Cambodia Celebrates First Drop of Offshore Oil Despite Major Petroleum Setback

Activists say developer KrisEnergy’s bankruptcy is a major embarrassment for the government.
Cambodia Celebrates First Drop of Offshore Oil Despite Major Petroleum Setback Cambodia's Minister Energy and Mines Suy Sem hands over the first drop of oil extracted from an offshore petroleum deposit to Minister of Defense Tea, Banh during a ceremony in Phnom Penh, Cambodia, June 9, 2021.
Posted June 9 on the Facebook page of Defense Minister Tea Banh

Cambodia’s government held a ceremony Wednesday to commemorate the delivery of the first drop of oil extracted from the country’s offshore deposits, but the partner company that produced it went bankrupt days earlier and activists said oil is not the answer to the country’s ailing economy.

During the ceremony at the Win-Win Monument in Phnom Penh, Tea Banh, Cambodia’s minister of defense, described the delivery of the first drop, enshrined in a gold-mounted glass container, as “an important first step for the country to build national capacity and its oil, gas, and energy industry.”

Cambodia has for decades hoped to develop the means to tap into its offshore deposits, finally teaming up with Singapore-based KrisEnergy in 2017 in a deal that was supposed to start producing in 2019.

But KrisEnergy declared bankruptcy only five days before the ceremony, meaning Cambodia may not soon become an oil producer after all.

Activists see the setback as a huge blow to Cambodia’s oil ambitions and an embarrassment to the regime of Hun Sen.

“I don’t see any pride or blessing for the Cambodian people, but a disgrace.  It is not a disgrace for Cambodia or Cambodian people. It is a disgrace for Hun Sen,” Alejandro Gonzalez-Davidson, founder of local environmentalist group Mother Nature, told RFA’s Khmer Service.

“Hun Sen should offer an apology and explain to the Cambodian people as to why just a few months ago he said Cambodia would acquire millions of dollars by becoming an oil-producing country,” he said.

Gonzalez-Davidson said that Cambodia has long allowed foreign companies to explore the possibility of exploiting the country’s oil reserves, but they have failed each time, calling the oil drop handed over during the ceremony “the last drop of the Hun Sen regime.”

Tea Banh acknowledged during the ceremony that Cambodia’s oil plans had hit a snag, but that critics of the government were looking for ways to fabricate destructive stories to hinder the development of the country.

“There are people who interpret things in a way to destroy us… If they see a benefit from destruction, they just do it,” he said.

RFA attempted to contact Chiep Sour of the Ministry of Mines and Energy’s General Department of Petroleum, but he said he was too busy to answer questions.

Other activists said the handover ceremony of the drop of oil, which had been extracted to much fanfare in Dec. 2020, was another attempt to distract the public from Cambodia’s human rights violations and economic woes.

Thuy Kimleak, a resident of the western province of Battambang, told RFA that despite the government’s promises, she has not seen any results from Cambodia’s foray into oil production.

“As a people, I want Hun Sen to show how the drop of Cambodian petroleum will improve our lives. We buy gas every day, so if we’ve found oil then this should be really great, but so far we don’t see anything,” she said.

San Mala of the Cambodian Youth Network said he was confused by the government holding the handover ceremony on the heels of KrisEngery’s bankruptcy.

He said the government should resume dialogue with stakeholders to ensure such failures are not repeated.

“We have questions regarding the procedures that the government went through to screen the oil investment company. Did they carefully study the company’s profile or scan for loopholes, because as far as we know the company has had many scandals,” said San Mala.

In Feb. 2021, Hun Sen told the press that Cambodia had the capacity to extract 1,200 barrels per day from its first oil station in Sihanoukville, and that this would increase as development nears completion.

At the time he said the amount of revenue the country could generate from a year of oil extraction would be only slightly ess that brought in from one million foreign tourists.

According to an April report by the UK-based oil industry news outlet Energy Voice, KrisEnergy had been facing financial troubles and was essentially gambling its continued existence on its hopes of being able to extract an optimistic 7,500 barrels per day and the Ministry of Energy and Mines had planned to export between 270,000 to 300,000 barrels by the end of May, but output between February 23 and March 30 reached a daily rate of less than 3,000 barrels.

The ministry at one time even gave warning to KrisEnergy that it needed to turn the situation around, or face consequences that could include a fine or a cancellation of the company’s agreement, according to an April Nikkei Asia report.

Reported by RFA’s Khmer Service. Translated by Sum Sok Ry. Written in English by Eugene Whong.


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