12 August 2014
A
Singaporean oil and gas company has purchased controlling interest in
Cambodia’s only offshore oil reserves for $65 million from U.S. oil giant
Chevron, which has failed over the past decade to extract a drop of oil from
the block located off the coast of Sihanouk ville.
Singapore-based
KrisEnergy, which already had a minority share in the exploration area,
announced Monday it has acquired Chevron’s 30% interest in Block A, raising its
stake to 52.25% and giving it control of the 4,709-sq-km area.
“KrisEnergy
Ltd announces that its wholly owned subsidiary, KrisEnergy (Asia) Ltd., has
entered into an agreement with Chevron Global Energy Inc. to acquire the entire
issued share capital of Chevron Overseas Petroleum (Cambodia) Limited” the firm
said in a media release. “Chevron Cambodia’s 30% participating interest in
Cambodia Block A will reduce to 28.5% once the Cambodia National Petroleum
Authority (“CNPA”) or its successor completes its acquisition of a 5%
participating interest in the block.”
Production
from the initial stage is expected to peak at about 10,000 barrels of oil per
day, according to the statement, an estimate that has come under much scrutiny
as efforts to get oil flowing have repeatedly stalled.
Richard
Lorentz, director of business development at KrisEnergy, said in the statement
that under the company’s operatorship plans for extraction will move “as
quickly and cost effectively as possible.” “We farmed into Cambodia Block A in
2010 and we believe it has all the makings of a significant oil production area.”
Exploration
on the block began in 2002. In 2008, the government estimated that Chevron
would recover 15 to 20% of the estimated 500 million barrels of oil in the
offshore exploration block starting in 2011. But in 2012, Chevron rejected the
terms of a production permit due to the 30% corporate income tax imposed by the
Ministry of Economy and Finance. President of the NGO Cambodians for Resource
Revenue Transparency said the two-year standoff between Chevron and the
government since the permit was rejected raised doubts about the future of
exploration in Block A.
In
November, control of the CNPA was handed from the Council of Ministers to the
Ministry of Mines and Energy, part of a reform effort that saw a severe
reduction in the number of government bodies overseen by Deputy Prime Minister
Sok An, who controls the Council of Ministers. In 2010, Mr. An promised to have
oil flowing by December 2012. The remainder of Block A will remain divided up
between Japanese company MOECO, which has a 28.5% interest, GS Energy with
14.25% and the CNPA with 5%.
Shares in
KrisEnergy rose 2.7% Monday to about $0.60, the biggest daily rise in over a
month, but a steep drop since the beginning of the year when they were trading
at about $1.
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