Logo of Phnom Penh Post newspaper Phnom Penh Post - Low oil prices set to delay Chevron

Low oil prices set to delay Chevron

Low oil prices set to delay Chevron

FALLING oil prices are likely to delay Chevron's development of Block A, a finance official said Wednesday, adding that the oil company had already finished exploration of the offshore concession, but would not begin production until at least 2012.

Hang Chuon Naron, secretary eneral at the Ministry of Economy and Finance, said in a forum on trade and investment Wednesday that Chevron was now playing a waiting game in Cambodia after seeing oil prices plummet in the past six months.

"At this stage, Chevron has finished exploration in Block A. If they decided to move on with development now ... [first] production would be in 2012," he said, a scenario he predicted would generate oil revenues of $200 million the same year.

However, Hang Chuon Naron predicted Chevron would wait longer to begin oil production from the Gulf of Thailand concession "because the oil price is in crisis".

"Therefore, production will be in 2014 or 2015 - that depends on the oil price," he added. "Everything depends on the price."

Hang Chuon Naron's assessment of Chevron's activities in Block A represent a further 

blow to the company's prospects of developing Block A in the near future. On February 5, Chevron's Asia Pacific spokesman Gareth Johnstone told the Post that the oil company was "working hard to find a solution to develop the complex reservoir".

He added: "We are in the process of evaluating several development options for the Block A resource to overcome this challenge."

Johnstone made no mention of world oil prices and the impact they were having on the development of Block A. The world crude price was just $34.92 a barrel at 2pm on Wednesday, down from July's record high of $145 a barrel.

"Chevron is not in a position to discuss startup dates until the evaluation process has been completed," Johnstone added in this month's statement. He refused to comment further on Wednesday.

Economic analyst Chan Sophal, president of the Cambodia Economic Association, said Wednesday that the oil price was unlikely to remain deflated for more than "one or two years". Chevron would likely begin production at this time, he suggested.

"I think that the law and environment is favourable for investors in this industry [in Cambodia], but now they may not be sure about the market," he said.

Having already established the existence of deposits in Block A, Chevron signed a Joint Study Agreement with the Cambodian government in July 2006 announcing plans to drill five wells in 2006 and five more in 2007 following an exploration campaign that ended in 2005 covering 2,428 square kilometres - a little over one-third of the area of the whole concession. Chevron owns 55 percent of Block A, while Moeco Cambodia Ltd owns 30 percent and GS Caltex Corp the remaining 15 percent.


  • School reopening to be postponed until November

    Minister of Education Hang Chuon Naron on Tuesday wrote to Prime Minister Hun Sen requesting a delay of school reopening across the Kingdom until November, when the new academic year begins. In his letter, Chuon Naron said the postponement is warranted to avoid the new

  • Foreigners in Kingdom must now register in FPCS system

    The Ministry of Interior’s General Department of Immigration (GDI) announced that it would not grant visa extensions to foreigners staying in Cambodia if their names are not listed on the Foreigners Present in Cambodia System (FPCS) by July 1. Foreign nationals can register in the

  • Covid-19 at ‘alarming rate’, health ministry says

    The Covid-19 risk level for individual transmission is at an “alarming rate” in the Kingdom and its probability is “not low”, warned Health Ministry spokesperson Or Vandine. “Cambodia’s coronavirus scenario is classified as being at an early stage of the pandemic because of ongoing

  • Mandatory quarantine for 30,000 workers begins

    Some of the roughly 30,000 workers from factories and enterprises across the Kingdom who went on leave during Khmer New Year began their government-imposed 14-day quarantine on Monday. Speaking at a press conference while visiting workers at the Phnom Penh Special Economic Zone on Monday, Ministry

  • Unemployed to get $40 per month

    The Ministry of Labour and Vocational Training has instructed enterprises, business owners and travel agencies in five provinces to prepare the proper forms for the suspension of employment contracts. This, it said, will make it easier for the ministry to transfer $40 a month to workers

  • Gov’t travel ban flouted

    While the majority of Cambodians have paid heed to Prime Minister Hun Sen’s order to stay put and not travel during the Khmer New Year – the holidays of which were also postponed – several hundred have left Phnom Penh nonetheless. They have allegedly breached provincial

  • G20 energy ministers struggle to finalise oil output cuts

    Top oil producers struggled to finalise production cuts during a virtual summit held by Group of 20 (G20) energy ministers on Friday, despite US President Donald Trump’s mediation efforts to end a standoff with Mexico. The final G20 communique appeared to gloss over simmering divisions

  • Kingdom revises travel restriction order

    The government on Friday eased the district and provincial border restrictions issued on Thursday. People are now allowed to cross districts within their provinces. Phnom Penh and Kandal province are to be treated as a single region where people are allowed to travel freely. In

  • Private schools struggling

    The Cambodian Higher Education Association has claimed that 113 private educational establishments are facing bankruptcy because of their inability to pay rent and staff salaries in light of nationwide school closures caused by the Covid-19 outbreak. It said the financial trouble started when the Ministry of

  • Khmer New Year holidays postponed

    In an effort to halt Covid-19 infections in the Kingdom, Prime Minister Hun Sen has postponed the Khmer New Year holidays scheduled from April 13 to 16. While the people will not have their usual break, nor will there be any public celebrations or gatherings at pagodas,