Rush for Cambodia's Oil begins

CAMBODIA

Cambodia has huge offshore oil fields whose expected worth far exceeds its current GDP. Experts fear that only the government, one of the most corrupt in the world, might benefit. An agreement with Thailand must still be worked out to develop fields in the Gulf of Thailand.

Phnom Penh (AsiaNews/Agencies) – Oil companies have begun lining up for licenses to tap Cambodia’s vast oil and gas fields, but experts are wondering whether this new wealth will be a blessing for the country. Firms from China, Japan, South Korea, Malaysia, Singapore, Kuwait, Australia, and France have come knocking on officials’ doors to get permits to explore and develop the country’s energy riches. US giant Chevron Corp. has already drilled in the Gulf of Thailand in the last two years and found oil in five oil wells.

According to several studies conducted by the United Nations, World Bank, Harvard University, and other reliable institutions, Cambodian reserves could contain as many as 2 billion barrels of oil and 10 trillion cubic feet of gas. Based on the current world price of oil and gas, this may provide Cambodia with annual revenues of US$ 6 billion a year over the next two decades, an amount more than the country’s gross domestic product which is only about US$5 billion a year.

Cambodia is one of the world’s poorest countries. Some 40 per cent of its population of 14 million live below the national poverty line of 50 cents a day, 50 per cent of children never complete their primary education, 30,000 children die every year from preventable diseases, and only half of the countryside has access to electricity.

Many experts fear a repeat of what has happened in many other developing countries where massive influx of oil money enriched elites without improving the standards of living of the population.

The best example is Nigeria. Since the discovery of oil in the 1970s, the African country has exported more than US$ 400 billion in oil, but that has not benefited its people, 70 per cent of whom continue to live on less than $1 a day. Moreover, the country is carrying a US$30 billion debt.

Cambodia is still viewed as one of the most corrupt countries in the world with the ruling Cambodian People’s Party using violence in maintaining its power. But in recent years, Prime Minister Hun Sen's government has had to accept some reforms and show some more respect for human rights in order to get foreign aid which represents about 60 per cent of its working budget. However, soon it will no longer need Western aid and could disregard human rights groups altogether.

In fact, Prime Minister Hun Sen’s regime has already created a Cambodian National Petroleum Authority under his full direct control over the oil wealth.

Sokimex, Cambodia's leading conglomerate, is expected to play a key role in the energy sector. It is majority-owned by Sok Kong, a long-time friend of Hun Sen.

Cambodia’s main opposition party led by Sam Rainsy publicly accused the two companies of tax and customs-duty evasion on imported petroleum products and complained last year that domestic retail oil prices failed to fall in line with declining global oil prices, which fell by about 25 per cent between mid-July and November last year.

Cambodian oil fields are very important for China because they would allow its fuel shipments to bypass the congested Malacca Strait, through which nearly 80 per cent of its oil imports now flow.

Chinese leaders have also openly expressed concerns that in a potential conflict, US naval vessels could block China's fuel imports from the Middle East at the narrow channel that separates peninsular Malaysia and the Indonesia island of Sumatra.

Beijing has recently showered Cambodia with aid worth hundreds for millions of dollars. On January 18, a "goodwill" delegation from the Chinese Communist Party met and held undisclosed discussions with senior members of Hun Sen's ruling Cambodian People's Party (CPP).

Full-scale production of oil is not expected earlier than 2009 and Cambodia must still reach an agreement with Thailand on an overlapping area claimed by the two neighbouring countries in the Gulf of Thailand. Negotiations between the two have been going on for years but have not produced any result. (PB) Read more!