The first oil to be tapped by Cambodia marks an important milestone for the country that could see it play a role in shoring up energy security in Southeast Asia, experts said.
On Dec 29, Cambodian Prime Minister Hun Sen said his country had begun extracting oil from one of its offshore oil fields the previous day, describing the beginning of oil production as “a blessing for Cambodia”.
“COVID-19 has bothered us, but it cannot destroy our efforts to produce that oil,” Hun Sen said. “This is a key start for Cambodia toward building an oil industry.”
Chheang Vannarith, president of the Asian Vision Institute, a think tank in Phnom Penh, hailed the step forward that Cambodia is taking as an oil producer.
Oil extraction will help boost revenues for Cambodia and improve the prospects for sustainable debt management, Chheang Vannarith said.
He said the effort will also create benefits for the whole region. When compared with other key oil exporters in the region, such as Brunei, Indonesia and Malaysia, Cambodia’s oil production sector is in its infancy.
Under the operations of Singapore-based KrisEnergy, the oil extraction is being carried out at the Apsara oilfield, in Block A of the Khmer Basin in the Gulf of Thailand.
KrisEnergy holds a 95-percent stake in the 3,083-square-kilometer offshore block, with the Cambodian government owning the rest.
Block A is one of six offshore blocks that Cambodia has awarded to companies to carry out exploration.
In a statement, KrisEnergy confirmed that production began on Dec 28, with extraction from a single development well. Production will increase as four more wells are installed.
According to the statement, production is expected to reach a peak rate of about 7,500 barrels per day once the drilling program is completed in mid-February.
Kelvin Tang, chief executive officer and president of KrisEnergy’s Cambodian operations, said the event is “an important strategic and operational milestone” for the company.
“In the context of the COVID-19 pandemic in 2020, progressing Apsara to first oil has been a tremendous achievement,” said Tang. “Our task now is to complete drilling of the four remaining wells, stabilize production and monitor performance.”
Han Phoumin, a senior energy economist at the Jakarta-based Economic Research Institute for ASEAN and East Asia, said that Cambodia relies heavily on imports of coal, oil, and electricity.
Cambodia imported all its required petroleum products from Singapore, Thailand, and Vietnam, according to a report in 2018 by Cambodia’s Ministry of Mines and Energy.
Cambodia’s fuel import dependency “could bring many energy security risks” if the nation fails to properly manage energy consumption and oil stocks, Phoumin said.
As Cambodia works to develop its energy infrastructure, Phoumin said the country needs to learn more about “how to manage the resources effectively”. It also need an adequate energy policy.