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Logo of Phnom Penh Post newspaper Phnom Penh Post - SOC Pushes Forward With Foreign Oil Concessions

SOC Pushes Forward With Foreign Oil Concessions

Recently gathered data on Cambodia's oil and petroleum reserves have exceeded expectations,

according to upbeat oil company executives and State of Cambodia (SOC) officials,

who are pressing ahead with plans for more foreign investment.

So far most of SOC's petroleum business dealings have been negotiated and finalized

beyond the scrutiny of the U.N. Transitional Authority in Cambodia (UNTAC).

Three international exploration consortia are already actively looking for petroleum

(oil preferably, but also gas) on the continental shelf area off Cambodia's southern

coast.

A fourth firm, NAWA Oil Company (Hungary) was awarded two blocks-one off-shore, one

on-shore-for exploration. But work has not yet started and the firm is now on the

verge of forfeiting its contracts.

These concession rights were the result of the first round of bidding which the SOC

opened in mid-1991. Three out of the four contracts were signed after last October's

Paris peace accords.

A second round of bidding for areas covering most of the rest of the on-shore areas

of the country was closed at the end of April this year. SOC officials at the Ministry

of Industry have nearly completed negotiations with a Taiwanese consortium for two

on-shore blocks which cover large swathes of Pursat and Battambang provinces.

.

"We plan to sign a contract by the end of September," said Ith Praing,

SOC vice-minister in charge of petroleum and mineral resources.

SOC officials are currently deciding whether to consider tardy bids from several

large international firms, which reportedly received the bid documents late, or to

evaluate them under the third concession round.

Asked whether the entire concession process should await the results of next year's

elections, Ith replied: "We administer the whole country; we are the government.

Why stop us-for what reasons-to keep the oil in the ground for a few more years?"

In preparation for the third round of bidding, an American firm, Halliburton Geophysical

Services (HGS), is soon expected to be awarded a contract to conduct geological testing

over the rest of the on-shore part of the country, said Ith.

HGS conducted the geophysical survey of the off-shore areas that have been awarded

for three out of four current concessionaires: Enterprise (U.K.), Premier (U.K.),

and CAMPEX (Japan)

Ith said the ministry was favorably impressed with the quality and speed of Halliburton's

work.

"We already know how fast they work and time is very important for us,"

explained Ith, who hopes to launch the third round of bidding in March or early April,

1993-"at least before the elections."

More important is that HGS' preliminary analysis indicates these areas are "very

prospective," said Ith.

"The initial indications were better than we expected," agreed Tadashi

Kude, general manager for Cambodian Petroleum Explor-ation (CAMPEX) Co., Ltd., the

concession holder in offshore Block III.

Other firms were not available for comment but the optimistic assessment apparently

applies to the whole off-shore area.

"I hear that everybody smiles now," said Ith.

Prior to HGS' off-shore survey, the main data available for oil and petroleum exploration

was rough information collected by Soviet geologists several years ago.

Finishing work in mid-August, Halliburton's "Magnificent Creek" ship took

nearly 12,000 kilometers of seismic readings in the three active concession areas.

The readings are taken by trailing a three-kilometer long cable about seven meters

below the ocean's surface and bouncing sonar waves several thousand feet below the

seabed.

For the rest of the country, there is currently only surface data. HGS is expected

to begin magnetic and/or gravity surveys from the air sometime during the dry season.

HGS' information-which will be used as a basis for negotiations with potential concessionaires-will

be sold to bidders, with the proceeds from selling the data packages split with the

SOC.

One firm paid $U.S. 100,000 for a data package from the government in the first round

of bidding.

The concessions are generally 30-year exploration and production-sharing contracts

that commit firms to three to four year exploration programs costing between $U.S.

15-20 million.

After this companies should be in a position to decide if they wish to take the more

substantial investments involved in "producing" oil or gas. Besides a $U.S.

10 per square kilometer rental charge, the oil firms must also provide funds for

training industry ministry officials. These grants, which vary according to other

aspects of the overall contract, range between $U.S. 60,000 and $U.S. 400,000 per

year, per block.

So far most of the training has been conducted in-country, and has concentrated on

English language instruction, said Kude.

In the event oil or gas is found, revenues are split with the Cambodian government

after companies have had a chance to recover all their costs.

The government's take, through taxes and royalties, will amount to more than 70 percent

of the total value pumped, according to Ith.

Concession Holders:

  • Enterprise Oil Plc Ltd. (U.K.): serves as operator in Blocks I & II, with

    Compagnie Europene des Petroles (France) holding an equity stake.

  • Premier Oil Pacific (U.K.): serves as the majority operator in Block IV and has

    taken on as minority partners Repsol Exploracion SA (Spain), and two Australian firms,

    Ampol Exploration Ltd., and Santos Ltd.

  • Cambodian Petroleum Exploration (CAMPEX): a joint venture between Nissho Iwai

    trading house and Japan Petroleum Exploration Co. (JAPEX), which serves as the operator

    for Block III. The state-owned Japan National Oil Corporation (JANOC) retains a 75

    percent stake in CAMPEX, as well as 60 percent in JAPEX.

  • Tang and Associates: Coordinator for the Taiwanese consortium which includes

    the China Petroleum Corp. and the Overseas Petroleum International Corp. (OPIC).

    Expected to sign a contract soon on Blocks XII and XIII.

  • NAWA Oil Company (Hungary) has been awarded Blocks V offshore and VIX onshore,

    but is on the verge of forfeiting its contracts unless work starts by October.

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