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Transparency urged for nascent oil sector

Transparency urged for nascent oil sector

CAMBODIA is taking strides to ensure that its nascent extractive industries will be well managed, an official with an international NGO said Tuesday, though observers warned that the government must be more transparent with incoming revenues.

With expectations raised by the discovery of potential offshore oil reserves, observers say extraction in Cambodia is at a critical stage.

At a conference Tuesday discussing industry governance, a representative of the NGO Oxfam America said he believed Cambodia is on the right path to avoiding pitfalls that have challenged oil-producing countries in the past.

“On the part of the government and the private sector, it is a finite resource we’re talking about. ... That opportunity has to be used well, not wasted,” said Brian Lund, the East Asia regional director for Oxfam America. “As we see it at the moment, the government of Cambodia is working in the right direction towards making sure that it is used well.”

Lund cited the establishment of an inter-ministerial working group on revenue management as a reason for optimism, as well as statements from officials suggesting that Cambodia may sign on to the Extractive Industries Transparency Initiative (EITI), a set of international standards that require governments to disclose their earnings from oil, gas and mining.

“It’s definitely part of the discussion,” Lund said of the EITI. “But there is still considerable work to be done before we get to the level of transparency and a level of accountability you would ask for in EITI.”

So far, it has been rare for authorities to release basic revenue figures.

EXPECTATIONS HAVE TO BE ... TEMPERED. IT’S NOT JUST A HUGE GOLDEN EGG.

Last week, for example, an official with the Cambodian National Petroleum Authority confirmed that PetroVietnam and French energy firm Total together gave the government US$26 million in signature bonuses and social funds in January, marking a substantial rise over the previous reported revenue of $800,000 in December.
Yet the figure was shown only during a conference presentation by a government finance officer; it was not part of any official disclosure.

Observers say they struggle to find official information detailing where revenue is going.

“Currently, we get information from newspapers,” said Chhith Sam Ath, executive director of the NGO Forum.

“We know the companies that are granted for exploration. However, this is all the information we get.”

The government must be more forthright going forward, he said.

“There is a need to provide transparency and accountability in the sector in order to ... ensure that the benefits from oil and gas will benefit all of Cambodia,” Chhith Sam Ath said.

In the meantime, some are urging Cambodia to rein in expectations sparked by the discovery of potential offshore oil reserves.

“When someone mentions that there is gold or oil, there is an immediate expectation amongst the community at large that this is enormous, that it’s fantastic,” said Oxfam’s Lund. “But in fact, expectations have to be properly tempered. It’s not just a huge golden egg. There is a lot of complexity and ups and downs.”

Last year, officials said the Kingdom would not begin receiving revenue from potential oil and natural gas concessions until 2013 at the earliest.

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