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NEWS UPDATES 11 April 2010

Cambodia threatens US energy firm with contract cancellation

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Cambodian Prime Minister Hun Sen has warned that US energy giant Chevron could lose rights to explore offshore interests if it does not produce oil by the end of 2012, reported local newspaper the Phnom Penh Post.

Speaking at the closing of a Ministry of Agriculture, Forestry and Fisheries conference Tuesday, the premier said the Cambodian government has ordered Chevron to get petroleum production under way or face termination of its contract.

“We have set [a deadline for] the Chevron company to reach oil production by the end of 2012; otherwise we will cancel the contract ... [if] negotiation has not been reached,” Hun Sen said in front of several hundred government officials gathered at the Faculty of Agriculture, on the outskirts of Phnom Penh.

Chevron owns a 30 percent stake in Block A, a 4,709 square-kilometre area in the Gulf of Thailand. Lying about 120 kilometres from shore, the concession is widely considered Cambodia’s best chance of producing energy within the next few years.

The government first awarded contract-sharing agreements covering Block A in August 2002 to energy companies Chevron, Moeco Cambodia Co and GS Caltex.

Chevron initially owned a 55 percent stake in the concession, but the multinational is believed to have sold a 25 percent stake in the block to Singaporean-based company KrisEnergy in February.

Production deadlines have routinely changed since operations started on the block, which Chevron officials described in February last year as a “complex reservoir” that posed a “challenge”. However, following Hun Sen’s warning, Chevron has been keen to emphasise its willingness to cooperate with the government.


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