing as an engine for economic growth.
The former Portuguese colony was invaded by neighboring Indonesia in 1975. An often violent 24-year resistance movement took East Timor to independence in 2002 and many of its key figures still feature prominently in running the country.
Alkatiri, who is a Muslim in the predominantly Roman Catholic nation, spent several decades living in exile in Mozambique during East Timor's struggle for independence.
Nobel Peace Prize winner and former prime minister and president, Jose Ramos-Horta, was also sworn into the cabinet last month in a new post as Minister of State and Counsellor for National Security.
Hernani Filomena Coelho da Silva has been appointed to the important post of oil minister. He was foreign minister in the previous administration.
Australia and East Timor reached a breakthrough agreement last month on a maritime border, ending a decade-old row that has stalled a $40 billion offshore gas project.
The dispute has led the owners of the Greater Sunrise fields - Woodside Petroleum, ConocoPhillips (NYSE:COP), Royal Dutch Shell (LON:RDSa) and Japan's Osaka Gas - to shelve the project.
Fretilin, which won 23 seats in the election, will join with the Democratic Party to control 30 seats in the 65-seat parliament.
Fretilin, or the Revolutionary Front for an Independent East Timor, had been in a de facto coalition since 2015 with the National Congress for Timorese Reconstruction, a party founded by former independence fighter Xanana Gusmao. (Writing by Ed Davies; Editing by Kim Coghill)