Cambodia could begin crude oil production for the first time as soon as 2009, bolstering the national economy and providing cheap energy to citizens, National Petroleum Authority General Director Te Doung Tara said Tuesday at the Cambodia Economic Forum.
Oil exportation is expected to follow soon thereafter, he told government officials, diplomats and investors at the event held at the Council for the Development of Cambodia.
Te Doung Tara added that although there are steps that remain to be taken, such as completing a feasibility study and making legal arrangements, he expected production to reach 500 million barrels of crude oil and to yield 3 to 5 trillion cubic feet of natural gas reserves within three years. Those rates, he said, should be sustainable over four decades.
“We are very optimistic,” Te Doung Tara said. “I would like to appeal that we need to come out with an early production as soon as possible.”
Skeptics of the proposed new industry, however, said much work must be done before oil production and exportation becomes a reality.
US oil giant Chevron Corporation, formerly ChevronTexaco, discovered oil off Cambodian shores in January 2005 when the conglomerate’s four exploration wells found significant pockets of oil. Since then, Chevron has signed a drilling deal with the Cambodian government, under which they plan to drill another ten wells this June.
Prime Minister Hun Sen told the forum that the country was many years away from having a healthy oil industry.
“Oil and gas in Cambodia can either be an opportunity or a threat. Indeed, oil and gas will be a new revenue stream. That is an opportunity to develop Cambodia’s economy. This is a positive aspect,” he said. “[We must] ensure that Cambodia enjoys an oil blessing and is not plagued by an oil curse.”
He said the country must work to invest revenues from oil to “enhance long-term economic growth and social equity,” and must develop appropriate petroleum taxes. He did not make his own projections on a production start date.
In a brief analysis of the Cambodian economy, Harvard University professor David Dapice confirmed Hun Sen’s statements. Dapice said strong revenues from oil could help Cambodia become a regional player, allowing the country to invest internationally and supporting the growing domestic private sector.
However, he warned that oil production could just as easily destabilize the country’s economy, because international oil and gas markets are volatile.
Speaking by telephone after the conference, Indochina Research Director Tim Smyth said Cambodian oil production could be a boon to the country, especially in reducing national energy prices.
“The cost of power is critical,” he said, adding that the past nine months of high energy prices have put a damper on household spending, an indicator of poor economic health. “The first goal is sustaining and lowering [energy] costs for Cambodians. I think any exports are going to be a bonus,” Smyth said. “On the face of it, it seems to be a very good thing. It’s hard to see how it could be bad.”
Economist and petroleum expert Mem Den disagreed, saying that the Petroleum Authority’s projections were nothing more than wishful thinking and that hopes should not get too high. He said developing proper oil production alone would take at least seven years, making 2013 a more reasonable starting date for production.
“I think oil production could be good. Not very, very good, just good,” he said. “After the year 2010, ask me again.”
