CAMBODIA has offered a deal to Thailand to break a 24-year territorial dispute
that has prevented a potential $15 billion off-shore oil and gas bed from being
The deal, announced by Industry, Mines and Energy minister Pou
Sothirak on Jan 19, proposes that both countries put aside sovereignty claims
over part of the Pattani Trough in the Gulf of Thailand.
that "on the verbal consensus of both [Cambodian] Prime Ministers", Cambodia was
prepared to "get together 50/50" with Thailand to exploit the area's natural gas
and oil reserves.
The Cambodian proposal - the first positive sign of
movement since the area was "frozen" under respective sovereignty claims in 1971
- could meet with a speedy and positive reaction from the Thais.
has recently struck a precedent deal with Malaysia on an off-shore block that
had been disputed for 20 or more years between those two
Though neither Malaysia nor Thailand dropped sovereignty
claims, they managed to strike a complicated deal that will allow each to
jointly explore the area and share profits.
Sothirak said that both
Prince Norodom Ranariddh - who it is understood first mooted the deal with Thai
Foreign Minister Thaksin Shinawatra some months ago - and Hun Sen agreed there
should be joint exploration of the area.
"We will not talk about
territorial integrity but instead economic integrity," Sothirak
Cambodian officials are convinced that Thailand is willing to enter
discussions on such a joint venture. "We are thinking of moving very fast," said
one, "we don't want this kept waiting."
The deal has yet to be put
formally to the Thai government.
United States oil explorers Triton, a
Dallas-based company that helped broker the Thai/Malay deal, has been courting
the Cambodians to develop the area.
Large parts of the disputed area lie
between claims either proven or potentially rich in hydrocarbons.
Thai side to the west, US company Unocal has been producing from one gas field
for ten years and recently announced that royalties it has paid to the Thai
government during that time have reached $1 billion.
On the eastern
Cambodian side, Enterprise Oil has completed wildcat wells and seismic survey
work on two blocks that according to reports appear encouraging.
seismic maps show that some of the huge Thai gas reserves being worked by Unocal
also appear to extend into the disputed block. Potential areas showing "seams"
of oil reserves also appear in the disputed block, especially to the
Triton analyst Paul Dailly said that the disputed waters - about
three times bigger in area than the recently resolved Malay/Thai claim - could
yield anything from three to eight trillion cubic feet of gas and
Based on improved technology, the Pattani Trough fields could move
from discovery to production in five years. Recent history shows that such
movement usually takes eight years, Dailly said.
Triton senior commercial
analyst Scott Davis said that in the first 18 months an exploration company
would spend up to $30 million completing studies and drilling wildcat
During the year long appraisal following a discovery, $34 million
more would need to be spent measuring reservoir sizes and adjusting drilling
The bulk of the "risk capital" - $1,200 million - would then be
spent designing and building rigs and finalizing engineering contracts. Neither
the Thai nor the Cambodian governments would be liable for those costs.
field yielding two trillion cubic feet of gas would net $2.8 billion, of which
Cambodia would get just under half in royalties, profit share and taxes; while
the exploration company would get 57 percent in cost recovery and profit share,
he said. The Thais would profit similarly, he said.
The Pattani Trough
could therefore produce $3.5 billion for Cambodia, at between $150 million and
$200 million a year, Davis said. There would also be indirect benefits, such as
infrastructure work and employment, he added.
Enterprise Oil Cambodia
general manager Barry Rogers, in a speech to a oil industry seminar in Singapore
on Jan 20, said the disputed Pattani Trough block would "no doubt" attract
interest when the territorial claim was resolved.
Rogers also said a
second offshore block now disputed between Cambodia and Vietnam as likely to
attract interest from multinational companies.
Rogers said that the
success of three of the first four wells drilled in Cambodian waters by
Enterprise, Campex and Premier boded well for the future, though more money had
to be spent to learn more of the potential.
He said more exploration
activity was likely in the Cambodian blocks already being worked. An on-shore
production facility was likely to be built within the next five
Sihanoukville port would need more money spent on it, but
associated benefits in medical facilities, helicopter support, fuel supplies,
accommodation and catering would follow.
Rogers said Cambodia had to date
had a remarkably successful re-entry into the petroleum exploration sector.