Phnom Penh Post - Gov't mulls auctioning off-shore oil blocks
Gov't mulls auctioning off-shore oil blocks
Eddie Morton | Publication date 05 November 2014 | 10:26 ICT
Wed, 5 November 2014
The Cambodian government is considering opening up the country's off-shore oil reserves to a public bidding process amid lacking investor interest in the offshore sites.
Meng Saktheara, secretary of state at the Ministry of Mines and Energy, told the Post yesterday that the government was considering a range of options to drum up interest in five of Cambodia's six oil blocks in the Gulf of Thailand.
"There is not so much competition or interest in them right now. We have had a number of contractors interested but some of them lately have terminated their interest due to the foreseen performance [of the blocks]," Saktheara said.
"We plan to probably have a bidding round to try to attract them and we are currently asking development partners to prepare official tender documents for the public bidding."
According to Saktheara, the first round of the pilot public bidding process, which would allow firms to submit applications to the government outlining their proposed project and financial commitment, could commence as early as next year.
"The perceptions of investor at the moment suggest that we still have a lot to do in regards to developing legal frameworks for the petroleum law, and make amendments to the tax law. So they are waiting."
"This [the public bidding process] will hopefully prove to us how competitive the market is out there for our remaining blocks. We would like to try this as a pilot only – it is where real transparency will come," Saktheara added.
In May, Saktheara said a full oil and gas extraction law and new mining licensing regulations were hoped to be drafted by the end of 2015, with laws surrounding worker safety, social responsibility and biodiversity also in line to be strengthened. At that time he also said that the Cambodian government was considering higher tax rates for oil and gas mining operations.
Of Cambodia's six blocks, Block A has long been the most promising with Singaporean oil and gas company KrisEnergy finalising its $65 million purchase of Chevron's stake in the site last month after the deal was approved by the government on September 17.
KrisEnergy, which already held a 25 per cent interest in Block A along with joint-venture partners MOECO and GS Energy, now holds the lion's share in the site, with a combined 55 per cent.
However, some interest is brewing in Cambodia's remaining off shore oil blocks B, C, D, E and F.
Singaporean firm Mirach Energy on Monday announced it had been granted approval by the Cambodia's Ministry of Environment to develop an Initial Environmental Social Impact Assessment Report (IESIA) to drill Block D, which neighbours the popular Block A on the western edge of the Kingdom's waters.
Operating under the local subsidiary CPHL (Cambodia) Limited, Mirach Energy is now reportedly working to submit the IESIA to the government, and is also negotiating an extension to its oil exploration period.
"With the approval from the Ministry of Environment in Cambodia, the Company can commence on the Environmental Management Plan and drilling plan," the company's November 3 statement says.
Sao Sopheap, spokesman for Ministry of Environment, urged Mirach Energy to provide accurate and expert information in their proposed IESIA.
"For any company investing in Cambodia in a large project like this, be sure the Ministry for Environment will take all proper measures to review their report, to make sure the environment and social implications are safeguarded," Sopheap said.
"The report must show technical expertise, precise data and proof of community consultation. Our length and timeliness of our review process depends greatly on the quality of the company's study."
Mirach Energy did not return request for comment.
Contact author: Eddie Morton
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