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Logo of Phnom Penh Post newspaper Phnom Penh Post - Offshore Block 5 to open for oil tenders

Offshore Block 5 to open for oil tenders

OFFSHORE Block 5 will be opened to tenders from oil exploration firms in the

next four months, Industry Ministry Under Secretary of State Nhep Bunchin said

on June 11.

Eight companies have already expressed interest in the block

and they along with other interested firms will be invited to submit formal

proposals to the ministry for the concession, said Bunchin.


government is now working to finalize its requirements for the block before

opening up for bids.

Bunchin said: "We want to make it attractive for the

investor and keep the government happy at the same time."

He said a

decision on the successful bidder would be announced only one month after the

offer closed, adding: "We want to push the development of the oil and gas

industry in Cambodia as fast as possible."

Block 5 is one of seven

offshore concession areas in Cambodian waters off the southwest coast.

Successful bidders for concession blocks sign a petroleum sharing

contract with the government under which commercial oil and gas finds are

divided between the two parties.

The government repays some of the

company's exploration costs from oil revenues.

Three other blocks may

soon also be opened for bidding, said Bunchin, after the failure of the Dutch

companies Marimex and Technitrade BV to fulfill their contracts to explore the


Fourth and final letters have been despatched to the companies

asking them to explain why no work has been carried out since the concessions

were awarded in 1992 in an agreement signed with the State of Cambodia regime.

Bunchin said: "Under the contract we only had to send out three letters

before the agreement became void but the co-prime ministers have asked us to

send another so as to be as fair as possible to the investors." The companies

will have 30 days to reply.

Technitrade holds the concession on Block 6,

the northernmost, while Marimex has Block 7, the closest to the coast and Block

10, an onshore area abutting the southern end of the Thai border.


Bunchin and oil industry sources expressed optimism that a commercially viable

oil field will be found in a Cambodian concession area.

The predictions

followed successful initial non-commercial strikes this year by the British

company Enterprise Oil in Block 2 and the Japanese consortium Campex in Block


Bunchin's optimism was not dampened by Campex failing to strike any

deposits with its second well Devada 1.

Drilling by the ship Ocean

Clipper began on Feb 6 and had been planned to run for 80 days but was

terminated on March 16 after depths in excess of 3,200 meters were reached

without any success.

Bunchin said he expected Campex would opt for a

third wildcat, or exploratory well. Looking at the overall picture with three

companies drilling he added: "I expect there will be a commercial find in

Cambodia after two or three more wells."

Referring to the concession

areas, one industry source added: "There is not less than one commercial oil

field out there."

Campex is now expected to conduct detailed seismic

testing of its block before making a decision by November on whether to drill a

third well.

With each well costing $8 million to drill, the company, a

consortium of four Japanese firms, may seek to spread the risk by bringing in

new partners.

Enterprise Oil is also expecting to conduct detailed

seismic surveys as the next stage of its exploratory operations.


Petroleum Camboya is running the third drilling operation in its Block 4 and has

the Japanese company Idemitsu and the Australian concern Ampolex as equal


Boring on the first well in Premier's block, Koh Tang 1, began

on May 19.

Country coordinator Jeremy Martin refused to comment on the

success of Premier's operation to date but he described the Enterprise and

Campex initial strikes as "encouraging."

All three companies are

increasing their chances of a significant discovery by following normal industry

practice and exchanging well and seismic data.

A second oil industry

source cautioned that Cambodia was relatively low in the pecking order for

exploration investment with proven fields in countries such as Kahzakstan

providing attractive alternatives.

The source said: "No real decisions

are made by the companies' offices in Cambodia, they are made at headquarters

and on a global basis.

"Data from each stage in the investment process

is evaluated before deciding to go onto the next, with all the partners'

approval being needed.

"Companies investment in an unknown quantity like

Cambodia can be seen as money put aside for a flutter on the races."


Enterprise and Campex finds spurred the oil industry's interest in the waters

off Cambodia and led to speculation that the Royal Government would reach an

agreement with Thailand for the exploration of contested areas.


Bunchin said his department was still waiting for the Ministry of Foreign

Affairs to make the initial approach to Thai authorities, adding that it was "a

very good opportunity for Cambodia."

The undersecretary said he expected

a bilateral Industry Ministry working party would be set up after the initial

approach to the Thais by the Ministry of Foreign Affairs.

Cambodia's land

area has been divided into19 concession blocks for oil exploration and the

government is considering offers from up to four different companies to conduct

aerial surveys. Firms contracted to do so would then be allowed to sell the data

to oil companies, possibly sparking further interest in


Bunchin said: "It is just a matter of time when this will




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