Hun Sen declares oil extraction a ‘failure’ for Cambodia

PHNOM PENH (AFP) – Premier Hun Sen declared Cambodia’s attempt at oil extraction a “failure” yesterday, just eight months after the kingdom achieved its long-awaited milestone of producing its first drop of crude.

In late December the nation announced it had extracted oil from its waters in the Gulf of Thailand which experts believe boasts significant deposits.

But the operation, led by Singapore’s KrisEnergy, was endangered after the company was unable to pay its debts and filed for liquidation in June.

“On December 29, we announced the first drop of oil – perhaps now it is a failure,” Hun Sen said yesterday.

KrisEnergy had forecast a peak production rate of 7,500 daily barrels – a modest amount compared with Cambodia’s oil-producing neighbours Vietnam and Thailand.

“In the end, there were 1,000 barrels pumped out a day,” Hun Sen said. “And now the company is bankrupt.”

Before it filed for liquidation, KrisEnergy held a 95-per-cent stake in the operation, while the government holds the rest.

The promised revenues could have been significant for the impoverished country, which estimated in 2017 that it would make at least USD500 million in royalties and taxes from the project’s first phase.

But the discovery also raised concerns about how Cambodia, a nation long ranked poorly in terms of transparency, would account for its newfound wealth.