Cambodia to revise oil contract, paving way for first oil

KrisEnergy

20/03/2017 06:58

* Agreement to kick off development at Block A in Gulf of 
Thailand 
    * KrisEnergy in talks with investors for project 
    * Development cost estimated at below $200 mln - KrisEnergy 
 
    By Prak Chan Thul and Florence Tan 
    PHNOM PENH/SINGAPORE, March 20 (Reuters) - Cambodia will 
sign a revised production sharing contract this month with 
Singapore-listed explorer KrisEnergy to develop an offshore 
field that could finally produce the country's first oil after 
years of delays, a government official said. 
    Cambodia is revising some fiscal terms in the 2002 contract 
for the Cambodia Block A field in the Khmer Basin, after 
KrisEnergy Ltd  KRIS.SI  became the sole stakeholder last year. 
The government and the company declined to elaborate on the 
changes. 
    "There will be an agreement signed in March," Meng 
Saktheara, a secretary of state at the Ministry for Mines and 
Energy, told Reuters.         
    Cambodia has struggled to develop oil fields in the Gulf of 
Thailand, as few companies are willing to invest in the area 
following the 2014 global oil price slump. 
    KrisEnergy hopes to begin initially producing around 8,000 
barrels per day of low-sulphur oil early next decade. But it 
first needs to find a partner to back the development, which is 
estimated at below $200 million. 
    "We're not in a rush to farm things out. What we are looking 
for are good credible and stable partners that can share the 
risk and cost of the project," said Kelvin Tang, KrisEnergy's 
chief operating officer and president of its Cambodia 
operations.      
    The company is likely to draw interest from state-owned 
companies or small-scale explorers backed by private equity, as 
international oil majors continue to sell mature or late-life 
assets in Asia, Wood Mackenzie analyst Andrew Harwood said. 
    "While it still needs to be finalised, Cambodia employs a 
PSC regime, which compares favourably with other producing 
countries around SE Asia, reflecting the current lack of 
activity and the need to attract upstream investment," he said. 
    He added that the project could be brought onstream by 2020 
at the earliest, but would likely face a year or two delay due 
to the challenges facing KrisEnergy.             
    As its previous operator, U.S. oil giant Chevron  CVX.N  
struck oil in the block a decade ago, but never started 
production due to disagreements with the government over final 
investment terms. 
    KrisEnergy bought Chevron's stake in the block in 2014. 
    The remaining shareholders, Japan's Mitsui Oil Exploration 
Co Ltd and South Korea's GS Energy Corp  GSHOLE.UL , sold their 
shares to KrisEnergy last year. 
    Cambodia's government will take a 5 percent stake in the oil 
block.     
 
 
 
 (Editing by Randy Fabi) 
 ((Florence.Tan@thomsonreuters.com; +65 6870 3497; Reuters 
Messaging: florence.tan.thomsonreuters.com@reuters.net)) 
 
Keywords: CAMBODIA OIL/