ENTERPRISE Oil will remain in Cambodia despite disappointing results from the company's

1996 offshore oil and gas exploration project.

According to Hugh Mackay, the company's operations manager in Phnom Penh, Enterprise

is now in a good position to gain access to the overlapping claims area (OCA) in

the Gulf of Thailand.

The OCA - northwest of the area explored by the company last year - has been under

force majeur since the mid-seventies.

Some seismic exploration of the area was conducted in the late 1960's and early 1970's,

but it has remained unexploited due the Khmer Rouge's policy of isolation and economic

sanctions imposed as a result of Vietnam's occupation from 1979 to 1989.

"The Cambodian government began issuing conditional licenses for the OCA ...

[and] our failure to find commercial amounts of hydrocarbons should prompt the government

to open negotiations with Thailand," Mackay said.

"I think you'll find the Thais and Cambodians will start talking about joint

development of the OCA fairly soon."

But Secretary of State for Industry Ith Praing said there were no plans to resume

talks with Thailand over the OCA at this stage.

He said negotiations stalled around one year ago, which he attributed to policy making

inertia associated with the recent Thai election and change of government.

The Cambodian government, however, has awarded Enterprise and 13 other companies

conditional exploration licenses in anticipation that an agreement over exploration

of the OCA will commence soon.

"Ours is one of fourteen companies awarded a conditional license, but we are

the only company to have operated a large operation from Cambodia," he said.

Enterprise - which heads a consortium including British Gas and Total - spent $55

million in Cambodia in what Mackay said was the most extensive continuous drilling

campaign ever undertaken here.

"Usually we would have set up in Singapore or Bangkok, but because of the expense

of doing that we decided to give it a try here in Cambodia," he said.

"And it worked very well - operationally the project was a great success - certainly

the drilling team was pleased with Cambodia as a place from which to operate.

"We have demonstrated that you can operate here successfully - it's a very good

advert [for the country] that an international oil and gas company can run a sophisticated

offshore operation from Cambodian soil," he said.

"It was actually much easier than it is in some other countries in the region

where the bureaucracy is an obstacle to an efficient operation.

"If we were to be granted access to the OCA, then we would base our operation

here," Mackay said.

Enterprise drilled four wells and conducted seismic surveys over hundreds of square

kilometers at a location centered about 175 kilometers southwest of Sihanoukville.

Mackay said the odds of finding commercial reserves of hydrocarbons were about one

in eight for any offshore exploration program.

But, he said a reduced staff would continue to evaluate the data the company collected

last year. "