The oil and gas sector is relatively new to Cambodia and it presents a huge potential for boosting the country’s economy. The government is now seeking to promote it.
Oil & Gas ? Cambodia
Oil & Gas
Reingsey Oum, Trade & Investment Officer, British Embassy Phnom Penh
09 October 2009
Whereas every effort has been made to ensure that the information given herein is accurate, UK Trade & Investment or
its sponsoring Departments, the Department of Business, Innovation and Skills and the Foreign & Commonwealth
Office, accept no responsibility for any errors, omissions or misleading statements in that information and no warranty is
given or responsibility is accepted as to the standing of any firm, company or individual mentioned.
Published October 2009 by UK Trade & Investment.
Crown Copyright ©
Oil & Gas ? Cambodia
Table of Contents
CHARACTERISTICS OF MARKET 4
KEY METHODS OF DOING BUSINESS 5
MORE DETAILED SECTOR REPORTS 7
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Oil & Gas ? Cambodia
Oil and gas has become an essential part of people?s life. The world is still heavily
dependent on it. All countries, especially the developing ones, increasingly need
energy to boost their economies. China, in particular, consumes significantly large
amounts of oil yearly to keep pace with its rapid economic growth and it has been
active in oil exploration. Last year, the price of crude oil reached a new high. This has
concerned consumers causing some to look for more alternatives and renewable
sources of energy. In the meantime, it provides opportunities for some oil companies
to accelerate their production as well as find new oil fields.
Cambodia has sustained high economic growth for the past decade (an average of
9.8% during the period 1997-2007 making it the 7 highest globally according to
World Bank statistics). Interestingly, the oil and gas sector has been relatively new to
Cambodia. The exploration began in the 1950s and the first drilling operation dated
back to 1972-74 by Elf and Esso.
In 1991, the State of Cambodia government passed the Petroleum Regulations and an
initial Cambodian bidding round was announced in the same year. A number of
exploratory concessions have been offered since the 1990s while some blocks
contracted have expired. The country could be an oil producer in the next decade after
the discovery of offshore oil was announced several years ago. Indeed, opportunities
await the first investors.
The oil and gas sector is relatively new to Cambodia and it presents a huge potential
for boosting the country?s economy. Cambodia is expected to produce oil and gas in
the next decade. Prospects of the oil and gas sector began when a consortium-
including Chevron signed a Production Sharing Agreement (PSA) in 2002 for offshore
Block A. They have announced that they discovered oil in 2004-2005. The discovery of
oil and gas was deemed to be economically recoverable but there is still uncertainty
about the size and quality of the oil and gas deposits.
The government has been seeking to promote the oil and gas sector. It has
established the Cambodian National Petroleum Authority (CNPA) to oversee the
upstream and downstream petroleum activities in Cambodia. Areas for hydrocarbon
exploration are classified into 6 offshore (A-F) and 19 onshore (VIII- XXVI) blocks. The
onshore exploration, especially those around Tonle Sap region, might also present a
large hydrocarbon potential.
Another opportunity in this sector lies in the overlapping areas claimed by Cambodia
and Thailand (OCA). It is estimated that the overlapping area contains up to 11 trillion
cubic feet of natural gas and an underdetermined quantity of condensate oil. In 2001,
a Memorandum of Understanding was signed between the two countries, which set a
joint development regime over Areas II, III and IV of the OCA and attempted to define
a maritime border in Area I of the OCA for future development. There have been on
going negotiations for joint development in this overlapping area. Currently, Area IV
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Oil & Gas ? Cambodia
appears to be the only one where rights have yet to be awarded as previous
agreement expired. Several companies, including Mitsui, World Wide Petroleum
Services, and Chevron, have formally submitted their bids for the area while two more
Japanese companies, Marubeni and Impex Corp., were believed to have applied for
this as well.
The government has publicly stated its desire for the development of an oil refinery
once the oil production starts. Depending on the commercial quantity of oil discovered
and the domestic and global demand for oil, there might be opportunity in Cambodia
to build an oil refinery in the long run.
There should also be opportunities to collaborate with the CNPA as consultant or data
provider in a way similar to what Petroleum Geo-Services (PGS). The PGS is conducting
the geology survey on onshore blocks and has acted as a sub-contractor for Medco
Energi. Should there be sufficient oil operations in Cambodia we would also expect that
oilfield service companies would have the opportunities to provide goods and services
to field operators.
UKTI publishes international business opportunities gathered by our network of British
Embassies, High Commissions and Consulates worldwide. These opportunities appear
in the Opportunities portlet on the relevant sector and country pages on the UKTI
website. By setting up a profile you can be alerted by email when relevant new
opportunities are published.
Please contact the Trade and Investment Officer in Cambodia to discuss your particular
interests and where UK Trade & Investment can help you to succeed in the Cambodian
CHARACTERISTICS OF MARKET
Annual oil consumption in Cambodia is around 30,000 barrels per day. At distribution/
retail level, we have seen several players such as Caltex, Petronas, PTT, Sokimex, Tela,
and Total. To date, Sokimex claims to be the largest petroleum-company in the
country, having more than 200 stations and obtaining a contract to supply petrol and
diesel to all government ministries.
Since the announcement of offshore oil discovery, many blocks have been issued
licenses to E&P companies. PSAs for all 6 offshore blocks have been signed. Block A
appears to be the only block that has been actively explored. Chevron, Moeco and GS
Caltex own this block (55%, 30% and 15% respectively). In 2005, Chevron announced
that it had discovered oil in four wells and gas in one well of the Block. Despite this
discovery, the company has not yet committed a start date for production reasoning
that the oil discovered consists of a number of small dispersed fields rather that a large
Concession in offshore Block B has been given to PTT Exploration and Production
Public Company Limited, Singapore Petroleum Company, and Resourceful Petroleum
Limited (33.34%, 33.33% and 33.33% respectively). The first exploration well drilled
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Oil & Gas ? Cambodia
in this block found no recoverable oil. Block C is given to Polytec Petroleum Corporation
(100%) while Block D belongs to China Petrotech Holding Limited (Cambodia). It is
worth noting that Block D could contain either 226.9 million barrels of recoverable oil
or 496.2 billion cubic feet of gas. As for Block E, it is jointly owned by Medco Energi
Internasional (60%), Kuwait Energy (30%), and JHL Petroleum (10%). Block F solely
belongs to Chinese National Offshore Oil Corporation International Limited.
Total has also discussed the offshore oil exploration with the government for several
years and submitted its formal bid in 2008. During the Prime Minister Hun Sen?s visit to
France in July 2009, his spokesman announced that the concession to explore offshore
oil in Area III of the OCA is given to Total. However, the agreement is yet to be signed
blaming for the need to discuss further technical issues. This concession raised protest
from Thailand; it is worth noting that the Cambodian government signed conditional
petroleum agreement with major companies since 1997 (ConocoPhillips for Area I & II,
BHP for the Area IV), subject to resolution of the claims.
With regard to the onshore blocks, Block XII appears to be the only one granted thus
far. In September 2007, Medco signed a three-year agreement with the government
for 52.5 % shares of the block concession. Other investors include the CNPA (40%)
and JHL (7.5%). Block XXVI, on the other hand, is given to Total but the agreement
has yet to be signed. Another P&E company, ATI Petroleum, claimed to have reached
an agreement in principle with the government to explore oil in Block X and XV.
However, it is unclear that ATI has been officially granted the concession. It is thought
that four more onshore blocks might have been awarded to a Chinese company.
Exploration periods are granted for a period of four years, and may be extended twice
for a period of two years each time. Exploration licenses for many blocks (mostly
offshore) have been issued. Prime Minister Hun Sen reportedly said that ?the stance of
the government is to make applications to seek oil in Cambodia as transparent as
possible through open bidding?. In reality, it seems that there is little information about
the sector and the bidding process disclosed to the public. Lobbying with the
government officials could therefore be beneficial and, as such, companies interested
in hydrocarbon exploration should make direct contact to the CNPA.
KEY METHODS OF DOING BUSINESS
Initial research is strongly recommended to assess your prospective investments or
potential business partners in Cambodia. In emerging markets, it can often prove
difficult to source reliable information from the Internet. Some Cambodians can, at
first, come across as being unduly suspicious but are generally keen to build and retain
relationships. Therefore, firm commitment ? coupled with a willingness to visit the
market ? is an important step in establishing a successful working relationship.
Most successful foreign investors have some form of local representation (i.e.
establishing an office, appointing an agent/distributor etc. This enables them to
develop their brand, gain loyalty and ? in particular ? clearly demonstrate they are in
the market seriously.
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Oil & Gas ? Cambodia
Cambodians consider the trade-off between price and quality of products/services
although the market, in general, is price sensitive. Reliable Technical support is also a
Some Do?s and Don?ts:
? Language can be a problem although English is becoming more commonly used
throughout Cambodia. Be sure to speak clearly, slowly and avoid slang/adages.
? Double check to ensure your counterparts fully understand your messages.
? Cambodian people care about their names (surnames precede given names) and
title. It is not common to directly address Cambodian people?s surnames (e.g.
Mr/Mrs. Surname). In fact, you can just call them by their titles only (e.g. Your
Excellency, Lok Chum Teav, Okhna, Sir, and Madam) and/or their given names if
they are junior and you know them well.
? Control your emotions ? any signs of anger, impatience, and frustration will not
help matters! Do not point your finger or shout at Cambodian
counterparts/colleagues as this can easily result in the loss of face, which is a very
important issue in Cambodian society.
? Avoid sitting with legs crossed and your feet pointing to the people you are
meeting with as this can be interpreted as ?lack of respect?.
? Cambodian businessmen and consumers normally do not like to read very long
text. Often, they prefer short versions with images and bullet points. Therefore,
when presenting your products/services for the first time, try to make it attractive,
short and straight to point.
? Do not interrupt an ongoing conversation even if you disagree. Many Cambodians
perceive this as impolite.
? When planning your visit ? organise appointments before your departure. Follow
up with telephone calls on arrival to confirm availability. Meeting for the first time
should be arranged during normal working hours with subsequent meetings being
arranged over breakfast, lunch, and dinner as well as normal office hours.
? Arrange a market discussion with the Trade and Investment Officer at the British
Embassy in Phnom Penh.
? Take plenty of business cards and corporate literature. If possible have the reverse
of your business card translated into Khmer.
? Follow up meetings by letter/e-mail on return to the UK. If possible keep the
Embassy informed of progress.
? Do not expect to do business immediately or necessarily on the first visit to
? Think about intellectual property rights issues.
? Check carefully if your business activities relate to the use of lands.
Other background information on doing business in Cambodia can be found on UKTI?s
website. Simply go to the Cambodia country page where you will find information on:
? Economic background and geography
? Customs & regulations
? Selling & communications
? Contacts & setting up
? Visiting and social hints and tips
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Oil & Gas ? Cambodia
MORE DETAILED SECTOR REPORTS
Research is critical when considering new markets. UKTI provides market research
services, which can help UK companies doing business overseas including:
? Overseas Market Introduction Service (OMIS). Bespoke research into
potential markets, and support during your overseas visits.
? Export Marketing Research Scheme. In-depth and subsidised service
administered by the British Chambers of Commerce on behalf of UKTI
Contact your local International Trade Advisor if you are interested in accessing these
services, or for general advice in developing your export strategy.
When considering doing business in Cambodia, it is essential to obtain legal, financial
and taxation advice. A useful list of contacts as well as further information on the
energy sector in Cambodia is available from the British Embassy. For further details,
Trade & Investment Officer
British Embassy Phnom Penh
No. 27.29, St. 75
Srass Chak, Daun Penh
Tel: +855 (0) 23 427 124/ 23 428 153
Fax: +855 (0) 427 125
At the moment, there is no event specifically related to the Oil & Gas sector in
UK Trade & Investment?s Tradeshow Access Programme (TAP) can help eligible UK
businesses take part in overseas exhibitions. Attendance at TAP events offers
? possibilities for business opportunities both at the show and in the future
? a chance to assess new markets and develop useful contacts
? grants are available if you meet the criteria
? UKTI staff overseas will be available to assist delegates
To find out if you are eligible to apply to attend an event, and more about the support
UKTI can offer, look at the UKTI Market Entry web page.
Details of TAP events can be found in the Events portlet on the appropriate country
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Oil & Gas ? Cambodia
Other Market Visit Support may be available via your local International Trade
H.E Te Duong Tara
Cambodian National Petroleum Authority
Nº. 13-14, Confederation de la Russie
Phnom Penh 12406, Cambodia
Tel: 023 890 330
Mobile: (855) 16 880 071/ 12 221 999
Fax: (855) 23 212 278
Chairman of British Business Association in Cambodia
Director of PricewaterhouseCoopers (Cambodia) Ltd
124, Norodom Blvd, Chamkarmon
Tel: +855(0) 12 803891 / 23 218086
Fax: +855(0) 23 216 991
UKTI?s International Trade Advisers can provide you with essential and impartial
advice on all aspects of international trade. Every UK region also has dedicated sector
specialists who can provide advice tailored to your industry. You can trace your nearest
advisor by entering your postcode into the Local Office Database on the homepage of
For new and inexperienced exporters, our Passport to Export process will take you
through the mechanics of exporting. An International Trade Adviser will provide
professional advice on a range of services, including financial subsidies, export
documentation, contacts in overseas markets, overseas visits, translating marketing
material, e-commerce, subsidised export training and market research.
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