The Cambodian government has threatened to cancel oil and gas exploration rights

held by Dutch consortium Maritime because it failed to meet a contractual deadline

to begin operations, high-level officials said.

Under the agreement it struck with the State of Cambodia administration in December

last year, Marimex was obliged to begin work within one month of the contract signing

but 10 months later it has yet to give any indication when it will do so.

"We have sent a letter to Maritime and told them that if they do not honor the

terms of the agreement we will revoke the contract," said Vice Minister for

Energy and Mines Ith Praing.

Maritime, which groups two little-known trading Dutch companies backed by the Romanian

government, was awarded a contract to explore one on-shore and two off-shore zones.

The com-pany's choice of an on-shore block in Khmer Rouge territory in the northwest

of the country and its specification as a trade and transport company in its contract

surprised many industry observers.

Minister for Energy and Mines Ing Khiet said if the contracts are canceled exploration

zones would be put up for bidding once again.

The minister said none of the other three existing oil exploration contracts which

are held by British and Japanese companies would be reviewed.

If the Maritime contract is rescinded, it will become the second foreign oil company

to forfeit exploration rights. The Hungarian state-owned company Nawa Oil had its

contract canceled late last year last year after it also failed to meet contractual

deadlines.

The other three companies, which all hold rights to offshore zones, are quickly pushing

ahead with their operations. Campex, a Japanese company is expected to sink its first

test well in December. British company Enterprise Oil is expected to follow soon

after.

Oil executives of the two companies say they are guardedly optimistic about Cambodia's

oil and gas potential.