KrisEnergy to extract Cambodia’s first oil in 2019

By: Euan Black - Posted on: October 20, 2017 | Business

The Singaporean company has taken a significant step towards producing Cambodia’s first ever barrel of oil

Kelvin Tang (C), president of KrisEnergy Cambodia, Malaysian Tan Ek Kia (L), chairman of the KrisEnergy Group, and Aun Pornmoniroth (R), Cambodian minister of economy and finance, toast during a signing ceremony in Phnom Penh, Cambodia, 23 August 2017. Photo: EPA/Mak Remissa

KrisEnergy, the Singaporean oil and gas company that operates Cambodia’s offshore Block A in the Gulf of Thailand, has announced that it has reached a final investment decision (FID) “to proceed with the first phase of development for the Apsara oil field”, and expects to begin oil production in 2019.

“FID is another step in progressing the Apsara development within the target timeframe following the formal signing of the petroleum agreement in late August,” Kelvin Tang, KrisEnergy’s chief executive officer, said in a statement, adding that the next stage for KrisEnergy was to source materials, equipment and services.

Once the structure that will house the equipment used to extract the oil has been built, it will be towed out to the field, secured in place and connected to a moored production barge, which KrisEnergy believes will be capable of processing and separating up to 30,000 barrels of fluid per day.

According to Adrian Pooh, a senior analyst at global renewables and energy consultancy WoodMackenzie, KrisEnergy’s announcement marks the beginning of an intense and costly two-year preparation process.

“The development requires significant capital investment, which we estimate at around $145-150m between 2018 and 2020,” he told Southeast Asia Globe.

“Depending on the results from developing Apsara Phase 1A, there is scope for additional phases to extract pockets of resources, much like the gulf of Thailand, where KrisEnergy has much experience. We estimate 8.6 million barrels of recoverable reserves for Phase 1A.”

KrisEnergy purchased their stake in Block A from Chevron in 2014 – ten years after the US oil giants first discovered the Apsara oil field – amid a global slump in oil prices and suggestions of a breakdown in relations between Chevron and the Cambodian government.

According to a 2009 Global Witness report, Chevron had been forced to pay an unreasonable “signature bonus” to the Cambodian National Petroleum Authority – an institution answerable only to Prime Minister Hun Sen.

While the price of oil dropped to a low of $29 per barrel in January 2016, last month it rebounded to a two-year high of $59, an upswing in part caused by Turkish President Recep Tayyip Erdogan’s threat to turn off an Iraqi oil pipeline in response to the country’s Kurdish population recently voting for independence.