Comment

Cambodia's first oil development takes major step forward with signed agreement with KrisEnergy

Below please find some commentary by Jean-Baptiste Berchoteau, research analyst, Asia upstream, Wood Mackenzie:

Cambodia has signed a revised PSC for Block A of the Apsara oil development with Singapore E&P player KrisEnergy, paving the way for Cambodia’s first oil development, three years after the start of long negotiations.

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.