Logo of Phnom Penh Post newspaper Phnom Penh Post - Oil and gas reserves no salve to economic crisis: senior minister

Oil and gas reserves no salve to economic crisis: senior minister

Oil and gas reserves no salve to economic crisis: senior minister

14_story104.jpg

With no confirmation of the size of Cambodia's oil and gas reserves, government officials say the impact of petroleum discoveries on the local economy is still unknown

Photo by: RICK VALENZUELA

A man filling a petrol container in Phnom Penh. 

THE government is not banking on the Kingdom's untapped offshore oil and gas reserves to get them through difficult times, officials say.

"We want Cambodia to benefit from its oil reserves as soon as possible, but we should not rely on anything that is difficult to control and that we have not yet seen with our eyes," Keat Chhon, minister of economy and finance,  told the Post Monday.

"What we have to strive for is to diversify our economy by strongly promoting the agricultural sector, increasing the manufacture of value-added products via processing before exporting and not expect substantial benefits from oil," he said.

The minister did not provide revised figures on the size of the potential deposits or on the companies' operations. The comments come despite Prime Minister Hun Sen last week urging Chevron and its Japanese partner Mitsui Oil Exploration to accelerate efforts in Cambodia.

Te Duong Tara, the director of the Cambodian National Petroleum Authority (CNPA),  refused to answer questions about the government's purportedly revised expectations for the petroleum sector. In March, he said the government had hoped to begin producing kerosene by 2011.

The government must decide soon on how best to develop the country's oil.

He added in the earlier interview that the size of the oil reserves had not yet been confirmed due to the complex geological undersea environment.

Chevron began gas and oil  exploration in the Gulf of Thailand in 2002 through a partnership with Mitsui. The company announced in 2005 it had struck oil in four of 15 test wells drilled about 150 kilometres off the coast from Sihanoukville.

Since that time, estimates of Cambodia's oil reserves have varied from between 50 million and 500 million barrels and about two trillion cubic meters of natural gas.

Sam Rainsy Party lawmaker Son Chhay warned Monday the government must establish a legal framework for the country's nascent oil and gas industry.

"I think the government must decide soon on how best to develop the country's oil resources but if it does not have legislation in place, there will be no benefits for the nation," he said.

According to Son Chhay, the revenue generated from the Kingdom's oil and gas reserves should not go directly into the national budget.

Instead, he proposed the creation of a separate "oil fund" to manage the cash. Oil funds have been created in other developing nations with large reserves and weak institutional frameworks - such as Chad - as a means of combatting corruption.

Cambodia Institute of Development Study President Kang Chandararot told the Post Monday that neither the government nor the private sector have provided clear data on Cambodia's oil and gas potential.

"I think it's too early to consider benefits from oil and gas," he said. "It would be good for the economy, as long as proceeds were used equitably."

In 2007, the International Monetary Fund produced a "moderate economic scenario" that estimated hundreds of millions of barrels of recoverable oil in Cambodia, and three times as much natural gas. According to the IMF scenario, income generated by estimated reserves would start at about US$174 million per year by 2011 and peak at $1.7 billion per year by 2021.

Chevron could not be reached for comment.

ADDITIONAL REPORTING BY GEORGE MCLEOD

MOST VIEWED

  • WHO: Covid in Cambodia goes into new phase

    The World Health Organisation (WHO) in Cambodia said that Cambodia has reached a new phase of the pandemic with “decreasing case numbers, high vaccination coverage and a more transmissible circulating variant threatening a hidden surge”. In a press release on September 6, the WHO said that

  • 'Pursue your goals, reach out to me': Young diplomat tapped as envoy to South Korea

    Chring Botum Rangsay was a secretary of state at the Ministry of Foreign Affairs and International Cooperation before being designated as the new Cambodian ambassador to South Korea. According to her official CV published on the foreign ministry’s website, she started her first government

  • Purging Sihanoukville’s past with a new masterplan

    Amid illicit activities, haphazard development and abandoned projects, the coastal city of Sihanouk province needs a reset to move forward. A new masterplan might be the answer to shake off its seemingly mucky image to become the Shenzhen of the south Gun toting, shootouts, police

  • International air visitor arrivals dip 93%

    The number of foreign tourists entering Cambodia through the Kingdom’s three international airports witnessed a sharp 92.5 per cent year-on-year decline in the first seven months of this year, according to the Ministry of Tourism. The airports handled 51,729 international tourists in the January-July period versus

  • School reopening ‘offers model for other sectors’

    World Health Organisation (WHO) representative to Cambodia Li Ailan said school reopening process should be used as a role model for reopening other sectors currently mothballed by the Covid-19 pandemic. Li strongly supports the government’s decision to reopen schools, saying it is a decision

  • Covid jab drive for 6-11 age group to begin Sept 17

    Prime Minister Hun Sen has permitted Covid-19 vaccinations for over 1.8 million children aged 6-11 across the country from September 17 in order for them to return to school after a long hiatus. Hun Sen also hinted that vaccinations for the 3-6 age group will follow in