Monday, October 25, 2021

Cambodia produces first drop of oil 15 years after discovery

In 2005, the discovery of the oil led the kingdom to be acclaimed as the region's next potential petro-state.

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In a long-awaited milestone for one of Southeast Asia’s poorest nations, Cambodian premier Hun Sen announced on Tuesday that the kingdom has extracted its first drop of crude oil from its waters.

Hun Sen hailed the first extraction of crude. “The first drop of oil has been produced in a new achievement for Cambodia’s economy. The year 2021 is coming and we have received a huge gift for our nation: the first oil production in our territory,” he said in a Facebook post.

The crude was produced from an area off the southwestern coast of Sihanoukville.

The Gulf of Thailand has significant oil deposits, with Chevron first finding proven reserves off Cambodia in 2005 but production stalled as the government and the US giant failed to reach a revenue-sharing agreement, leading the firm to sell its stake to Singapore’s KrisEnergy in 2014.

Chevron’s discovery of the oil led the kingdom to be acclaimed as the region’s next potential petro-state. The government announced that hundreds of millions of barrels of crude were beneath its waters.

KrisEnergy currently holds a 95% stake of the block where the oil was taken from, while the government holds the remaining 5%.

The company expects a peak production rate of 7,500 barrels a day from an initial phase – a modest amount compared with Cambodia’s oil-producing neighbours Vietnam and Thailand.

Small though those production numbers are compared to other oil producing countries, the revenues could be significant for the government, which estimated in 2017 that it would make at least US$500 million in royalties and taxes from the first phase of the project.

The discovery also raised concerns of how Cambodia – a country long ranked poorly in terms of transparency – would use its new-found wealth but Hun Sen, Asia’s longest-serving leader, dismissed the worries.

“It is a blessing for Cambodians,” he insisted. “It is not a curse like it has been called by some ill-willed people.”

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