A STATE-AFFILIATED Japanese organisation is set to sign an agreement with the government today for onshore oil production, amid renewed criticism of Cambodia’s allegedly opaque extractive industry deals with foreign companies.

The Japanese Oil, Gas and Metals National Corporation (JOGMEC) plans to sign the memorandum of understanding – which an official said would lay the groundwork for a product-sharing contract (PSC) in Cambodian territory – with the Cambodian National Petroleum Authority (CNPA) during a ceremony this morning at the Council of Ministers, officials said.

Speaking on the condition of anonymity, sources at the CNPA said Monday that the deal would pave the way for the government and JOGMEC to begin talks about possible gas and oil extraction in Block 17, which covers the northern Tonle Sap basin.

Ek Tha, a spokesman for the Press and Quick Reaction Unit at the Council of Ministers, said a PSC would likely follow the signing of the agreement. PSCs concerning oil-extraction agreements typically set out the percentage of production the parties stand to receive after certain costs and expenses have been recovered.

International attention has been focused on Cambodia’s extractive and energy industries in recent weeks, prompted in part by news last month that mining giant BHP Billiton has uncovered evidence of possible corruption on the part of employees working on an unnamed project widely believed to be a bauxite mine in the Kingdom’s Mondulkiri province.

The international watchdog Global Witness on Friday said the issue of transparency in oil and mining payments should top the agenda of a donor-government meeting scheduled for June. Its statement came after Prime Minister Hun Sen confirmed that he had signed a US$28 million deal with Total for an offshore concession, including an $8 million “social development fund”, comparing Total’s dealings with the government to those of BHP Billiton.

Men Den, deputy general director of the CNPA, declined to give further information about the deal beyond confirming that the signing ceremony was set to take place today.

Ek Tha said Deputy Prime Minister Sok An would preside over the ceremony.

Sok An is also scheduled to meet Chiaki Takahashi, Japan’s deputy minister for the ministry of finance, trade and industry, for a bilateral discussion on oil and natural gas, investment and trade promotion between the two countries, Ek Tha said.

He added that the deal is an indication that Japanese investors are interested in Cambodia’s natural resources.

He also emphasised that the government is aware of the environmental concerns raised by oil extraction projects, and that work in the Tonle Sap basin will be carried out in a manner that would promote sustainable development.

“The Japanese government always pays attention on environmental issues, so Japanese investors come to help Cambodia, not to hurt us,” Ek Tha said.

Global Witness spokesman George Boden said by phone from the UK on Monday that any oil deal centred on the Tonle Sap could harm the area’s natural resources, notably fish stocks.

“The stakes are massive,” Boden said. “A massive amount of livelihoods are centred there.”