Interim Energy and Mines minister Ing Khiet said the new Cambodian government would
review oil and gas exploration contracts signed by the former Phnom Penh-based administration.
"We must respect the national interest of the Cambodian people and obviously
energy is going to be a very important sector in the future of Cambodia," he
The former Hun Sen-led regime awarded contracts to five foreign companies to explore
zones off Cambodia's southern coast.
Industry insiders said any review of the contracts is likely to focus on Maritime,
a consortium which groups Marimex and Technitrade International, two Dutch companies
backed with Romanian government money. Maritime was awarded two offshore blocks and
one onshore zone last December but has yet to begin work.
Questions have been raised about Maritime since it specified itself as a transport
company in its contract and opted for an onshore block deep in Khmer Rouge territory
in the northwest of the country.
Maritime has yet to open a representative office in Cambodia and could not be contacted.
Khiet, who is expected to retain control of the energy portfolio when a constitutional
government assumes power on Sept. 15, declined to single out any of the existing
The former Phnom Penh government also awarded contracts to two consortiums led by
UK-based firms Premier Oil and Enterprise Oil, and another to Campex which is headed
by the Japanese National Oil Co. A fifth contract was awarded to Hungary's Nawa Oil
in a deal widely viewed as a political arrangement between the former communist leaders
of the two countries. The offshore block is being re-offered after Nawa failed to
meet contractual deadlines to begin exploratory work.
Campex and Enterprise officials said they would welcome a review of their contracts
and were prepared to sit down and discuss the deals with the new government.
"We have absolutely no problem with an examination of our contracts because
we believe they will stand the closest scrutiny because they are based on international
norms," said Barry Rogers, General Manager of Enterprise Oil in Cambodia. Premier
Oil is based in Singapore.
Khiet said that since FUNCINPEC won May's general electio, there had been renewed
interest in the on-shore zones.
Before the election, the centerpiece of a $2 billion international effort to bring
peace to war-ravaged Cambodia, security concerns had scared off prospective investors.
To date, no seismic line, geomagnetic or gravity surveys of any meaningful size have
been undertaken on the shore zones.
"We shall proceed very soon with the onshore zones. We have several companies
that are interested but I cannot name them," Khiet said.
The minister said the new government would also seek to redraw the boundaries for
zones which overlap Cambodia's landmark and ecologically pivotal Tonle Sap lake.
"We want to avoid the possibility of an accident during drilling. An oil spill
on the Great Lake would be devastating, it would wipe out fish stocks and devastate
the environment of the whole country," he said.
Campex general Manager Seiji Ikeda, said his company expected to spud their first
exploratory well on December1 and said the would know the results within three monts.
Rogers said Enterprise would follow within weeks adding the company had so far been
"very favourabley impressed by geo physical studies" already made.
"Our initial assesment was that there was slightly more chanve of finding gas
than oil but today I would say it is about 50-50," he said
Only three previous wells have been sunk in the continental shelf off Cambodia, back
in the early 70s by Elf and Esso. Those wells were drilled on regional highs along
the Cambodian shelf. Oil experts said new data drawing on comparisons with the geology
of the neigboring Pattani basin in Thai waters suggested the early attempts had been
Khiet, who was a member of Prince Sihanouk's cabinet in the early 60s said the government
would also consider granting tax concessions on the importation of equipment used
for exploratory work. The issue has been a source of dispute between the foreign
oil firms and the government since they began work in Cambodia in 1991.
"If they find oil they will have to pay tax before they sell it so I suppose
we can recuperate our revenue then," he said.
Khiet predicted Cambodia would have a huge demand for oil and oil products in the
coming decades as it attempts to rebuild itself after decades of war. He singled
out asphalt which will be needed in huge quantities to repair some 4,000 kilometers
of ruined roads.
"We will be looking to our neighbors to help, particularly Thailand, Malaysia
and Indonesia. Hopefully they will offer us friendship prices," he said.
Cambodia's oil potential remains for the most part unknown and its offshore fields
unexplored, but this has not stopped politicians and government officials in the
past from making grandiose claims about what an oil discovery could do for the country.
Dr. Long Bora, who led the unsuccessful Cambodia Free Independent Party in the election
had promised voters he would turn Cambodia into a second Kuwait, and painted a picture
of a future where the population could give up farming and live off state oil revenues.
Experts say he may have been overstating the case.
"There is a tremendous misconception about what oil and gas can do for an economy,"
said Rogers citing a study by the East West Institute in Hawaii which calculated
potential future revenues to the governemt might by worth U.S. $175 million a year.