Chevron's Cambodian Oil Project on Track for 2009 Start-Up

SINGAPORE (Dow Jones Newswires), November 4, 2008

Cambodia remains on track to start up its first oil field next year from a Chevron Corp. led project, but "considerable caution must be exercised" in terms of the project's commercial viability, a senior official of the Cambodian National Petroleum Authority said Tuesday.

"It's premature to speculate" how much oil or natural gas can be pumped from offshore Block A, CNPA vice-chairman Ho Vichit told the Asia Oil and Gas Investment Congress.

"It must be recognized that hydrocarbons shows alone do not oil or gas field, let alone an oil or gas field that might be viable for commercial development."

Vichit's startup schedule is consistent with earlier government estimates, although Chevron has in the past downplayed any firm timelines.

Block A, a 6,278 square-kilometer block about 200 kilometers off the coast of Cambodia, was discovered in 2005.

Vichit noted there are some "technical challenges" to overcome - reserves are spread over a wide area in small pools, rather than a single large reservoir, while the Cambodian government is still working on a petroleum law that will provide a legislative framework for extracting oil and gas.

"Based on exploration results, it's most likely that a mix of low-sulfur waxy crude and some gas will be produced," he said.

Chevron's unit in Cambodia owns a 55% stake in Block A, with partners Mitsui Oil Exploration and GS Caltex Corp. holding 30% and 15% respectively.

Last year, the International Monetary Fund forecast recoverable reserves at 500 million barrels, with the first of three fields entering production in 2011 - and predicted a $15 billion windfall for the government from royalties and taxes over the life of the fields.

Chevron hasn't given any estimates of reserves at Block A.

More than 10 foreign companies are drilling in Cambodia's six offshore blocks, including China National Offshore Oil Corp.

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