MAY KUNMAKARA
Singapore-listed oil and gas firm KrisEnergy is expected to begin extraction from the Block A offshore oil field in the next two weeks as the government is close to finalizing the agreement, a ministry official said.
Ministry of Mines and Energy secretary of state Meng Saktheara said the ministry had already approved most of the agreement, with only small portions remaining for the Ministry of Economy and Finance to look into.
“My ministry has already cleared, in principle, every issue,” he told Khmer Times.
“Just small things remain for the Ministry of Economy and Finance and the company’s technical team to meet and discuss the investment risks. Then everything will be done.
“It’s a good time to start working on their project while the global oil price is recovering slightly,” he added before predicting that extraction work is likely to begin in a fortnight.
He also said that the draft law on oil and gas extraction is due to be finalized soon and would hopefully be approved by the government in early 2017.
KrisEnergy’s vice-president of relations and corporate communications Tanya Pang echoed Mr. Saktheara’s statement, noting that the company was close to completing the agreement pending the finalization on several details.
“Finalization of all agreements relating to the Block A oil development requires inputs from both the Ministry of Mines and Energy and Ministry of Economy and Finance,” she told Khmer Times.
“We have provided our input and we are waiting on both ministries to respond. Major issues have been resolved and only the drafting details are being fine-tuned,” she added.
Ms. Pang said that both ministries have been “proactive and helpful,” adding that the process has been “going well” thus far.
She added, however, that KrisEnergy remained vigilant to the price fluctuations of the oil and gas industry regardless of when it will begin extraction activity.
“As we have seen over the last 24 months, oil prices may go through periods of extreme volatility so the overall commerciality of a project must be taken into consideration rather than today’s market.
“Higher oil prices may also bring higher costs for materials, services and equipment, which must all be taken into consideration,” she said.
Even with the industry’s plunge early this year and its sluggish recovery, she noted that financing was not a concern for the company.
“Despite the tough prevailing financial and industry conditions, we have received support from our key shareholders and bank to proceed with this project. We do not foresee financing to be an issue,” she said.
KrisEnergy has an overwhelming 95 percent stake in the Block A offshore energy concession after it announced in August that it was in negotiations to buy out Mitsui Oil Exploration’s 28.5 percent stake and GS Energy Corporation’s 14.25 percent stake, after the companies approached KrisEnergy to seek a sale of their shareholdings.
The sale was completed on October 7, with the purchases adding to the 52.25 percent stake they owned since buying Chevron’s in 2014.
The Cambodia National Petroleum Authority still has a five percent stake in the 4,709-square-kilometer concession located in Cambodian waters within the Gulf of Thailand.
Officials from the Ministry of Economy and Finance could not be reached for a comment as of press time.
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