Cabinet Minister Sok An warned Thursday against irrational exuberance before the start of Cambodia’s oil production, saying the country’s deposits are unknown and may take time to be developed.
“We are cautioned by experienced oil men to be most cautious in our expectations,” Sok An told a Phnom Penh investor conference. “Nature is highly variable in its generosity to nations,” he said.
Sok An, also chairman of the Cambodian National Petroleum Authority, made the remarks as part of an address on natural resource development during which he also scolded those concerned that Cambodia’s future oil revenues may be squandered.
Sok An said authorities were well aware of the pitfalls facing any attempt to manage oil income.
“We have received many questions about what we are going to do with the revenues from the oil and gas,” he said.
“I think my reaction is that no question is more stupid than this question.”
Sok An’s comments echoed those made Wednesday by Prime Minister Hun Sen, who opened the conference by saying that speculation about the extent of Cambodia’s hydrocarbon deposits was “highly premature” but that a planned Sihanoukville oil refinery may begin operating in 2010.
Together the remarks suggested an attempt to dampen expectations aroused by US oil giant Chevron’s 2005 discovery of significant deposits in the 6,300-square-kilometer offshore Block A.
In a report released last month, the UN Development Program said research conducted by the CNPA, Harvard University and the Supreme National Economic Council found that oil revenues “may be the single biggest threat to the country’s well-being and longer-term stability.”
Officials have said that a law on the petroleum industry is being developed and that Cambodia is considering whether to adhere to the Extractive Industries Transparency Initiative, an international good-governance pact on managing revenues from natural resources.
Participants at Thursday’s conference also stressed the importance of production sharing agreements to ensuring that Cambodia does not get the short end of the stick in agreements with petrochemical firms.
Marae Ciantar, senior associate at the law firm Allens Arthur Robinson, which has provided legal advice to the government on the oil industry, said that unlike some other countries, Cambodia already has an international standard production-sharing framework in place.
“I don’t think this has been fully appreciated,” he said.
Sin Fong Wong, country manager for the International Finance Corporation, the private sector arm of the World Bank, said production sharing would allow Cambodia to direct corporate dollars toward social ends.
“If you go down the path of having a [production sharing agreement] structure put in place…the oil companies will be working as a contractor for the Royal Government of Cambodia and that gives you the opportunity to shape the expenditures,” he said.
