KrisEnergy, Cambodia sign agreements for Gulf of Thailand oil development

The Cambodian government and KrisEnergy Ltd. have signed fiscal and technical agreements after 3 years of negotiating for the nation’s first oil field development in Cambodia Block A in the Gulf of Thailand.

Content Dam Ogj Online Articles 2017 08 Krisenergy Cambodia Block A

The Cambodian government and KrisEnergy Ltd. have signed fiscal and technical agreements after 3 years of negotiating for the nation’s first oil field development in Cambodia Block A in the Gulf of Thailand.

KrisEnergy, operator of the block since 2014, plans to develop the Apsara area in the northeastern section of the concession, which is one of seven geological trends in the license with oil and gas potential. Cambodia Block A is part of the Khmer basin and lies in 50-80 m of water.

Under the agreements’ terms, KrisEnergy has 60 days to declare a final investment decision thereby signaling the formal launch of the Apsara project, which is expected to take up to 24 months until production is launched.

Under the formalized terms, a 5% interest in Cambodia Block A transfers to the Cambodian government, with KrisEnergy holding 95% interest. The agreements also trigger the second relinquishment phase of the concession in which 1,626 sq km, or 25% of Cambodia Block A, is returned to the authorities, leaving 3,083 sq km under the operatorship of KrisEnergy.

“KrisEnergy will benefit from more attractive fiscal terms than the default Cambodian terms notably [relating to] income tax, tax holidays, and export duty,” commented Jean-Baptiste Berchoteau, Wood Mackenzie Ltd. research analyst for Asia upstream. “These revised fiscal terms are on par with other Southeeast Asian countries, and it is still premature to say whether or not this agreement could attract more upstream investment into Cambodia.”

Phased development approach

Phase 1A of the Apsara development consists of a single unmanned minimum facility 24-slot wellhead platform producing to a moored production barge capable of processing 30,000 boe/d with gas, oil, and water separation facilities on the vessel. Oil will be sent through a 1½-km pipeline for storage to a permanently moored floating storage and offloading vessel.

Content Dam Ogj Online Articles 2017 08 Krisenergy Cambodia Block A

KrisEnergy said that individual oil accumulations in Cambodia Block A are small and spread over a large geographic area, and reservoir production performance in the Khmer basin is yet to be proven. Therefore some uncertainty exists as to long-term production rates, reserves, and commercial viability, which is why the firm has adopted a phased development approach.

Once the initial Phase 1A platform is on stream, there will be a period to monitor reservoir performance before commencing Phase 1B, which envisages up to three additional platforms producing to the Phase 1A facilities. A Phase 1C will potentially add up to six additional platforms for the full 10-platform Apsara development.

Berchoteau noted that KrisEnergy “has announced its intention to farm-out up to half of its stake in the block” to help with capital expenditure and expects “interest in the project from both local and international players” now that fiscal terms are set.

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