THE Government has confirmed it is in negotiations with controversial British-based

businessman Mohamed al-Fayed to allow his company "Harrods Energy" to drill

for oil next to the Tonle Sap.

The Tonle Sap is the source of 70 per cent of Cambodia's protein.

Cambodian National Petroleum Authority director Te Duong Dara said that al-Fayed

flew into Phnom Penh for a private meeting with Prime Minister Hun Sen on March 21

to discuss the purchase of the oil concession.

Al-Fayed was accompanied by the wife of former Thai Prime Minister Chavalit Yongchaiyudh

for his two-hour meeting. The pair flew in from Thailand on al-Fayed's corporate

jet.

Al-Fayed is the owner of the exclusive London department store Harrod's.

The meeting was requested by al-Fayed through Sok An, Minister at the Council of

Ministers.

Dara said the areas that are being looked at for the drilling program are to the

west of Tonle Sap, including Battambang, Pusat, and Kampong Chhnang. He said they

would not be drilling on the lake bed itself.

He said negotiations are now proceeding and that they had forwarded technical information

on the proposed areas.

Dara said that initial investigations had indicated two large, deep subterranean

basins that could contain either oil or gas but further investigations were needed.

He said that further test work would be needed to be done before they could say if

commercial quantities of petrochemicals could be harvested from the area.

"There needs to be seismic investigation in both two and three dimensions which

could take six months to a year because, as you know, with the rains in Cambodia

we cannot work all the time," he said.

The Post understands that foreign drilling companies have already been approached

to undertake a seismic evaluation and were initially asked to begin drilling by the

end of May.

Seismic evaluations involve drilling a series of shallow holes, loading them with

explosives, detonating them, then measuring the echoes.

The best indicator of the extent of the petrochemical resources there would be a

test well, which Dara said could be several years away.

Dara said they were satisfied that Harrods Energy had the expertise to carry out

the work and develop the industry.

He pointed to Harrods Energy's activities in Thailand, where it has taken over a

number of concessions from the Thai oil company PTT.

Dara said that of the 10 test wells drilled in Thailand by Harrods Energy, five struck

oil, which is a high percentage.

However not everyone in the Government has been happy about al-Fayed's involvement.

One Government official said that at the meeting with Hun Sen, al-Fayad had "bragged

about what he was going to do for Cambodia's oil industry" but he did not have

the technical knowledge of the subject.

"If he was coming here to tell us he was going to open a Harrod's department

store we would have listened more carefully," the official said.

He added there were concerns about al-Fayed's links to the international arms dealer

Adnan Khashoggi. Al-Fayed and Khashoggi are brothers-in-law. Khashoggi also was once

wanted in Thailand over the disappearance of a large quantity of money from a Thai

bank.

Born in Egypt, al-Fayed has been trying for years to become a British citizen. However

he has become embroiled in scandals, including paying MPs to ask questions in the

House of Commons, bugging employees, and being accused of theft by the late Tiny

Roland after his Harrod's safety deposit box was rifled.

There are also concerns about the wisdom of drilling for oil next to the Tonle Sap

lake - a key breeding ground for fish in Cambodia.

A spokesman for one local environmental NGO said there was an enormous risk of destroying

the most important ecological area in Cambodia if there was an oil spill in the lake's

catchment area.

He said he could see the financial attraction of such a project but doubted it was

worth it.

"The project is good for the Government but it will not benefit the community,"

he said.