Government officials provided few details on Friday as to why a major oil and gas exploration deal with the French petrochemical giant Total appears to have been torpedoed at the last minute.
On July 19 the government announced at a news conference that it had awarded exploration rights to Total for 2,430-square-km within the 27,000-square-km “overlapping claims area” in the Gulf of Thailand as well as 22,000 square-km of land around the Mekong River bordering Vietnam.
Total, however, revealed on Thursday that the government has pulled out of what the company believed was a done deal, and has asked for numerous changes within the contract despite the Council of Ministers having approved the exploration rights just last month.
Council of Ministers spokesman Phay Siphan said that there was a full ministerial session
held on Friday morning during
which governmental negotiations
with Total were not discussed
in depth. He added that he was unable to provide any further details.
A man answering the phone of Cabinet Minister Sok An, who would only identify himself as an assistant, said only that he believed negotiations with Total were still taking place. Mr Sok An is heading up negotiations between the government and Total. Te Duong Tara, director general of the Cambodian National Petroleum Authority said he was too busy to comment Friday.
Jean Pierre Labbe, Total’s general manager for exploration and production in Cambodia, said in an interview on Thursday that Total had learned to its shock about the government’s new contractual requests at a Wednesday meeting between company officials and the Cambodian National Petroleum Authority at Mr Sok An’s private residence in Phnom Penh.
The deal to that date had already taken three years to form, Mr Labbe said, adding that the government’s apparent about face on the deal would speak volumes on foreign investment in Cambodia.
“[The deal] really depends on the Prime Minister,” Mr Labbe added on Friday.
“If he wants to install credibility in the investment climate in Cambodia he will sign the accord. If not then there will be an impact on the government’s credibility,” Mr Labbe said, adding that negotiations with the government were still ongoing but would take a back seat until August 24 when officials are due to meet and hold further discussions over the deal.
Mr Labbe said that the principal problem outlined by Mr Sok An during Wednesday’s meeting concerned fiscal agreements with regard to how much of the revenue derived from the concessions would go to the government and how much would go to Total.
Fabyene Mansencal, first secretary at the French Embassy in Phnom Penh, said that the climate for foreign businesses in Cambodia in light of a possible end to the deal with Total was “a grave question.” But she refused to provide any further details “at this stage.”
A number of private investors also declined to comment on the potential repercussions on investor confidence if the Total deal officially collapses.
Yim Sovann, lawmaker and spokesman for the opposition SRP, said that he had not seen the contract but if the government did not follow through and sign the contract, confidence in the country would be damaged.
“If you continue to do like this, Cambodia will lose confidence from foreign investors,” he said. “Investors bring a lot of money to the country,” he added.
Total’s troubles come just over a week after the English-language Thai newspaper The Nation reported that Cambodia’s Foreign Minister Hor Namhong had informed Thai Prime Minister Abhisit Vejjajiva that no work will take place in the disputed offshore Block 3 until the two countries resolve their disputes along the entire common border.
Prior to Mr Namhong’s visit to Thailand, The Nation also reported that the Thai military was drawing a military contingency plan for the overlapping claims area in response to Cambodia’s announcement that they would permit Total to carry out exploration operations in Area 3.
