Petroleum operations in the Apsara oil field of Block A offshore Cambodia will face some challenges as KrisEnergy (Cambodia) Co Ltd loses funding, after its Singapore-based parent company KrisEnergy Ltd filed for liquidation and arranged for the sale of assets to pay off its debts, according to a senior official of the Ministry of Mines and Energy.
On June 4, KrisEnergy announced that it could not repay its debts, which exceed the value of its assets, noting that cash flows from the Apsara Mini Phase 1A oilfield development will be restructured.
Ministry secretary of state Meng Saktheara said that, unless there are exceptional circumstances, the court would appoint an appraiser and arrange for the sale of the company’s assets to repay all the debt to existing creditors.
He said via Facebook: “After the court proceedings, KrisEnergy will be liquidated and the creditors will be able to manage all of KrisEnergy’s existing assets, including its subsidiary KrisEnergy Cambodia and the petroleum concession in Block A in Cambodia.
“At that time, creditors can continue to manage or find partners to re-manage those assets based on the petroleum agreement and the law of Cambodia in the case of petroleum blocks in Cambodia.
“Then, the creditors who have the right to manage the KrisEnergy Cambodia subsidiary will have to discuss with the Cambodian government to find a consensus on how to continue to implement the Block A petroleum project in the future,” he added.
In the meantime, he said, pending court action and negotiations between the creditor parties to continue with the Cambodian government, Block A petroleum operations in Cambodia will be met with hurdles as KrisEnergy Cambodia loses funding for its operations.
“Major petroleum operations and planned follow-up development projects will be temporarily suspended pending a settlement agreement between the government and creditors, which has the right to proceed with the courts,” Saktheara said.
KrisEnergy investor relations and corporate communications vice-president Tanya Pang told The Post: “The winding-up petition as announced on June 4 relates only to KrisEnergy Ltd, the parent company listed on the Singapore Exchange and not the subsidiary companies holding the group’s assets. Operations of KrisEnergy’s assets are continuing.”
Cambodia extracted its first drop of crude oil on December 28 from the A-01D well – part of the five-well mini-platform featured in KrisEnergy’s “Mini-Phase 1A” development.
According to Saktheara, KrisEnergy holds interests in licences in countries such as Bangladesh, Indonesia, Thailand, Vietnam and most recently in Cambodia, through its subsidiary KrisEnergy Cambodia.
He said KrisEnergy has been facing a financial crisis since 2018 and has started selling oil block concessions in some countries to overcome it. But the predicament had worsened by 2019, and the company was facing more stringent enforcement to collect debt from the creditors, he added.
The company first filed for a debt moratorium “in early 2019”, seeking protection from a Singapore court to avoid filing for bankruptcy and liquidation, according to Saktheara.
After receiving support from the Royal Government of Cambodia, KrisEnergy continued to develop the oil wells and proposed a downsizing of the plan – from 20 wells to just five, he said.
He said the company expects the oil production projects in Cambodia’s Block A to build confidence with major creditors, compelling them to examine the possibility of turning the debt into venture capital firms.
However, after the production of Cambodia’s first drop of oil at the end of 2020, production volumes from the test well did not meet the company’s expectations, he added.
“These factors caused the company to run out of options and have to apply to the court to declare the sale of all the company’s assets to repay the debt,” Saktheara said.
KrisEnergy is currently operating five test wells in a 110sq km production area of Block A, which covers about 3,000sq km, he said.