Across the tranquil green waters of the Gulf of Thailand, boats are firing high powered sound beams across the waves to penetrate the deep-sea soil deposits.

 

The object is to determine the extent of the oil and gas hidden in the ground beneath the waters in the five offshore blocks that border the celebrated “Block A,” where Chevron two years ago announced it had struck “significant” deposits of oil and gas and has been exploring since then.

 

Although the oil rigs will not be arriving soon, at a March 26-28 international oil and gas conference in Phnom Penh, participants got their first glimpses of what Cambodia’s future could look like when the oil and gas industry readies itself for production, probably in 2011.

 

Te Duang Tara, director general of the Cambodian National Petroleum Authority (CNPA), disclosed that all of the licensed operators are in various stages of early exploration, which involves shooting 2D and more expensive 3D seismic surveys – something required under terms of their exploration contacts with the CNPA.

 

He said none has yet taken the next more costly step of drilling a well, but a few of the operators are optimistic about doing so.

 

“We’re trying to make it happen,” said Lateef Dada-Bashua, a Nigerian consultant for Polytec, a Hong Kong property development company that holds the exploration license for Block C.

 

He said because there are no drilling rigs, platforms or other equipment in Cambodian waters now, he will have to bring in equipment from elsewhere, which is not proving easy.

 

“It’s very expensive. No one will even give us a bid right now,” Lateef said, explaining that the high oil prices are keeping the equipment busy.

 

“It’s a gamble,” said an official of one of the oil exploration contractors, asking not to be identified. “This whole situation with offshore oil in Cambodia is very new. No one is very prepared and no one knows what the government is going to do.”

With oil prices up to $110 a barrel, just how much oil there may be continues to be the subject of much speculation, often inaccurate, Tara said at the conference held at the InterContinental hotel.

 

He offered this analysis: “The oil is still in the ground. It is like the fish in the sea. We don’t know if it is the big fish or the small fish. Does it have scales?  Before we can cook the fish we have to know what kind it is.”

 

What kind of fish

One of the big questions raised was, “what if the fish isn’t oil, but is gas?”

“Cambodia is gas prone,” Piyasvasti Amranand, Thailand’s former Minister of Energy said in his speech. He elaborated later in an interview: “It’s too early to say, oil or gas, but from the people I am talking to, it’s gas. The Gulf of Thailand has been producing mainly gas for nearly 30 years.”

 

He said the geology is complex but that in the overlapping claims area – the disputed areas on the border of Cambodia and Thailand – it is mostly gas.

 

“If it’s oil, no problem. The oil companies will put in massive investment. Oil is fungible. You can export it. If it’s gas, it’s more complex.” he said.

 

For gas, though, Cambodia would need to build a pipeline to transport it, Piyasvasti said, adding that Thailand already has a network of pipelines in the gulf and Cambodia could build a short link to connect to them.

He said Thailand is the only market that Cambodia will find for gas. Malaysia is too far and doesn’t need gas; Vietnam has its own.

 

Tara acknowledged that there will be gas mixed with the oil, but he said that “Cambodia is oil prone.”

“All I hear at this conference is oil, oil, oil, but it’s gas, gas, gas,” said an official of an oil and gas company interested in Thai waters as well as Cambodian territory.

 

Chevron’s news 

There were no estimates coming from any of the companies working in the blocks as to how much oil or gas may lie beneath their waters.

 

David Moffat, Chevron’s south Asia exploration manager, said Chevron has drilled 15 wells so far in its Block A and an analysis of the results indicates the oil is “dispersed” rather than concentrated in core deposits. He gave no estimate as to the amounts of oil.

 

Tara, however, told reporters that the government’s current estimate is that Chevron’s Block A alone contains 500 million barrels of reserves with a recovery rate of 15 or 20 percent. He didn’t give any figures for the five other oil fields.

Border dispute

Perhaps the most optimistic news was that border negotiations are to resume soon with Thailand over the huge offshore “Overlapping Claims Area,” where oil and gas are known to lie beneath waters claimed by both Thailand and Cambodia.

 

Tara said negotiations on the boundary are expected to resume after Khmer New Year.

 

“What you need is political good will,” he said, adding that after the Thai Prime Minister’s visit to Cambodia in February, such good will had been created.