Cambodia's first oil unlikely before 2010

SINGAPORE, Nov 4 (Reuters) - U.S. major Chevron Corp has yet to submit a plan for what was slated to be Cambodia's first oil development, a senior Cambodian official said on Tuesday, which would mean first oil is unlikely until the next decade.

The impoverished Indochinese country has been keen to tap its hydrocarbon resources like its Thai and Vietnamese neighbours but Chevron-operated Block A, once touted as Cambodia's route to riches, is unlikely to be onstream before 2010 at the earliest.

"Chevron is planning to do more exploration and appraisal. By the end of the year, they will submit a development plan," Ho Vichit, vice-chairman of state-owned Cambodian National Petroleum Authority (CNPA) told reporters on the sidelines of an energy conference in Singapore.

The time lag between a development plan and first oil is usually at least a year and often take several years.

But Ho said the field would be developed, rejecting the suggestion that development could be shelved.

Chevron issued last year a downbeat assessment of the offshore block, after a second drilling campaign showed the block presented challenges, with hydrocarbons being dispersed rather than in one core field.

The company also said at the time it planned a third drilling campaign for late 2008-2009.

Chevron operates the block with a 55 percent interest, while Mitsui Oil Exploration, a unit of Mitsui & Co, holds a 30 percent stake and South Korea's GS Caltex a 15 percent stake.

Cambodia has since toned down its oil ambitions and initial estimates of 400-700 million barrels are no longer discussed.

"We are still at the early stages of exploration," Ho said, when discussing plans to establish a national oil company.

For the time being, CNPA, which is regulatory body, acts as the government's representative in contracts.

Ho said it was too premature to discuss finds on other blocks as companies had just completed drilling.

Thai PTT Exploration and Production PTTE.BK said in a statement in July that exploration well Vimean Morodok MahaNorkor-1 on block B resulted in non-recoverable oil shows. The company said it would continue technical work to evaluate the block, which it operates.

Cambodia is keen to attract investors to develop both the upstream and downstream sectors, as it has no refinery and imports about 1 million tonnes of refined products a year.

The lack of geological data has limited interest in onshore blocks, with several yet to find takers.

But offshore, the continued border dispute with Thailand is preventing exploration in some areas.

Ho declined to comment on when the dispute could be resolved and whether the latest flare-up over the 900-year-old Preah Vihear temple with Thailand was making things worse.

"This depends on politics," he said.

(Reporting by Maryelle Demongeot; Editing by Ramthan Hussain)

Many Challenges To Cambodia's Oil Upstream Hopes

November 03, 2008

SINGAPORE -(Dow Jones)- Cambodia is facing a wide range of challenges in developing its oil and gas upstream sector, even as it moves cautiously ahead with an offshore exploration project led by U.S. oil major Chevron Corp. (CVX), a senior government official said Tuesday.

The Cambodian National Petroleum Authority is also pushing for construction of the country's first oil refinery and mulling the establishment of a national oil company, but global interest in the country's hydrocarbons potential is lacking, progress on a petroleum law has been slow, and a long-running maritime acreage dispute with neighboring Thailand has yet to be settled.

"It's very difficult - when we opened (upstream blocks for) bidding in 1991 or 1992, nobody was interested," CNPA Vice-Chairman Ho Vichit said on the sidelines of the Asia Oil and Gas Investment Congress.

"So, we approached companies...to do direct negotiations," he said, attributing the poor investment interest to Cambodia's limited track record in terms of oil and gas reserves.

The country only started formal seismic surveys in January and has yet to finalize results, Ho said.

More than 10 foreign companies are drilling in Cambodia's six offshore blocks, including China National Offshore Oil Corp.

The government is optimistic that a consortium headed by Chevron remains on track to begin producing oil from offshore Block A next year, but the U.S. company has downplayed any firm timetables.

Ho said there are some technical challenges to overcome as reserves are spread over a wide are in small pools, but he said the project won't be shelved.

Earlier, Ho told the conference in Singapore that "it's premature to speculate" how much of the oil or gas discovered in 2005 can be pumped from offshore Block A, about 200 kilometers off the southern coast.

"It must be recognized that hydrocarbons shows (evidence) alone do not make...an oil or gas field, let alone an oil or gas field that might be viable for commercial development," he said.

The idea of a national oil company - the CNPA would play the role of regulator in such a scenario - remains at "a very preliminary stage," Ho said.

Cambodia's draft petroleum law, which would provide a legislative framework for extracting oil and gas, also remains "complicated" and is still some way from reaching the ministerial level, a step required before any approval by the national assembly. Ho also cited the need to translate the final document into languages suitable for potential investors as another factor contributing to the delay.

Meanwhile, the government is still negotiating with Thailand to jointly develop three offshore areas near Block A following a 2001 memorandum of understanding; a fourth area is claimed entirely by each side.

Ho wouldn't comment on whether the political upheavals in Bangkok have slowed progress in the talks.

For the downstream sector, Cambodia has contracted Japanese firm Toyo Engineering Corp. (6330.TO) to assist with a feasibility study to build a refinery.

A 50,000 barrel-a-day facility is being considered, tiny by international standards but perhaps an important first step to ease pressures from high petroleum import prices.

Cambodia, which doesn't subsidize domestic fuel prices, imports about 1 million metric tons a year of refined oil products, Ho said, pegging the country's economic growth around 7% a year.

-By Yee Kai Pin, Dow Jones Newswires; kai-pin.yee@dowjones.com; +65-6415-4062