Just a few months after pumping its first-ever oil, Cambodia's just-launched oil production faces an uncertain fate after the government's partner in the operations filed for liquidation amid inability to service debts and underwhelming production rates.
Singapore-based KrisEnergy Ltd, which was developing the Khmer basin in the Gulf of Thailand, also known as Block A, said last week it was "unable to pay its debts based on actual and/or contingent liabilities and will proceed to liquidation."
One reason for the decision was the significantly lower ultimate recovery and cash flow from the Apsara Mini Phase 1A development in Block A, resulting in the company's restructuring exercise being no longer viable, KrisEnergy said.
The company signed a deal with the Cambodian government in 2017 to develop the prospect.
Oil was initially discovered in the region in 2004 by Chevron. The U.S. supermajor, however, was unable to reach an agreement with the Cambodian government to develop the discovery. Additionally, due to the 2015-2016 downturn, few companies have been willing to invest in the unestablished oil region.
With KrisEnergy out of business, the Cambodian government does not have immediate plans for the country's oil production, a spokesman for the Ministry of Mines and Energy told Reuters on Thursday.
"I can't predict ... I can't answer this question, let's wait and see," the spokesman said.
Meng Saktheara, a senior official of the Ministry of Mines and Energy, said on Thursday, as carried by The Phnom Penh Post:
"Major petroleum operations and planned follow-up development projects will be temporarily suspended pending a settlement agreement between the government and creditors, which has the right to proceed with the courts."
While court proceedings and creditor talks with the government of Cambodia are ongoing, the operations at Block A will suffer because KrisEnergy is losing funding to sustain them, Saktheara said.
By Charles Kennedy for Oilprice.com
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