US Chevron Company Wants to Suspend Oil Exploration at the Khmer Sea Bottom because of the Global Economic Crisis – Thursday, 21.5.2009

Posted on 24 May 2009
The Mirror, Vol. 13, No. 613
http://cambodiamirror.wordpress.com/

“The global financial crisis affects the exploration of oil and other natural deposits at the Cambodian sea bottom, and this serious crisis causes the US biggest oil company to encounter difficulties for the exploration and exploitation of oil in Block “A” and to demand the Khmer government to sign a deal to postpone the exploration license at an area of the sea 150 km from the Sihanoukville port.

“Chevron’s Asia-Pacific media adviser based in Singapore, Mr. Gareth Johnstone, said that negotiations should be continued, even though the previous deal expired in April. He added that Chevron’s deal has not yet been concluded because of the economic crisis which is affecting the oil exploration in Block “A.” But he said that Chevron is discussing with the Khmer government to postpone the license deal for Block “A.”

“The chairperson of the National Assembly’s Commission on Economy, Finance, Banking and Audit, Cheam Yeap, said that the US oil exploration company Chevron is conducting exploration on six drilling sites in Block “A” within an area of 278 km2 located in the Gulf of Thailand in the Khmer sea territory. The economic crisis causes the oil exploration to be suspend for a short period only, and things will turn to be normal soon.

“The vice president of Chevron International Exploration and Production South Asia, Mr. Joe Geagea, told a newspaper in Bangkok that a license has not been given. But Cambodia and Chevron still maintain the hope that resources extracted from the Cambodian sea bottom will be brought to the market, though the oil price is low at present and the economy is declining.

“Mr. Joe Geagea said, ‘The problem is: What can be done in order to benefit us [Chevron] and Cambodia. Therefore, we want to continue negotiating with Cambodia.’

“Before, Chevron had said that the declining oil price is the reason that motivates US based Chevron to consider suspending drilling and oil exploration in Block “A” until the market of oil improves again. But so far, the oil market has not recovered so that Chevron could continue its activities at the Khmer sea. Another problem is that there is not yet a tax agreement with the Khmer government over the income from oil if the exploitation succeeds.

“It should be noted that regarding the signing of any agreements of private companies or of foreign investors, they have to pay the government millions of dollars for new licenses or to prolong expired licenses. Therefore, there have to be intensive negotiations to request new licenses.

“Mr. Gareth Johnstone said, ‘Because of commercial reasons and of the contract agreements, we cannot give any information about the discussions.’

“Cheam Yeap tries to conceal any problem which might block the process of the oil and natural gas exploration at the Khmer sea bottom. He said that he plans to ask the government to draft three laws relative to energy resources of the Kingdom of Cambodia, like the monitoring of oil, oil taxes, and the benefits of the energy sector, as an effort to better organize the use of national resources.

“Cheam Yeap added that the Extractive Industries Transparency Initiative based in London is invited to Cambodia to hold four workshops aiming to share experiences in organizing energy resources.

“Mr. Cheam Yeap said, ‘We want Cambodia to be blessed by its oil resources and not to be cursed by its oil resources like Nigeria, Chad, Venezuela, Panama, and some African countries which were poor before, and after they found oil they are still poor after they gained some benefits from natural oil.’ Cambodia still hopes that oil can be extracted from its sea bottom starting between 2011 and 2013.

“Cheam Yeap boasted that besides Chevron of the United States, there are also companies from other countries that are interested in the natural oil treasures of Cambodia, like Saudi Arabia, Kuwait, Indonesia, and other neighboring countries in Southeast Asia. Cheam Yeap admitted that there are some obstacles for the oil exploration at the Cambodian sea bottom, because the sea border has not been demarcated at disputed areas with Siam [Thailand].

“At present, Cambodia has already given licenses for 37,000 km2 of its sea territory, and the remaining area of 27,000 km2 is disputed with Siam [Thailand].

“It should be noted also that Chevron has already paid US$20 million to the Khmer government in exchange for the license for oil and natural gas exploration in Block “A,” the block with the most oil deposit. But this US$200,000 license [above, it said US$20 million] expired in April. Therefore, Chevron has to negotiate with the Cambodian National Petroleum Authority, with Deputy Prime Minister Sok An as the president and Te Duong Dara as the secretary general, in order to continue to get an exploration license in Block “A.”

“On Wednesday, it was not known yet whether the Hun Sen government, notorious for corruption by receiving kickbacks, requires Chevron to pay additional tax so that it can continue its license to explore oil in Block “A.” But the government seemed to be not much interested with this and just demanded Chevron to negotiate again. The negotiations simply focused on paying money to request a new license, which made Chevron release some information, which surprised journalists in Bangkok.”

Moneaksekar Khmer, Vol.16, #3763, 21.5.2009
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Thursday, 21 May 2009