Original report from Phnom Penh
27 January 2009
While Cambodia waits for the oil to flow from its offshore blocks, potentially yielding millions of barrels and billions of dollars, industry experts have lowered their expectations.
“It is a very risky business. Oil is sticky, and it likes to stay in the ground,” said Michael McWalter, an oil and gas expert at the Asian Development Bank and advisor for Cambodia’s National Petroleum Authority. “If it is sticky, the water will flow instead. So the oil recovery level is very low, and oil that has been recovered has no gas with it.”
The World Bank estimates Cambodia’s total offshore oil potential at up to 2 billion barrels in six blocks in the Gulf of Thailand.
Block A alone could hold 400 million barrels. It is under exploration by the US giant Chevron in cooperation with Japan’s Mitsui Oil Exploration and South Korea’s Caltex. The remaining blocks are under investment by 13 companies, from France, Kuwait, Sweden, Singapore, China and others.
Chevron is still leading in exploration, but the company has already encountered the problem of dispersion—where oil deposits are scattered in pockets underground, rather than in giant reservoirs.
Cambodia’s offshore crude is dispersed, “rather than in one core field, which makes investment hard,” said Men Den, deputy director of the Cambodian National Petroleum Authority. “So it costs more to produce oil.”
Meanwhile, McWalter said low crude prices could mean Chevron won’t be able to start pumping oil by 2011, as it once expected.
“Although all the planning has been done, the circumstances are so different now for the oil industry,” he said. “Even if you can submit the development plan tomorrow, you need more time to check and approve, and a long time to prepare. So it’s hard to believe that any company can produce oil in 2011.”
Chevron is the largest oil investor in Cambodia, spending more than $100 million to explore 6,000 square kilometers in Block A, which lies under the sea 140 kilometers southwest of Sihanoukville town.
Chevron spokesman Gareth Jonhstone told VOA Khmer the company would not discuss start-up dates, but Chevron and its partners in Block A were “working closely with the Royal Government of Cambodia to complete the fiscal and legal framework for the development of petroleum resources in Cambodia.”
While some skeptics warn that the potential billions of dollars from the oil fields must not be used to line corrupt pockets, experts point out the costs and risks of the ventures themselves.
The natural conditions for Cambodia’s oil blocks is not good, the price of exploration technology high and the value of crude oil dropping, McWalter said.
Phat Bunne, an oil and gas expert at the Cambodian Institute of Technology, agreed, saying offshore oil could turn out to be less than expected and deal failure to prospective companies.
Men Den said it all comes down to the price of crude.
“If the oil price falls, no oil [production] starts,” he said. “If the oil price decreases more, or even stays at the same low level, I believe none of the companies can go ahead."
“It is a very risky business. Oil is sticky, and it likes to stay in the ground,” said Michael McWalter, an oil and gas expert at the Asian Development Bank and advisor for Cambodia’s National Petroleum Authority. “If it is sticky, the water will flow instead. So the oil recovery level is very low, and oil that has been recovered has no gas with it.”
The World Bank estimates Cambodia’s total offshore oil potential at up to 2 billion barrels in six blocks in the Gulf of Thailand.
Block A alone could hold 400 million barrels. It is under exploration by the US giant Chevron in cooperation with Japan’s Mitsui Oil Exploration and South Korea’s Caltex. The remaining blocks are under investment by 13 companies, from France, Kuwait, Sweden, Singapore, China and others.
Chevron is still leading in exploration, but the company has already encountered the problem of dispersion—where oil deposits are scattered in pockets underground, rather than in giant reservoirs.
Cambodia’s offshore crude is dispersed, “rather than in one core field, which makes investment hard,” said Men Den, deputy director of the Cambodian National Petroleum Authority. “So it costs more to produce oil.”
Meanwhile, McWalter said low crude prices could mean Chevron won’t be able to start pumping oil by 2011, as it once expected.
“Although all the planning has been done, the circumstances are so different now for the oil industry,” he said. “Even if you can submit the development plan tomorrow, you need more time to check and approve, and a long time to prepare. So it’s hard to believe that any company can produce oil in 2011.”
Chevron is the largest oil investor in Cambodia, spending more than $100 million to explore 6,000 square kilometers in Block A, which lies under the sea 140 kilometers southwest of Sihanoukville town.
Chevron spokesman Gareth Jonhstone told VOA Khmer the company would not discuss start-up dates, but Chevron and its partners in Block A were “working closely with the Royal Government of Cambodia to complete the fiscal and legal framework for the development of petroleum resources in Cambodia.”
While some skeptics warn that the potential billions of dollars from the oil fields must not be used to line corrupt pockets, experts point out the costs and risks of the ventures themselves.
The natural conditions for Cambodia’s oil blocks is not good, the price of exploration technology high and the value of crude oil dropping, McWalter said.
Phat Bunne, an oil and gas expert at the Cambodian Institute of Technology, agreed, saying offshore oil could turn out to be less than expected and deal failure to prospective companies.
Men Den said it all comes down to the price of crude.
“If the oil price falls, no oil [production] starts,” he said. “If the oil price decreases more, or even stays at the same low level, I believe none of the companies can go ahead."
5 comments:
Yep, that's what will happened when you let too many evils (like pouk ah Scam rainxy and his potato diggers) on our holy soil.
cambodia may need the world experienced or experts help with this oil and gas business. if mismanaged, can create a lot of problems instead of helping the country. so experts help is essential as cambodia is just beginning to experience this new wealth output. god bless cambodia.
To 3:36AM,
If you think that every unfortunate things happened in Srok Khmer resulted from Sam Rainsy, I kind of start to feel sorry for you. The truth of the matter is that your mother might have been fucked by him, too, you know? And if one of your eyes starts to loose vision, your mother might have been fucked by ah kwak Hun Sen as well... Please don't say that you are going to get on a helicopter anytime soon. If you do, khmouch ah Hok Lundi will be happy to welcome you.
Get it?
3:36 AM,
I think you are totally YOUN's brain. You don't really know what you are talking about. Since you have no logic comments and using baseless talks without any clear analyze you are totally using a reverse psychology.
Sam Rainsy is not the one holding power right now. How can he done such thing. He is the man for the right future of Cambodia. I'd rather choose him instead choosing one of your kind.
Khmer is look forward to have Mr. or MP Sam Rainsy to lead the country in near future. Those that took so much money from Cambodia's national interest is CPP. Look at Sok Kong and Yay Phu, these two non-Khmer is sucking up Cambodian dry. The revenue of selling tickets to travelers produced million of $$$ dollars and where does money go??
Man, you have to do some more research about bashing out people before you talking shit without clear view.
To those that think no one dare to touch them, mother nature or only god will end their life. May lord Buddha bless Cambodia.
Khmer-sino PP,
Oh shut the fuck up, Ah potato digger (4:29). Don't you ever get tired of saying the same thing over and over, and for decade after decade?
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