French, Chinese Oil Firms Vie for Offshore Block

French petroleum giant Total is vying with a Chinese oil company for the rights to explore for petroleum in Cambodia’s offshore Block B, a 6,551-square-km section of seabed 250 km off the coast, the Cambodian National Petroleum Authority said Wednesday.

Men Den, director of petroleum exploration at the authority, declined to name the Chinese firm in question. But representatives from the Chinese National Petroleum Offshore Oil Company, the third largest oil firm in China, met with Prime Minister Hun Sen in July and expressed interest in exploring Cambodia’s offshore oil.

“Total is interested in offshore but the negotiation is very slow,” Men Den said. “The Chinese company needs it also but it depends on which company can offer the most to the Cambodian government and the Cambodian people,” he said.

Officials from Total headquarters in Paris will come to Cambodia in October to make a presentation that will also include a bid for rights to explore for oil onshore, he said.

“Total are coming next month but we do not know what day,” he said.

Total has set its sights on Block B, which lies adjacent to Block A, where US-based Chevron has found significant reserves of petroleum after drilling test wells last year. Cambodia has a total of six exploration blocks offshore. Block A and Block B are thought to have the most potential for oil deposits.

Men Den said that new studies show increasing potential in Block B and confirmed that Thai company PTTEP was already awarded a 30 percent exploration stake in the block last year.

In August 2005, Singapore Petroleum Company, Malaysia-based Resourceful Petroleum and Australian firm Cooper Energy Limited announced they had also acquired the remaining percentage stakes for exploration in Block B.

Those four companies are likely to sell their stakes in the block to the larger company that wins the rights to it.

Resourceful Petroleum has stated it paid $800,000 for a 10 percent exploration stake in the block.

PTTEP may hold onto its stake rather than selling to a bigger company, Men Den said.

“[PTTEP] may still have 30 percent, it depends on the international companies,” Men Den said.

Exploratory rights do not entitle firms to extract the oil they discover; this requires further negotiations with the government.

Jean-Daniel Gardere, head of the economic and trade commission at the French Embassy, said that if the Total deal goes through it would significantly increase France’s presence in Cambodia.

He said that the hundreds of millions of dollars that Total, a private company, would potentially invest in Cambodia, could far eclipse the approximately $200 million that Society Concessionaire de L’Aeroport, a French-Malaysian joint venture, has spent at the Siem Reap and Phnom Penh airports.

He added that in addition to Block B, Total is interested in a large inland area that would cover “environmentally sensitive” areas.

The Tonle Sap basin, which extends approximately 30,000 square-km into northeastern Cambodia, has been tagged by the government as a potential gas and petroleum exploration site.

Environmentalists are sure to find such explorations in the bio-diverse Tonle Sap basin a controversial proposal.

“When you look at the environmental sensitivity of these areas and Cambodia’s need to develop tourism in a sustainable way, I think a company with a good track record like Total is better for Cambodia,” Gardere said.

“With Total’s investment, many smaller firms would also come along catering to the exploration process,” he added.

But Total has not always enjoyed a pristine reputation in the region. In 1999, New York-based Human Rights Watch said a $1.2 billion oil pipeline from Burma to Thailand partly developed by Total was raising human rights controversy.

“Press accounts reported that Burmese forces providing security for the project continued to commit violations against villagers along the pipeline route, including killings, torture, rape, displacement of entire villages, and forced labor,” Human Rights Watch claimed at the time.

Rights Watch said that Total defended its presence, arguing that the pipeline would result in sustainable, long-term economic and social benefits to villagers living near the pipeline, and lasting benefits to the Burmese generally.

In a February 2005 report, the Burma Campaign UK also had tough words to say about Total, which it claimed may provide an annual revenue of up to $450 million to the Burmese military junta.

“Total’s investment in Burma has helped the regime to build its military capacity and therefore its control of the country’s population. It has therefore impeded the prospect of democratic change,” BCUK claimed.

Total Cambodge Director General John Wilson said by telephone on Wednesday that he could not comment on the Cambodia deal because he is in charge of the distribution of refined petroleum rather than exploration.

“I am not going to comment on the specifics of the deal,” he said. “Those working on the deal are in Paris.”

Total officials in Paris had not responded to e-mailed requests for comment by Wednesday evening.

 

 

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