Blocks fall as oil interest dries up
Blocks fall as oil interest dries up
Cambodia's plan to become an oil-producing nation rests almost entirely on its development of offshore Block A, as depressed global oil prices have discouraged companies from investing in exploration activities and all but two of the Kingdom’s concession licences have been revoked or allowed to expire.
“When oil prices decline heavily, it makes many oil exploration companies hesitate and put their projects on hold,” Meng Saktheara, secretary of state at the Ministry of Mines and Energy, said yesterday.
Cambodia has divided the country and its territorial waters into a total of six offshore oil blocks and 19 onshore blocks for oil and gas exploration. It has also assigned blocks in the Overlapping Claims Area (OCA), a disputed maritime territory covering nearly 27,000 square kilometres in the Gulf of Thailand.
Of Cambodia’s six offshore blocks (A-F), Block A is the most advanced in terms of exploration and production plans, and contains the country’s only proven oil discovery. Singapore-listed KrisEnergy, which holds a 95 percent interest in Block A, signed a production-sharing agreement (PSA) with the government last month that is expected to pave the way to developing the block’s Apsara oil field, where oil was first discovered in 2005.
KrisEnergy estimates that it can recover 8.5 million barrels of oil from a single platform during the project’s first phase, with extraction to begin in late 2019 or early 2020. Company representatives have said that with additional platforms KrisEnergy could likely achieve the government’s ambitious projection of recovering 30 million barrels of oil over the course of nine years.
According to Saktheara, all of the licences for the other five offshore blocks have been revoked after the operators failed to make progress in exploring them.
Cambodia’s 19 onshore blocks (I to XIX) are even less developed, with only three contracts officially granted for exploration, and just one still in play.
Saktheara said the concession licence for Block XV, awarded to Vietnamese state-owned oil and gas firm PetroVietnam in 2009, remains in effect despite the company’s inactivity.
“The company has not been active since early 2017, and there is no noticeable progress,” he said.
According to Saktheara, the low price of oil in the global market, as well as the long time it took to conclude the PSA with KrisEnergy, discouraged companies from sinking capital into exploring Cambodia’s oil potential. However, he expects that the development of Block A could renew interest.
“I expect that when offshore Block A will start operations [extracting oil], this will reboot attention in the other blocks,” he said.
Saktheara confirmed that the provisional concessions awarded in the OCA remained in effect, though indicated that exploration of the blocks was subject to resolution of a long-running maritime border dispute between Cambodia and Thailand.
