Cambodia’s Black gold
Wednesday, 02 April 2008 , Written by « Sam Campbell »   

Concerns about overlapping claims, corruption and on shore drilling remained even though government officials have assured that oil and gas deposits will benefit Cambodia.

Deputy Prime Minister Sok An said on Friday that Cambodia will “enter into petroleum production in a time when oil issues have global dominance,” as the three-day Fuelling Poverty Reduction with Oil and Gas Revenues conference-sponsored by the UNDP and Norway-drew to a close.


“The windfall of petroleum income is an exciting prospect for our country,” said Sok An, who is also chairman of the Cambodian National Petroleum Authority (CNPA). Rising crude prices and inflation make it “hard not to think we’re in a new would order,” he added.


Downplaying expectations over revenue, Sok An said that Cambodia’s off shore oil fields are “modest in size” but that “smaller oil fields may be more easily developed.”


Premature speculation over the value of hydrocarbon reserves serves only to mislead, Sok An continued, calling the oil sector “a real business, and not a speculative business.”

CNPA Director General Te Duong Tara agreed the extent of hydrocarbon reserves was a big question.


“Oil in the ground is like fish in the sea,” he mused, chastising journalists for not distinguishing between oil in the ground (OIG) and estimated ultimate recovery (EUR) in their reports. Such distinctions are important, as EUR in the neighboring gulf of Thailand is a mere 10-15 percent of OIG reserves. Te Duong Tara pointed out.


Current preliminary EUR figures will definitely change he said, so it is “far too early” to predict the total value of hydrocarbon deposits in dollars.


The UN warned that oil revenues alone will not provide Cambodians with “sufficient conditions to achieve sustainable and equitable economic development.”


Addressing corruption, Sok An said it is important to have “a good set of laws to manage the petroleum sector,” which include “best practices...[and] the principles of transparency and accountability.”


Contracts with oil companies have been well negotiated, Sok An said. “We have been quite demanding,” he assured.


Sok An also said he hoped the contractual irregularities and graft that have plagued other industries, such as logging, would not blight Cambodia’s oil sector. “We will do our best to avoid those difficulties, “the deputy prime minister vowed


A UN statement conceded that Cambodia has “made major strides towards establishing legal, policy and regulatory frameworks” needed to manage the oil sector although “major institutional capacity limitations” must be addressed, the UN said.


“People are always asking” about Cambodia’s much-awaited Petrol Law, complained Te Duong Tara, claiming that Cambodia already has strong regulations dealing with oil revenues. Calling the new legislation a “brush up,” he evaded questions over delays by saying that “the law must be progressive” and “Cambodia must cut shoes to fit its feet.”


Cambodia is not yet ready to sign the Extractive Industries Transparency Initiative (EITI), a framework aimed at strengthening governance by improving transparency and accountability in the extractive sector, the CNPA director general continued. He vaguely praised the EITI as “good in a conceptual way,” though he said it would be some time before Cambodia was ready to implement such legislation. “Smoothness is our objective,” he ambiguously concluded.


Thai and Cambodian disputes over a large offshore overlapping claims area (OCA) were also a major feature of discussions.


Sok An merely said the Cambodian government was “hopeful of resolving terms” with Thailand.


Te Duong Tara warned border issues with Thailand would take a long time to resolve. He was a little more upbeat on an agreement over a joint Development Area (JDA), but again cautioned that negotiations – ongoing for the last 13 years – were a long-term process.


“Every party protects its interests...[and] agreements are subject to good will and rationality,” Te Duong Tara said, emphasizing that profits must be shared on a 50/50 basis.


Onshore drilling in areas around Ton le Sap Lake – a primary food source for millions of Cambodians – would have to show “considerable concern for and involvement of host communities and [concern] for their environment,” Sok An said.


Te Duong Tara revealed that there had been a great deal of interest from “many companies” in onshore blocks, including from TOTAL. Initial surveys are promising but there is not yet enough data to make concrete predictions, he said


Te Duong Tara declined to reveal the results of environmental impact assessments on blocks around Tonle Sap Lake. The impact assessments run to “20 books” and are too technical for reporters to understand, the CNPA Director General claimed.

Extracted from:

- The Mekong Times Issue No39 Monday, March 31, 2008.

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