Logo of Phnom Penh Post newspaper Phnom Penh Post - Kingdom to get 25% local oil



Kingdom to get 25% local oil

Content image - Phnom Penh Post
A proposed platform that KrisEnergy plans to build in Cambodia’s offshore oil Block A in the Gulf of Thailand. Photo supplied

Kingdom to get 25% local oil

Companies processing petroleum from Cambodia’s oilfields are required to provide a maximum of 25 per cent to meet local needs, according to a law that has been signed off by King Norodom Sihamoni on July 12. It was passed by the Senate in late June.

However, petroleum exports can be banned in the event of an emergency shortage in local supply, states the Law on the Management and Production of Petroleum, a copy of which was obtained by The Post on Sunday.

The Post reported in May that KrisEnergy Ltd, the Singapore-based firm that operates Cambodia’s Block A offshore oilfield, has claimed the first drop of oil will be extracted late this year, with commercial production scheduled to begin next year.

The law has nine chapters, 72 articles and is “effective immediately”.

It details the authority tasked with managing production, environmental protection, punishments for negligent production and other concerns related to the processing of petroleum, as well as the nature of agreements.

The law divides production into “upstream” and “downstream” activities. Upstream activities include prospecting, research and development, and production.

Downstream activities include the treatment, transportation, stocking and trading of petrol products.

The Ministry of Mines and Energy will oversee the management of the sector and all activities therein. All individuals and legal entities seeking involvement in the sector must receive permission from the ministry.

All contractors must provide data regarding their operations to the ministry, the law states.

“Petroleum agreements must be valid for no longer than 30 years from the date of the agreement. Petroleum contractors can renew the validity of their agreements for a period of not more than 15 years,” Article 17 states.

Contractors that have been inactive for five years will have their contracts terminated as stated in Article 24, it adds.

Article 27 says contactors must negotiate with those in legal ownership of land before starting operations. They can request arbitration from the Ministry of Mines and Energy if no agreement can be reached with landowners.

Chapter 7 outlines punishments for breaking the law. These include the revoking or suspension of rights, the payment of compensation and imprisonment.

“Individuals who explore for, develop or produce petroleum without an agreement or if the agreement has been suspended face two to five years in prison and a fine of 100 million riel to 250 million riel ($25,000-$62,500)).

For legal entities, the fine will range from 4,000 million to 40,000 million riel ($1 million-$10 million), Article 58 states.

Contractors not abiding by technical and international standards and who affect the environment or society or cause death due to negligence will be fined between 400 million and two billion riel, it says.

“Those who provide data or information with the intention to cause public confusion or misrepresent the Ministry of Mines and Energy will be sentenced to between one and three years in prison with a fine of between 50 million and one billion riel,” the law states.

Social analyst Meas Nee said he was concerned by how rigorously debated the law would have been before being passed by the single-party Senate.

“A second concern regards implementation because legal enforcement remains weak in Cambodia.

“Like in the mining sector, an important resource could end up in the hands of some powerful people. It could be used as a tool to pressure those who criticise the management of the petroleum sector,” he said.

Kin Phea, the director of the International Relations Institute at the Royal Academy of Cambodia, said a transparent law in this sector was needed to ensure its effective management and to guarantee reliable revenue streams.

However, he disagreed with Nee on the nature of the law’s passing. He said beneficial laws could be passed without the participation of an opposition party.

“Generally speaking, the laws in Cambodia are good because they are passed after consultation with assistance providers and many development partners.

“However, it is questionable whether they are always implemented effectively, consistently and equally,” Phea said.

MOST VIEWED

  • Phnom Penh placed in two-week lockdown

    The government has decided to place Phnom Penh in lockdown for two weeks, effective April 14 midnight through April 28, as Cambodia continues to grapple with the ongoing community outbreak of Covid-19, which has seen no sign of subsiding. According to a directive signed by Prime Minister

  • Cambodia on the verge of national tragedy, WHO warns

    The World Health Organisation (WHO) in Cambodia warned that the country had reached another critical point amid a sudden, huge surge in community transmission cases and deaths. “We stand on the brink of a national tragedy because of Covid-19. Despite our best efforts, we are

  • Hun Sen: Stay where you are, or else

    Prime Minister Hun Sen warned that the two-week lockdown of Phnom Penh and adjacent Kandal provincial town Takmao could be extended if people are not cooperative by staying home. “Now let me make this clear: stay in your home, village, and district and remain where

  • Businesses in capital told to get travel permit amid lockdown through One Window Service

    The Phnom Penh Municipal Administration has issued guidelines on how to get travel permission for priority groups during the lockdown of Phnom Penh, directing private institutions to apply through the municipality's One Window Service and limit their staff to a mere two per cent. In

  • Vaccination open to foreigners in Cambodia

    The Ministry of Health on April 8 issued an announcement on Covid-19 vaccination for foreigners residing and working in Cambodia, directing the Ministry of Labour and Vocational Training and local authorities to register them. Health minister Mam Bun Heng, who is also head of the inter-ministerial

  • Ministry names types of business permitted amid lockdown

    The Ministry of Labour and Vocational Training singled out 11 types of business that are permitted to operate during the lockdown of Phnom Penh and Takmao town, which run through April 28. Those include (1) food-processing enterprises and slaughterhouses; (2) providers of public services such as firefighting, utility and