Oil interests tread a fine line in Cambodia

Photo by: HENG CHIVOAN
Stephane Dion, managing director of Total Cambodge.

The Phnom Penh Post
Friday, 10 July 2009
KAY KIMSONG

Stephane Dion, managing director of Total Cambodge, says stability of the Kingdom’s market for oil will someday be guaranteed by domestic production, but for now it depends on Singapore.

CEO TALK

What price changes have you introduced this year on petrol and diesel?

Prices at the pumps reflect the international price of oil products and the cost of bringing these products here.

The international price reference in this region of the world is the MOPS (Mean of Platts Singapore), which is quoted daily in Singapore.

If you look at the MOPS cycle between January 2 and June 30, 2009, the MOPS price increased by 84 percent for gasoline (Mogas 92) and 33 percent for diesel. In the same period our pump price has increased by 29 percent for gasoline (from 2,950 to 3,800 riels/litre) and by 16 percent for diesel (from 2,850 to 3,300 riels/litre).

This shows the efforts that Total is making to control the pump price. Unfortunately, it also implies that further price increases will be necessary.

What was the substance of the recent meeting with Minister of Finance Keat Chhon?

In the meeting ... [on June 29] His Excellency Keat Chhon expressed the government's concerns over the increase in oil prices and the potential consequences for inflation and people's purchasing power. Representatives from the oil companies present pointed out that international crude oil prices have doubled in recent months.

Everybody said how they are aware of the impact of oil prices for a country like Cambodia and are making efforts to keep prices low.

On behalf of Total, I pointed out that Total has just blazed a trail in Cambodia by launching Excellium 95.

This is a new-generation fuel that reduces the fuel consumption of gasoline engines by an average of 3.7 percent compared with regular 95 octane gasoline while also cutting pollutant emissions.

Not only does Excellium 95 address environmental concerns, but it also addresses the primary concern of both the government and the customers - namely price.

If you look at one litre of Excellium 95, it sells at 3,950 riels/litre, which is between 0 percent and 2.6 percent more than the super sold by our competitors.

What effect would it have if Cambodia was pumping oil from its own reserves?

Producing crude oil and natural gas in Cambodia and refining it in adjacent countries would increase the supply.

It is less easy to calculate the changes that might occur in the domestic petrol market, but it would certainly help control pump prices. It is also easy to predict that this would help the economy by bringing an influx of revenues and directly or indirectly generating business.

So, as far as Total is concerned, it can only encourage the Cambodian government to move forward quickly with the upstream sector and sign exploration contracts with world-class oil companies - exploring, drilling and hopefully finding and pumping natural oil and gas.

Local and international organisations have voiced concerns over how the government will spend future oil and gas revenues. What is your view on that?

That is a very long debate that happens in many countries. It isn't my role to comment on what NGOs say, and I don't have experience in the upstream sector to judge this.

Companies such as Total do what we can to help put together an appropriate framework that would enable production to proceed transparently and according to the rules so that revenues can benefit everyone.

What are your thoughts about expansion in Cambodia?

We have touched on the upstream sector, and it's no secret that Total has been in discussions with the government to obtain [a number of onshore and offshore] concessions. So that's one possible area.

We do intend to add petrol stations where there is demand, for instance in the newly developed parts of Phnom Penh, but I don't have specific numbers.

We have two stations in both Siem Reap and Sihanoukville. And we have stations in the main cities and on main roads. The most populated parts are covered by our network, and we will extend that to other provinces.

Why does Sokimex and not Total have the contract to supply petrol to government ministries?

We weren't asked to tender, but we would be happy to do so if asked. If there was an open tender for all companies, Total would be happy to participate.

Cambodia has again been criticised for corruption, most recently by NGOs and by the US ambassador. To what extent did Total have to provide incentives to officials here?

I won't comment on this because it is not my role to comment on statements by NGOs and the US Embassy.

Total abides by a very strict code of conduct and complies 100 percent with all the regulations of the countries in which it operates. This applies to our operations in more than 130 countries in the world.