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Oil firm ready to begin test drilling

Oil firm ready to begin test drilling

Campex, a consortium of Japanese petroleum companies, is expected to start drilling

test wells off Cambodia's southern coast in October, a high ranking State of Cambodia

official said May 19.

Ith Praing, vice minister in charge of petroleum and mineral resources, said the

Japanese group had completed seismic and site surveys and planned to drill two wells.

He said two other European-based consortia would follow with test drilling in adjacent

zones early next year.

"After siesmic interpretation those companies are very happy. The results of

those seismic surveys were very encouraging," he said.

Praing said he was confident contracts for oil exploration awarded by his Vietnamese-installed

government would be honored even if it fails to win the election currently being

held in the war-torn country. The result of the U.N -organized election is expected

to be announced in the first week of June.

"If the next government is from the Khmer Rouge or parties that are very close

to \the Khmer Rouge I don't know what will happen but if a liberal government or

our government wins there will be no impact on the contracts they signed because

our petroleum agreements meet the international standard of the oil industry,"

he said.

Roger Ottenheym, general manager of Shell Cambodia, one of the losers when the first

round of bidding for offshore blocks was held in 1991, acknowledged the process had

been fair and said it would be unwise for a new government to scrap or demand changes

to existing contracts.

Petroleum exploration in Cambodia resumed last year after an interval of almost 20

years. In the early 1970s ELF and Esso sunk offshore test wells but were forced by

an escalating civil war to halt their search before they found commercial quantities

of hydrocarbons.

All exploration activity was abandoned during the 1975-79 reign of the Maoist Khmer

Rouge which was ousted from power by a Vietnamese invasion.

In Sept 1991, the State of Cambodia introduced investment incentives and divided

the country up into 26 blocks, seven offshore and 19 onshore for bidding.

In addition to Campex, which groups JNOC (Japanese National Oil Co.) Nissho Iwai

Corp. and Taiyo, two other successful bidders, British-based Premier Oil Pacific

Ltd. and Enterprise Oil began exploratory work on Cambodia's continental shelf in

late 1991.

The Premier Oil-headed venture links Repsol Exploracion of Spain and two Australian

companies, Ampol Exploration and Santos Ltd. Enterprise Oil is operating in partnership

with British Gas, Total and Campaignie Europeane des Petroles (CEP) of France.

A fourth consortium, comprising Marimex and Technique trade International, Dutch

firms with Romanian government backing were awarded two offshore blocks and one onshore

zone in December but have yet to begin work. Praing said they were "waiting

for the (political) situation to become clearer".

The remaining offshore bock, which was originally awarded to Hungarian firm Nawa

Oil, is being re-offered after the company failed to meet contractual deadline to

begin exploratory work.

"There has been much interest because Block V is next to blocks already surveyed

and so the contractors of III and IV (Campex and Premier) are interested. They know

where there is an extension of the basins. The might not be sure but they can estimate

what is happening in Block V," Praing said.

The vice-minister said several newcomers were also bidding for the block but declined

to name the contenders. He said his ministry expects to begin evaluation of bids

in one or two months.

Praing said earliest indications based on seismological data and coparisons with

oil production in the neighboring waters of Thailand and Vietnam showed Cambodia's

oil reserves were "medium".

"Maybe half oil and half gas. This is only a comparison because on the Thai

side they have drilled and produced a lot. It has similar geological structures but

at the moment it is anybody's guess."

He said no survey work had been done on the two onshore blocks but noted primary

"indications are good for commercially viable oil and gas deposits."

In addition to the officially listed offshore zones, a further 27,500 sq. kilometers

lies in disputed waters claimed by both Thailand and Cambodia. Another 8,000 square

km area is at the center of overlapping claims made by Vietnam and Cambodia.

Praing said the government hoped to work out a joint exploration and development

agreement similar to the one struck by Malaysia and Thailand.

"We have to negotiate with the Vietnamese and the Thai," he said.

"On the Thai side they have a lot of big fields such as the Erawan Field already

in production and also on the Vietnamese side they have Big Bear, Wild Tiger. Only

Cambodia has none. It remains white, virgin," he said.

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