Cambodia eyes domestic oil production, refinery for energy security: official
Singapore (Platts)--27Sep2012/513 am EDT/913 GMT
Cambodia is working on three fronts to improve its energy security and
supply, including the development of its first oil-producing asset, looking
for ways to resolve a disagreement over disputed territory in the Gulf of
Thailand, and studying the economic viability of building its own refinery.
"Having that security, having our own supply and our own refining will
... enable the country to grow at a faster rate," Sok Khavan, acting director
general of the Cambodian National Petroleum Authority, said at the Oil & Gas
Investor Summit in Singapore Wednesday.
"Right now our electricity price and energy price [are] very high and
the benefit that we get from a lower energy price and increased supply
security will be more growth," he added.
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Cambodia's GDP in 2011 was just under $13 billion, according to the
World Bank, and that is expected to grow five-fold by 2030, Khavan said. In
recent years, the growth trend has meant annual oil product demand growth of
about 10%, with all of the country's needs being met through imports from
Singapore, Thailand and Vietnam.
The most imminent development that will start to address the issue of
energy supply will be kicking off work on Block A in the Gulf of Thailand, an
oil exploration block operated by Chevron (30%), with partners Mitsui (30%),
KrisEnergy (25%) and GS Caltex (15%).
"This is the first development for Cambodia, and the fact that we are
new in this means we need to finalize [the contract] and make sure that our
legal regime addresses all the issues," Khavan said. "We are now putting the
final pieces in place and the discussion with Chevron and their partners are
proceeding very well."
According to KrisEnergy's website a production permit application
detailing the first phase of development of the Apsara field in block A was
submitted in September 2010. Operator Chevron said in a fact sheet that it
expects approval of the production permit and a final investment decision by
the end of the year as well.
Khavan declined to reveal any details on when production would start. He
said that it was still under discussion with Chevron.
"We would like to proceed quickly, on a fast-track basis. We've already
had some delay, so we cannot afford to have further delay. We'll be happy if
they can proceed as fast as possible," he said.
Khavan added that it was difficult to estimate the potential production
of the field since it is a new development and Chevron has to pool several
pocket discoveries together to make a commercial development.
DISPUTED TERRITORY IN GULF OF THAILAND
Cambodia is looking for an opportunity to push through a resolution of
the outstanding issues with the so-called Overlapping Claims Area with
Thailand. The area has been a topic of contention between the two countries
since the 1970s.
In 2000, a memorandum of understanding was signed calling for the joint
development of three blocks in the disputed area that are furthest offshore,
with the area closest to the shore -- and also the area more prone to oil,
according to Khavan -- to be divided between the two countries.
The OCA is estimated to have 12-14 Tcf of natural gas and some
"unspecified" amount of crude, Khavan said.
"It's a no-brainer that the two countries need to unlock this resource,"
he said. "The impact of unlocking [it] will provide enormous benefit to both
Khavan said he could not comment on the status of discussions at the
moment, adding that "there is an alignment between the two governments that
we need to resolve this issue and resolve it as fast as we can."
Cambodia is "in favor of any solution that will allow the two countries
to ... [move toward] exploration and production as soon as possible," he said.
PLANS FOR FIRST DOMESTIC REFINERY
Cambodia is also working on a plan for a domestic refinery, although
Khavan could again provide few details.
CNPA is working with the Cambodia Petrochemical Company and its advisers
to determine if would be commercially feasible to build a domestic refinery,
Khavan said. It's too early to say what companies or countries would be
involved and what capacity would make economical sense.
"There are a number of factors to consider, the potential production
that we will have domestically, the level of demand and the growth rate.
Demand is relatively low now but growing healthily," he added.
In November 2011, China National Machinery Industry Corp., more commonly
known as Sinomach, said it had signed a framework agreement with the Cambodian
Petrochemical Company on engineering, procurement and construction work for
Cambodia's first refinery.
The signing of the agreement on November 29 was witnessed by Cambodian
Prime Minister Hun Sen. Construction of the refinery is set to take 36
months, at an investment of $1.6 billion.
According to a report by the Phnom Penh Post, the refinery will first
use Cambodia's domestically produced crude and then consider refining
imported crude from Europe. It will be capable of refining both sweet and
Cambodia currently imports all the oil products it consumes, and in the
last three years, its oil product imports have grown from 1.36 million mt/year
in 2009 to 1.52 million mt/year in 2010, rising to 1.58 million mt/year in
With a population of about 14 million, that puts the per capita oil
consumption last year at 0.8 barrels/year.
"Those are the official figures. We think the actual demand is higher,"
Diesel makes up the largest portion of the product mix at 55%, with
gasoline accounting for 25%, and fuel oil and kerosene 10% each.
--Thomas Hogue, firstname.lastname@example.org
--Edited by E Shailaja Nair, email@example.com