Oil production delayed

Tuesday, 31 January 2012
Tom Brennan
The Phnom Penh Post

The Kingdom’s much-hyped deadline of tapping its first oil reserves by December 12, 2012 – or 12-12-12 – will not be met, a government spokesman said yesterday.

Chevron Overseas Petroleum (Cambodia) Ltd, which is now exploring the Kingdom’s offshore Block A in the Gulf of Thailand, has notified the Cambodian government that no oil extraction would take place this year, the spokesman said.

“2012 is not possible,” Ek Tha, spokesman for the Council of Ministers, said yesterday by phone.

A representative from Chevron early this month met with the Cambodian National Petroleum Authority to deliver the news, he said, though the reasons for the decision were not discussed.

Ek Tha would not disclose the name of the Chevron representative, although Chevron Overseas Petroleum (Cambodia)’s current president is Steve Glick, who arrived in Phnom Penh last April.

While a new tentative schedule was raised at the meeting, neither party was ready to announce a new deadline for oil production in the Kingdom, Ek Tha said.

The Cambodian government and Chevron plan to release a joint statement on the status of Block A and their partnership sometime in the first quarter, according to Ek Tha.

When asked if the Cambodian government was frustrated by the delay, as Prime Minister Hun Sen at one point had threatened to cancel Chevron’s contract if oil was not produced by 12-12-12, Ek Tha said both parties remained committed to extracting oil from Block A.

“We want to have oil produced as quickly as we can, but we have to work with Chevron as a partner,” he said.

“We want the oil and gas to come out to serve the social development of Cambodia, and the Cambodian people want to see that happen.”

Gareth Johnston, Chevron International Pte Ltd’s Asia Pacific media advisor based in Singapore, responded to questions yesterday by email, saying: “We are continuing to work with the Royal Government of Cambodia to move the Block A project towards a final investment decision.”

He did not answer questions about Chevron’s meeting with the Cambodian government, what prompted the delay or when the company expects to produce oil in Block A.

Chevron (Cambodia)’s Steve Glick told the Post in August that the company believed Block A was financially viable, though “relatively small”.

He also noted that Block A was technically changing to drill. The block’s oil is spread out among smaller pools, rather than one large reservoir, making it harder to reach, Glick said.

While he would not at the time provide details of any potential production of Block A, he did say that Chevron had drilled 18 wells and invested US$160 million exploring the area.

“Technically, Chevron’s ready to go … And we’re working through the remaining issues with CNPA with the target of getting a final investment decision this year,” Glick said at the time.