Oil deal before petroleum law
Oil deal before petroleum law
Singaporean energy firm KrisEnergy and the Cambodian government will conclude their long-drawn negotiations for extraction of oil from offshore oil field Block A before the passage of an upcoming law for the petroleum sector.
“We want to have some kind of deal before the law [is passed]”, said Meng Saktheara, secretary of state at the Ministry of Mines and Energy,
The petroleum law, which will be the country’s first legislation governing the extraction of oil from onshore and offshore fields, is currently in the draft stage, with Saktheara expressing concern over how long the law might take to makes its way through the National Assembly.
According to Saktheara, the law’s passage could take time due to negotiations with lawmakers and NGOs over a range of issues, such as revenue sharing. “The oil industry is something very new to Cambodia, especially to lawmakers,” he said.
Saktheara said a final draft would be ready by the end of the year and that the KrisEnergy deal will take the draft legislation into consideration.
“Maybe the law will change significantly; this is also a concern from the company.”
Another reform that will be passed in conjunction with the petroleum law, is the addressing of inconsistencies between tax rates that could apply to the oil sector, Saktheara added.
Richard Stanger, president of the Cambodia Association for Mining and Exploration Companies, agreed, saying the new law would clear things up for future companies interested in exploration.
“[The law] would certainly make things more clear about how to acquire a licence”, he said.
KrisEnergy acquired Chevron’s 30 per cent stake of Block A in August last year, adding to its existing 25 per cent stake, giving it a controlling stake in the project. At the time, the energy company said it expected to pump out 10,000 barrels of oil per day from Block A.
The KrisEnergy deal was brokered after Chevron and the Cambodian government spent years unsuccessfully trying to reach an agreement over taxation and profits.
“If we could have had this law, these two laws, last year, it could have sped up the registration process,” Saktheara said.
KrisEnergy said it was unable to comment due to ongoing negotiations with the government.
