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2 Cambodia, Thailand struggle over
petroleum By Andrew Symon
PHNOM PENH - Much international attention
on Cambodia is focused on petroleum discoveries
made by US supermajor Chevron offshore in the Gulf
of Thailand. But the real prize is the overlapping
claims area (OCA) further offshore to the west, an
area long contested with Thailand.
But no
exploration has ever taken place over what all
geologists say is definitely prospective for oil
and gas because of the failure of the Thais and
Cambodians to reach a sensible agreement as to
how
to resolve border issues.
In principle,
they have embraced a joint development approach,
but this is not moving forward because of failure
to agree on a division of the government revenues.
To some advisers close to the Cambodian
government, a major stumbling block is Thai
intransigence. While the Cambodians are now
prepared to make some concessions, the Thais are
still not giving anything, wanting the lion's
share of the benefits.
Certainly, there
can be a lot of national sensitivities involved in
settling border claims, and both Thais and
Cambodians have long memories of old hostilities.
But Bangkok's attitude would not seem to sit well
with all the talk in forums of the Association of
Southeast Asian Nations of regional cooperation
and good feeling, and also not in the context of
the Asian Development Bank-promoted program to
integrate the Greater Mekong Sub-Region
economically.
Shine the light on the
OCA Just what Chevron has found in what are
without dispute Cambodian waters is debatable.
People may in fact be disappointed. All sorts of
numbers are being bandied about, but Chevron
itself is very tightlipped. Its Bangkok office
says the sorts of numbers put forward by
multilateral agencies, non-governmental
organizations (NGOs) and media are speculative and
do not come from Chevron. Where development goes
in its offshore Block A is not clear.
After completion of a recent drilling
round, Chevron said: "All data will be thoroughly
analyzed over the next several months to
recalibrate the pre-drill geological and
geophysical models and to determine the ultimate
resource potential in Block A." There are in fact
counter-rumors now that the petroleum resources in
the block, while maybe still at commercial levels,
are far less than what has been anticipated. Time
will tell. The government has tentatively put
petroleum reserves in Block A at 700 million
barrels.
Better to shine the spotlight on
the 27,000-square-kilometer OCA in the north of
the Gulf of Thailand.
Geologists say it is
very prospective for oil and gas because it covers
a continuation of structures that in adjacent and
truly Thai waters have been producing large
volumes of oil and gas for many years. This is a
different geology from that under the Cambodian
waters to the east of the OCA.
Indicative
of the OCA's prospectivity is that both sides have
awarded blocks over the same areas to major
companies. These include ConocoPhillips of the
United States, Chevron (taking up blocks also held
earlier by Unocal after Chevron acquired that
company in 2005, as well as its existing prior
interests in the OCA), BG (British Gas),
Australia's BHP Billiton, and Japan's Idemitsu,
Inpex and Moeco. None have relinquished their
claims, pointing to the strength of the OCA's
prospects.
The origins of the OCA dispute
date back to borders made more than a century ago
between Siam and the colonial French government
then ruling Cambodia and Laos as well as Vietnam.
A result of this is that today in the northern
part of the OCA, Cambodian- and Thai-claimed
maritime borders are almost perpendicular to each
other.
Efforts to resolve the problem made
some headway at the start of the decade when the
two sides signed a memorandum of understanding in
2001 agreeing that a joint development regime
could be established over the lower two-thirds of
the area while the northern third could be
developed once the maritime border could be
delineated. But the road was still not easy, as
Thailand insisted that this border delineation be
achieved before a joint development area could be
established.
Discussions fell into limbo
after the diplomatic breakdown in Thai-Cambodia
relations in early 2003. This was caused by
attacks on the Thai Embassy and property triggered
by reported remarks by a Thai actress that
Cambodia's revered Ankhor Wat temple complex in
the northwest of the country should be part of
Thailand.
Relations were eventually
repaired and negotiations resumed over the OCA.
The current Thai proposal is that the
disputed area be divided into three strips running
north-south, with the revenue from the central
area to be shared equally. The share from the
outer areas would be weighted in favor of the
country adjacent to that area. But a difficulty
here for Cambodia is that the most prospective
areas are likely to be to the west.
For
its part, Cambodia proposes dividing the area
vertically down the middle and six times
horizontally, creating 14 different blocks.
Revenues from the blocks would be shared equally.
Each country would be responsible for managing
seven of the blocks, allocated in a checkerboard
pattern.
Thailand, however, does not seem
prepared to accept equal division and argues for a
greater share of the fiscal benefits. Yet even
under a 50:50 split of government revenue from oil
and gas production from a joint development area,
Thailand would gain the largest share of the
overall economic benefits.
According to a
study undertaken by UK-based petroleum-industry
consultants Wood McKenzie, 85% of the
development's overall economic benefits would
accrue to Thailand. This was determined on the
basis of gas from the OCA likely being fed into an
existing comprehensive Thai pipeline system in the
gulf. Thailand would
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