Oil Refinery Will Lower Gas Prices, Government Says

Cambodia’s first post-Khmer Rouge oil refinery is slated for construction in Preah Sihanouk province under a $620 million deal between a local firm and a Chinese state-owned company.

Under the deal—inked at the Sofitel hotel in Phnom Penh on Wednesday by Cambodian Petrochemical Company (CPC) and China National Petroleum Corporation subsidiary CNPC Northeast Refining and Chemical—phase one of the project should be complete by 2018, enabling the plant to refine 2 million tons of oil per year.

While exploration of Cambodia’s own oil reserves remains far off, the government hopes the refinery will put a dent in the domestic price of gasoline by allowing the import of unrefined crude.

“Oil will come from Middle Eastern countries like Iran and Iraq,” CPC CEO Han Khieng said on the sidelines of Wednesday’s signing ceremony, adding that 85 percent of the petroleum produced would go toward the domestic consumer market.

Meng Saktheara, a secretary of state of the Ministry of Mines and Energy, said yesterday that the refinery would provide welcome competition in the local market but predicted that it would take at least five years before significant employment benefits were realized.

“We are facing a big challenge in terms of laborers who are skilled in oil refining, and so I think the jobs that would be offered to domestic laborers would be low-skill. So the benefits for Cambodian people would be few,” he said.

The refinery will be built on 390 hectares of land in Preah Sihanouk province and construction will begin in November, Mr. Khieng said, adding that an environmental impact assessment would be conducted soon.

Lim Limin, CEO of CNPC Northeast, said during a speech Wednesday that details of the second phase of the project, which will increase the refinery’s capacity to 5 million tons per year, were too technical to explain.

“We will manage the project well—safely with environmental protection,” he said.

Cambodia’s last oil refinery, also in Preah Sihanouk, was bombed by the U.S. in 1975 during the so-called Mayaguez incident, a disastrous attempt by U.S. troops to rescue Khmer Rouge-held hostages off the coast of Sihanoukville.

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