KrisEnergy and the Cambodian government have signed fiscal and technical agreements for Cambodia’s first oil field development at Cambodia Block A in the Gulf of Thailand.
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Cambodia Block A. Map from KrisEnergy. |
The Singapore-based company plans to develop the Apsara area in the northeastern section of the concession, which is one of seven geological trends in the license where there is potential for oil and/or gas to be trapped.
Cambodia Block A covers 3083sq km over the Khmer Basin in the Gulf of Thailand where water depths range between 50-80m.
Under the terms of the agreements, 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 to produce first oil.
KrisEnergy says the agreements also trigger the second relinquishment phase of the concession, whereby 1626 sq km, or approximately 25% of the Cambodia Block A area, is returned to the authorities leaving 3083sq km under the operatorship of KrisEnergy.
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 up to 30,000 b/d of fluid with gas, oil and water separation facilities on the vessel.
The oil will be sent via a 1.5km pipeline for storage to a permanently moored floating, storage and offloading vessel.
According to KrisEnergy, the individual oil accumulations in Cambodia Block A are small in size and spread over a large geographic area, requiring significant funds and time to fully develop. Additionally, reservoir production performance in the Khmer Basin has yet to be proven.
“For these reasons, among others, there is some uncertainty regarding long-term production rates, reserves and commercial viability and therefore a phased development approach has been prudently adopted,” says KrisEnergy.
Once the initial Phase 1A platform is on stream, the company says there will be a period to monitor reservoir performance before beginning Phase 1B, which will include 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.
“Producing Cambodia’s first oil in its offshore waters will be a major step along our steady road to economic development and national prosperity and is aligned to the government’s key development goals,” says Secretary of State for the Ministry of Mines and Energy and Chairman of the Inter-Ministerial Committee for Block A H.E. Meng Saktheara.
“There has been great interest in this project from many stakeholders and related parties and we are delighted to have reached this stage,” says Kelvin Tang, KrisEnergy COO and president of the company’s Cambodian activities. “Our technical and project teams have a successful track record of bringing greenfield oil developments in the Gulf of Thailand into production on time and to budget. Apsara marks only the first phase of the development of Cambodia Block A, there remains further potential in other geological trends within the contract area for future investigation.”
KrisEnergy (Aspara) is the operator of Cambodia Block A with 71.25% interest. KrisEnergy (Cambodia) holds 23.75% stake, and the government of Cambodia holds the remaining 5%.
Jean-Baptiste Berchoteau, research analyst, Asia upstream, Wood Mackenzie says that KrisEnergy will benefit from more attractive fiscal terms than the default Cambodian terms notably in terms of income tax, tax holidays and export duty.
“These revised fiscal terms are on par with other SE Asian countries, and it is still premature to say whether or not this agreement could attract more upstream investment into Cambodia.
“KrisEnergy is expected to make a final investment decision (FID) in the next two months and aims to deliver first oil two years after FID. Given the relatively small size of the field, executing the project on time and on budget will be crucial to achieving a positive return on the investment.
“In order to generate much-needed cash flow and reduce capital expenditure, it has announced its intention to farm-out up to half of its stake in the block. With the fiscal terms for the block now clarified, we expect interest in the project from both local and international players,” says Berchoteau.
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