SINGAPORE, Oct 27, 2006 (Dow Jones Newswires) Sitting on billions of dollars worth of black gold, Cambodia is on the way to lifting itself from abject poverty, but getting the money into the bank seems fraught with difficulty.
The government anticipates oil will be being pumped out of rich offshore deposits from 2009 but just who will be doing it, how much will be produced then and in the years ahead and what will happen to the profits is still a matter of conjecture.
Two factors may have a decisive impact on this - ownership of some offshore areas are contested by Thailand, and China's very long game with the Cambodians puts it in a good position when political decisions on oil extraction and concessions are made.
A consortium led by US oil giant Chevron Corp. (CVX) announced significant offshore finds last year, and companies from
But the situation is very murky, as
The dispute between the two countries over the maritime boundary has dragged on since the early 1970s.
In 2001, the two signed a Memorandum of Understanding on joint development of oil and gas in the disputed areas, but no significant moves have been made since then.
Just How Much Is There?
But by the end of 1997, all holders of production-sharing contracts had relinquished their blocks, partly due to weak global oil prices. Things then stalled until 2002 when
"The government of
The government has yet to release official data on its oil reserves. But according to a study by the United Nations Development Program and
As far as is known, much of Cambodia's onshore oil and gas reserves are located in its Tonle Sap Basin, but to date no serious exploration has been done.
Japan National Oil Corp. conducted some airborne gravity and magnetic surveys in the areas in 1990s.
Singapore Petroleum Co. (S99.SG), Dallas-based X-Change Corp.,
However, among them, Chinese oil companies may well grab the biggest share, mainly because of the historically- close relationship between the two countries.
French oil giant Total SA (TOT) is competing with a Chinese oil company for exploration rights to offshore Block B, according to Cambodia Daily newspaper recently.
It didn't say which Chinese firm was involved but noted that officials from Chinese National Offshore Oil Co., or CNOOC, had met
"Chinese companies are in a more favorable position (compared with other countries)," said Sheng Lijun, senior fellow at the
Currently, China National Petroleum Corp. (CNPC.YY), CNOOC, and Zhuhai Zhenrong Co. are all planning to, or already participating in oil and gas exploration.
China National Chemical Engineering Group Corp. will help build a 40,000-barrel-a-day oil refinery at the southern town of
The refinery, with planned total investment of $420 million, is expected to come on line by 2009.
For the 13 million Cambodians, one third of whom live below the poverty line, oil revenues could be a bonanza.
But as the inhabitants of
Added to that,
According to the Global Competitiveness Index 2006 compiled by the World Economic Forum,
Oil and gas revenues "could promote significant socioeconomic development (in
But a sudden inflow of money, as happened in many poor countries where oil was found, has often led to high-level corruption and political battles for access to this wealth.
"In the absence of mechanism to improve their use and broaden their impact, oil receipts could lead to a further concentration of wealth and greater social tension. They may also lead donors to curtail their aid," the ADB's 2006 Asia Development Report said