Cambodia to produce limited crude oil for export: press report

05, Apr. 2019

PHNOM PENH, NNA – Cambodia plans to start producing a limited amount of crude oil, for export only, as the country has no refineries.

Offshore production in the Khmer Basin in the Gulf of Thailand will begin late this year or early next year, according to a report in the Khmer Times quoting Secretary of State at the Ministry of Mines and Energy, Meng Saktheara.

“We won’t be able to process the oil in the beginning because we don’t have the facilities we need,” Saktheara is quoted as saying at a news conference on Tuesday.

He said the producer, Singaporean oil and gas explorer KrisEnergy Ltd., will have to ship the crude abroad.

Cambodians have been expecting economic benefits from offshore oil development since Chevron first announced a discovery in 2004.

But the U.S. oil giant concluded that the field would not be profitable, according to a 2015 report by Resources for Development Consulting prepared for the non-governmental watchdog, Cambodians for Resource Revenue Transparency.

KrisEnergy was brought into the consortium for its experience with so-called “marginal” fields, the report by the Canadian research firm said.

KrisEnergy purchased a controlling interest in the offshore oilfield from Chevron in 2014 for $65 million, said the Khmer Times report. The company now owns a 95 percent stake in Block A of the oilfield, and the Cambodian government holds the remaining five percent, according to a report last week in the Phnom Penh Post.

KrisEnergy planned to start with a single platform, with expected gross recovery of 8.6 million barrels, Resources for Development Consulting said in its report.

“If this first phase is successful, a second phase is anticipated that could be expected to start in the early 2020s and result in production of up to 25.8 million barrels,” it said.

The first phase as proposed by KrisEnergy is a low-cost effort to determine whether there are sufficient reserves to justify expansion, the report said.

“The project is not economically viable at this level of production,” it said.

“Total government revenues over the six years of this first phase production could be expected to amount to less than $100 million with oil at $70 a barrel and around $125 million at $90 a barrel,” said the research firm.