Graham Lees
World Politics Watch Exclusive
BANGKOK, Thailand -- Cambodia is on the verge of attracting the attention of business news writers instead of the horror headlines that for so long marked reporting about the Southeast Asian country.
Instead of horrendous stories of the murderous and bizarre Khmer Rouge regime that bludgeoned the place back into the dark ages, the news out of Cambodia is set to focus on oil and gas production and refineries and port development.
It should be a time for happy anticipation by the international institutions and NGOs that have propped up the country for years. But instead there is trepidation that Cambodia's anticipated "black gold" bonanza from rich, as-yet-untapped, offshore undersea fields could plunge the fragile country of 13 million back into the despair of the 1990s.
Cambodians might be sitting on as much as two billion barrels of oil and 10 trillion cubic feet of gas, according to reports by the World Bank and the United Nations Development Program (UNDP), but those bodies fear that unless it is handled well the country, already ravaged by acute poverty, may become the Nigeria of East Asia.
Nigeria has netted $450 billion from its oil during the last 35 years, but more than half the population still earns less than $1 a day and there is a national debt of $30 billion.
"Depending upon the world price of oil, Cambodian reserves may be contributing annual revenues of $2 billion per annum --several times the current level of domestic revenue and ODA [overseas development aid] combined -- within perhaps five to ten years," says a World Bank report.
But the bank adds forebodingly: "International experience suggests that such petrochemical wealth may equally well result in a 'resource curse' that actually retards development and poverty reduction."
The curse is corruption. Cambodia may be stable and improving after the years of chaos that saw the citizens of the former pretty French colonial capital Phnom Penh driven out to the countryside at Khmer Rouge gunpoint, but there is little sign of progress toward accountable and transparent government. Prime Minister Hun Sen and his cronies maintain a tight grip on power.
In fact, the Singapore Institute of International Affairs said in a report in October that Hun Sen has consolidated his power in recent months.
In September, the Asian Human Rights Commission highlighted the plight of a Cambodian journalist who had dared to allege that the deputy prime minister, Sok An, was corrupt.
Dum Sith, the editor-in-chief of a Khmer language newspaper, was fined $4,500 -- or 18 million Riel, a fortune in Cambodia -- after being sued by the government for spreading disinformation. The commission said the court case had been unfair and constituted abuse of the legal system to suppress freedom of expression.
None of which bodes well for the bonanza waiting to happen as Asian and Western oil companies queue up for drilling concessions in the Gulf of Thailand, less than 200 kilometers from the sleepy Cambodian port of Sihanoukville, which is set to become a black gold rush boom town.
Cambodia has six potential offshore fields in its territorial waters of the gulf's Khmer Basin, plus several sea areas disputed with neighbor Thailand. Only one of them has so far been explored, the so-called Block A.
The total area up for exploration covers about 37,000 square kilometers of Cambodian waters. Another 27,000 square kilometers are in dispute with Thailand. After being stalled for a decade, talks between the two countries have resumed on agreeing to border lines, or perhaps settling for joint development.
The Block A drillings, conducted by a foreign consortium led by Chevron and including GS Caltex of South Korea and Japan's Mitsui Oil, caused industry excitement when Chevron confirmed "significant finds" from its initial exploration last year. Chevron is conducting more test drills but has not published any figures.
However, the World Bank report says: "Provisional estimates are that this explored portion of Block A contains 400-500 million barrels of oil and 2-3 trillion cubic feet of gas; total reserves may quite possibly be as high as 2 billion barrels of recoverable oil and 10 trillion cubic feet of gas."
Chevron may wish to be very cautious in its comments -- "too early to speculate", said a spokeswoman for the company in Bangkok -- but its findings have started a rush by other oil companies to the Cambodian capital Phnom Penh to try to win drilling concessions for the other five unexplored offshore areas.
The interested companies include France's Total, Japan's Mitsui, the U.S. oil equipment company AirGATE Technologies, and two Chinese state enterprises, the China National Offshore Oil Company (CNOOC), and China National Petroleum Corp.
Sources said that Total and CNOOC are competing to win the concession to explore Block B next to Chevron's concession.
According to the Phnom Penh newspaper Cambodia Daily, senior managers of CNOOC have been "wooing" various Cambodian government ministries as well as the Cambodian National Petroleum Authority, and analysts at the Institute of Southeast Asian Studies in Singapore say Beijing's financial backing of the Phnom Penh government puts it in a strong bargaining position. In September, Hun Sen asked the visiting Chinese Finance Minister Jin Ren Qing for a $200 million loan for infrastructure developments.
The Japan Bank for International Cooperation, which always lays the ground work for private Japanese commercial investment, is contributing almost $38 million in grants or loans to help develop Sihanoukville, until now better known to roaming budget backpackers as a base for cheap diving trips to the nearby undeveloped islands.
The China National Chemical Engineering Group Corporation is going to help develop an oil refinery in Sihanoukville with a capacity of 40,000 barrels per day. The refinery will reportedly cost $420 million.
"When Cambodia gets moving with its hydrocarbons exploration and production then sleepy Sihanoukville is going to become a frontier boom town," said Collin Reynolds, an energy commodities analyst in Bangkok.
China is busy investing in all sectors of the fragile Cambodian economy, including hydroelectric power generation projects. "Aside from humanitarian grants and donations from the U.N. and other agencies, China has become the biggest commercial investor in Cambodia, with a $217 million investment in the timber, textiles, and food processing industries in 2004 alone," says the Centre for the Development of Cambodia in Phnom Penh.
Rather depressingly, a report by the UNDP concludes that "without a fundamental shift in the role of the state it is unlikely Cambodia will realize its potential."
On the other hand, pariah state Burma has demonstrated admirably that despots who incur the wrath of the U.N., and sanctions by western governments over human rights abuses, can still do very nicely selling concessions to a wide range of companies and governments eager to drill for huge gas reserves in offshore waters.
Graham Lees is a Bangkok-based British journalist who has worked in several countries in East Asia over the past ten years covering regional business and political affairs.
Instead of horrendous stories of the murderous and bizarre Khmer Rouge regime that bludgeoned the place back into the dark ages, the news out of Cambodia is set to focus on oil and gas production and refineries and port development.
It should be a time for happy anticipation by the international institutions and NGOs that have propped up the country for years. But instead there is trepidation that Cambodia's anticipated "black gold" bonanza from rich, as-yet-untapped, offshore undersea fields could plunge the fragile country of 13 million back into the despair of the 1990s.
Cambodians might be sitting on as much as two billion barrels of oil and 10 trillion cubic feet of gas, according to reports by the World Bank and the United Nations Development Program (UNDP), but those bodies fear that unless it is handled well the country, already ravaged by acute poverty, may become the Nigeria of East Asia.
Nigeria has netted $450 billion from its oil during the last 35 years, but more than half the population still earns less than $1 a day and there is a national debt of $30 billion.
"Depending upon the world price of oil, Cambodian reserves may be contributing annual revenues of $2 billion per annum --several times the current level of domestic revenue and ODA [overseas development aid] combined -- within perhaps five to ten years," says a World Bank report.
But the bank adds forebodingly: "International experience suggests that such petrochemical wealth may equally well result in a 'resource curse' that actually retards development and poverty reduction."
The curse is corruption. Cambodia may be stable and improving after the years of chaos that saw the citizens of the former pretty French colonial capital Phnom Penh driven out to the countryside at Khmer Rouge gunpoint, but there is little sign of progress toward accountable and transparent government. Prime Minister Hun Sen and his cronies maintain a tight grip on power.
In fact, the Singapore Institute of International Affairs said in a report in October that Hun Sen has consolidated his power in recent months.
In September, the Asian Human Rights Commission highlighted the plight of a Cambodian journalist who had dared to allege that the deputy prime minister, Sok An, was corrupt.
Dum Sith, the editor-in-chief of a Khmer language newspaper, was fined $4,500 -- or 18 million Riel, a fortune in Cambodia -- after being sued by the government for spreading disinformation. The commission said the court case had been unfair and constituted abuse of the legal system to suppress freedom of expression.
None of which bodes well for the bonanza waiting to happen as Asian and Western oil companies queue up for drilling concessions in the Gulf of Thailand, less than 200 kilometers from the sleepy Cambodian port of Sihanoukville, which is set to become a black gold rush boom town.
Cambodia has six potential offshore fields in its territorial waters of the gulf's Khmer Basin, plus several sea areas disputed with neighbor Thailand. Only one of them has so far been explored, the so-called Block A.
The total area up for exploration covers about 37,000 square kilometers of Cambodian waters. Another 27,000 square kilometers are in dispute with Thailand. After being stalled for a decade, talks between the two countries have resumed on agreeing to border lines, or perhaps settling for joint development.
The Block A drillings, conducted by a foreign consortium led by Chevron and including GS Caltex of South Korea and Japan's Mitsui Oil, caused industry excitement when Chevron confirmed "significant finds" from its initial exploration last year. Chevron is conducting more test drills but has not published any figures.
However, the World Bank report says: "Provisional estimates are that this explored portion of Block A contains 400-500 million barrels of oil and 2-3 trillion cubic feet of gas; total reserves may quite possibly be as high as 2 billion barrels of recoverable oil and 10 trillion cubic feet of gas."
Chevron may wish to be very cautious in its comments -- "too early to speculate", said a spokeswoman for the company in Bangkok -- but its findings have started a rush by other oil companies to the Cambodian capital Phnom Penh to try to win drilling concessions for the other five unexplored offshore areas.
The interested companies include France's Total, Japan's Mitsui, the U.S. oil equipment company AirGATE Technologies, and two Chinese state enterprises, the China National Offshore Oil Company (CNOOC), and China National Petroleum Corp.
Sources said that Total and CNOOC are competing to win the concession to explore Block B next to Chevron's concession.
According to the Phnom Penh newspaper Cambodia Daily, senior managers of CNOOC have been "wooing" various Cambodian government ministries as well as the Cambodian National Petroleum Authority, and analysts at the Institute of Southeast Asian Studies in Singapore say Beijing's financial backing of the Phnom Penh government puts it in a strong bargaining position. In September, Hun Sen asked the visiting Chinese Finance Minister Jin Ren Qing for a $200 million loan for infrastructure developments.
The Japan Bank for International Cooperation, which always lays the ground work for private Japanese commercial investment, is contributing almost $38 million in grants or loans to help develop Sihanoukville, until now better known to roaming budget backpackers as a base for cheap diving trips to the nearby undeveloped islands.
The China National Chemical Engineering Group Corporation is going to help develop an oil refinery in Sihanoukville with a capacity of 40,000 barrels per day. The refinery will reportedly cost $420 million.
"When Cambodia gets moving with its hydrocarbons exploration and production then sleepy Sihanoukville is going to become a frontier boom town," said Collin Reynolds, an energy commodities analyst in Bangkok.
China is busy investing in all sectors of the fragile Cambodian economy, including hydroelectric power generation projects. "Aside from humanitarian grants and donations from the U.N. and other agencies, China has become the biggest commercial investor in Cambodia, with a $217 million investment in the timber, textiles, and food processing industries in 2004 alone," says the Centre for the Development of Cambodia in Phnom Penh.
Rather depressingly, a report by the UNDP concludes that "without a fundamental shift in the role of the state it is unlikely Cambodia will realize its potential."
On the other hand, pariah state Burma has demonstrated admirably that despots who incur the wrath of the U.N., and sanctions by western governments over human rights abuses, can still do very nicely selling concessions to a wide range of companies and governments eager to drill for huge gas reserves in offshore waters.
Graham Lees is a Bangkok-based British journalist who has worked in several countries in East Asia over the past ten years covering regional business and political affairs.
2 comments:
The dangers are very clear. Greed, power and corruption that goes uncontested will yield absolute evil. Only then will civil unrest, and possible revolution becomes the hard line cure.
Good! Now it is time to modernize cambodian army and move on from there!
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