Oil Revenues Long Way Off In Claims Area

Thai, Cambodian ministers pave way for discussions on contested maritime space

After years of deadlock over disputed waters in the Gulf of Thailand that are widely believed to be rich in oil and gas reserves, Thailand’s energy minister, Pi­chai Naripthaphan, yesterday said that coming to a power sharing agreement with Cambodia was on track, though it could take years before either government sees any revenues.

Speaking to reporters after a meeting with Deputy Prime Minister Sok An and Minister of Industry, Mines and Energy Suy Sem, Mr. Pichai said that even if talks go smoothly, it could still take another decade before any oil or gas is actually extracted from the 27,000 square km of contested maritime space, despite some of the world’s biggest oil companies having already been granted exploration licenses.

“Today we have a good meeting. Both Thai and Cambodian have a good intention to strengthen our relationship, and we hope that in the future, we are able to work on the overlapping claims area,” he said. “Once we’re able to finalize this, the oil and gas will come out in eight to 10 years.”

Since Thai Prime Minister Yingluck Shinawatra and her Pheu Thai party came to power in July, previously frosty relations between Thailand and Cambodia have thawed and optimism over reaching an agreement on the so-called overlapping claims area (OCA) has risen.

In August, Cambodia’s petroleum authority announced that it would like to renew discussions with Thailand in order to find a solution over the OCA. The announcement came after Thailand in 2009, under the government of Abhisit Vejjajiva’s Democrat Party, canceled a 2001 memorandum of understanding that called on the two countries to jointly develop the disputed waters in the Gulf of Thailand. The MOU also barred both countries from developing the area until a comprehensive solution was reached.

The move came in retaliation to Prime Minister Hun Sen’s decision to appoint fugitive former Thai Prime Minister Thaksin Shinawatra—Ms. Yingluck’s older brother, who is wanted at home for an abuse of power conviction—as his economic adviser.

Mr. Pichai said that before any further talks are held on the OCA, the Thai Parliament would have to approve the 2001 MOU, though he did not say when this would happen.

“The intention of Thailand is to see Cambodia prosper,” he said.

Also present at yesterday’s meeting between Mr. Sok An, who is chairman of Cambodian National Petroleum Authority, and Mr. Pichai were several board members of Thailand’s PTT Exploration and Production—which already has an exploration license in one of Cambodia’s offshore blocks—and the Electricity Generating Authority of Thailand.

Spokesman for the Council of Ministers Phay Siphan said that while a roadmap for future negotiations had not been etched out during the meeting, demand for petroleum in both countries was rising, creating the incentive for both countries to work toward an agreement.

“Both sides said that oil and gas are necessary and needed in the two countries, so there should be no obstacles,” he said.

So far, Cambodia has awarded exploration rights in the OCA to the French oil firm Total. Last year, Total paid Cambodia $28 million in contract fees and signature bonuses and has since seen its project remain idle while Cambodia and Thailand try to reach an agreement. Chevron Corp has also been granted rights inside the OCA.

During yesterday’s talks, Mr. Siphan said, Cambodia agreed to construct a new power plant in Koh Kong province in order to sell electricity to Thailand. Thailand also agreed to accept 10 Cambodian students to undergo training in the oil and gas industries every year.

 

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