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    Southeast Asia
     Jan 26, 2007
Page 1 of 2
ASIA HAND
Cambodia's coming energy bonanza

By Shawn W Crispin

BANGKOK - If the United Nations, World Bank and Harvard University are to be believed, Cambodia is poised to become a major new global energy exporter, with a fossil-fuel windfall that promises to double the country's current gross domestic product (GDP) and potentially lift millions of Cambodians out of poverty.

US oil giant Chevron has indicated a huge oil-and-gas find off Cambodia's south coast, where it has reportedly hit black in four



out of five well tests. Cambodian energy official Te Duong Tara last week estimated that the 6,278-square-kilometer Block A that Chevron is drilling could contain as much as 700 million barrels of oil, or nearly twice the earlier 400-million-barrel estimate.

The World Bank has said that Cambodia's total energy reserves may be as high as 2 billion barrels of oil and 10 trillion cubic feet of natural gas. Depending on future world prices, fuel exports could generate annual revenues upwards of US$2 billion, or several times the current combined amount that Cambodia generates in domestic revenues and receives in foreign aid, the bank has said. Meanwhile, Cambodian energy officials indicated this week that they hope to ramp up production as early as 2009, three to seven years earlier than the World Bank projected as feasible.

Those gushy projections have multinational oil companies lining up to win exploration licenses and production agreements for the other five blocks designated by the government. Competition is hot for the rights to drill the 6,557-square-kilometer Block B, where France's Total SA and China National Offshore Oil Corp (CNOOC) are reportedly dueling over the lead contract. Japanese, South Korean, Kuwaiti, Thai, Malaysian and Singaporean energy companies are also reportedly bidding on exploration stakes - though it's unclear whether the Cambodian government plans to field bids for all six maritime blocks.

The potential capital investment and future joint production agreements promise to transform Cambodia from a net fuel importer into a major regional, if not global, energy player. Depending on the size and accessibility of the proven reserves, energy-export revenues could soon double Cambodia's current GDP, according to a joint study last year by the United Nations Development Program and Harvard University.

To be sure, Cambodian officials could be hyping Block A to spark investor interest in potentially less promising concession areas. Other multinational oil companies have drilled and come up dry at the same Block A where Chevron has reportedly tapped a gusher. Yet Chevron has so far remained mum about its actual findings, which the company will reveal publicly in either April or May. Moreover, Cambodia has a poor record of getting its proven reserves out of the ground and on to the market, including its inability to reach a joint development agreement with Thailand for a rich natural-gas field overlapping both countries' territorial waters.

Fuel wars
Yet the broad consensus is that Cambodia is probably on the verge of an oil-and-gas bonanza.

An energy-rich Cambodia would appreciably enhance the war-torn country's geostrategic significance, particularly as the United States and China aggressively joust for access to new fuel sources around the globe. It is relevant that a US oil company made Cambodia's initial find, and perhaps even more significant that a Chinese energy firm has lobbied heaviest to win majority rights to the geographically adjacent Block B, where a small Chinese software outfit has quietly helped local energy authorities conduct so-called "logging" seismic tests.

Beijing is in hot pursuit of any new Asia-based energy sources that would allow its fuel shipments to bypass the congested Malacca Strait, through which nearly 80% of its oil imports now flow. Chinese leaders have openly expressed their worries that in a potential conflict, US naval vessels could block China's fuel imports from the Middle East at the narrow channel that separates peninsular Malaysia and the Indonesia island of Sumatra.

Indeed, China's spurned $18.5 billion bid in 2005 to acquire US oil giant Unocal was strategic-minded considering that the majority of the targeted firm's reserves were in Asia - a point US Congress members made to block the deal. So from China's perspective, security concerns put a high premium on Cambodia's nearby newfound resources.

Beijing has recently intensified its already strong charm offensive aimed at Cambodia, which in recent years has seen Chinese aid distributed to build key infrastructure and even a shiny new Council of Ministers building in Phnom Penh. Last year Prime Minister Hun Sen requested and will likely receive $200 million from China for infrastructure projects. On January 18, a "goodwill" delegation from the Chinese Communist Party met and held

Continued 1 2 


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