In the run up to the new year, the Prime Minister of Cambodia, Hun Sen, announced that the country had become an oil-producing country.
In a social media post, Hun Sen announced:
“The year 2021 is coming and we have received a huge gift for our nation—the first oil production in our territory.”
Among the benefits this will bring, he referred to:
“National budget revenue, economic benefits from the diversification of the oil industry and national capacity building in this sector.”
The start of production in Cambodia has been a long time coming. Oil was initially discovered in the Gulf of Thailand by Chevron, the owner of the Texaco lubricant brand, back in 2004, but it was unsuccessful in reaching a development agreement with the Cambodia government. The fall in oil prices that started in 2014 also deterred other oil companies from investing in the region.
A turning point was reached when KrisEnergy, an independent upstream producer with a focus on Southeast Asian hydrocarbon basins, reached an agreement to develop Block A, which is about 1,200 square miles, in the Gulf of Thailand’s Khmer basin. The company bought Chevron’s stake in the region in 2014 for $65 million, meaning it now has a 95% stake in Block A.
Despite the pandemic having impacted the demand for oil, the Cambodian government is looking to earn about half a billion dollars from the initial development phase. It may also help the country to diversify its energy mix, which currently mostly relies on a mix of coal and drought-hit hydropower.