Cambodia - Next Oil and Natural Gas Frontier?

Tue, 07 February 2012
By. John C.K. Daly
OilPrice.com

Prime Minister Hun Sen seems to be overly optimistic about when offshore oil production would begin however, as Chevron Overseas Petroleum (Cambodia) Ltd. officials have informed the Cambodian government that oil extraction would take place this year. According to Council of Ministers spokesman Ek Tha, the Cambodian government and Chevron Overseas Petroleum (Cambodia) Ltd. plan to release a joint statement on the status of Bloc A and their partnership sometime in the first quarter of the year.

U.S. and Japanese companies are interested in prospecting for oil and natural gas in Cambodia.

According to Phai Siphan, state secretary and spokesman of the Council of Ministers Office, in the provinces of Preah Vihear, Siemreab, and Kampong Thom there are 17 oil blocs covering a total area of over 2,300 square miles undergoing seismic study, where around 6,000 boreholes, each 0.2 inches in diameter, are drilled to a depth of 20 to 65 feet.

Phai noted that Japanese company JOGMEC (Japan Oil Gas, Metals Corporation) began prospecting for oil and natural gas in 1996, telling reporters, "On 4 May 2010, JOGMEC signed a basic memorandum with the Cambodian Petroleum National Authority on all 17 inland blocs of the Kingdom of Cambodia in the provinces of Kampong Thom, Siemreab, and Preah Vihear, to study and investigate oil data," adding, "According to a statement by Samdech Prime Minister Hun Sen, on 12 December 2012, if there are no obstacles, we can hope to get the first drop of oil at 12 noon on December 2012. We don't know what we'll be facing in the days ahead. But we already knew our flexibility and our competence with U.S. oil company Chevron would make our dream become reality."

Last month Chevron Overseas Petroleum (Cambodia) Ltd. representatives met with the Cambodian Petroleum National Authority, as it has begun exploring for oil in Cambodia's offshore bloc A, having already drilled 18 wells with an investment of $160 million.

Seeking to allay potential maritime disputes before possible production begins, Cambodian Deputy Prime Minister Sok An, in charge of the Council of Ministers Office, intends to travel to Thailand in the near future to discuss with the Thai Government the possibility of joint oil production in the two countries’ overlapping maritime border area.

Betting on the future, the Cambodian government is drafting a law on oil management and policy.

Prime Minister Hun Sen seems to be overly optimistic about when offshore oil production would begin however, as Chevron Overseas Petroleum (Cambodia) Ltd. officials have informed the Cambodian government that oil extraction would take place this year. According to Council of Ministers spokesman Ek Tha, the Cambodian government and Chevron Overseas Petroleum (Cambodia) Ltd. plan to release a joint statement on the status of Bloc A and their partnership sometime in the first quarter of the year.

Indicating some behind the scenes tension between the Cambodian government and the U.S. oil giant, when asked if the Cambodian government was frustrated by the delay, as Cambodian Prime Minister Hun Sen at one point had threatened to cancel Chevron Overseas Petroleum (Cambodia) Ltd.’s contract if oil was not produced by 12 December 2012, Ek Tha commented that both parties remained committed to extracting oil from Bloc A, remarking, “We want to have oil produced as quickly as we can, but we have to work with Chevron as a partner. We want the oil and gas to come out to serve the social development of Cambodia, and the Cambodian people want to see that happen.”

In August 2011 Chevron Overseas Petroleum (Cambodia) Ltd. president Steve Glick said that the company believed Bloc A was financially viable, though “relatively small,” noting that Bloc A was technically challenging to drill, as the site’s oil is spread out among smaller pools, rather than one large reservoir, making it harder to reach. Glick added, “Technically, Chevron’s ready to go … And we’re working through the remaining issues with the Cambodian Petroleum National Authority with the target of getting a final investment decision this year.”

Whatever the kingdom’s prospects, other nations are also interested in its oil potential. Earlier this week Jae Hyun Shin, South Korea's visiting ambassador in charge of energy and mineral resources cooperation, said during a meeting with Cambodian Prime Minister Hun Sen "Korea is interested in investing in oil and gas and energy sector in Cambodia."