Int’l Group Discusses Feasibility of Gas Pipeline

A group of international companies will study next month whether building a gas pipeline from one of Cambodia’s offshore exploration sites to Sihanoukville would be feasible, parliamentarian Than Sina, who chairs the National Assem­bly’s planning and investment commission, said Wednesday.

US oil giant Chevron, Japanese firm Mitsui, and Korean electronics group LG will together examine the feasibility of constructing the pipeline, Than Sina told a conference on oil organized by the NGO Oxfam in Phnom Penh.

No company has yet been selected to construct the pipeline, which would transport natural gas from block A, where Chevron has been drilling test wells, he said.

Oil will be taken from block A to Sihanoukville by tanker, but it is not yet clear whether a new refinery would be built in Cambodia, Than Sina said.

Attempts to contact Chevron, Mitsui, and LG were unsuccessful.

The pipeline study brings Cam­bodia one step closer to the much-anticipated production of oil and gas, which for most developing na­tions has turned out to be a curse rather than a blessing.

Speaking at the same conference, Ian Gary, Oxfam America’s pol­icy adviser for extractive industries, said oil tends to generate a lot of money but few jobs.

In Chad, which started producing oil in 2003, Exxon Mobil has invested $4.2 billion dollars, which has resulted in just 1,000 new jobs for locals, he said.

Oil also tends to further concentrate economic activity and political power, potentially swamping out other productive sectors of the econ­omy and leading to long-term instability, he said.

Governments often take out oil-backed loans on unfavorable terms with commercial banks, which leads to mushrooming foreign debt, Gary said.

Ramped-up spending on public programs is often inefficient, he added.

One important innovation in Chad—where the development of the oil sector was partly financed by the World Bank—was the creation of an oversight committee comprised of government officials and members of civil society to approve disbursements of oil revenues for government projects, he said.

But things did not go well in Chad and the great hope of poverty reduction from oil wealth never materialized, Gary said.

One problem was that the oversight committee managed only a fraction of Chad’s total petroleum revenues, and did not have adequate investigative and enforcement powers, he said.

Gary said transparency and a robust legal framework are essential in avoiding the oil curse.

But they are not always enough: Chad’s relatively robust laws on petroleum revenue management were undercut by the absence of a strong anti-corruption law and a functioning judiciary, Gary added.

Than Sina said that Cam­bodia needs a law on petroleum and gas.                         “At the National Assembly we are still waiting for that,” Than Sina added.


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