Cambodia to get 25 per cent local oil

PHNOM PENH (The Phnom Penh Post/ANN) -  Kingdom to get a maximum of 25 per cent oil to meet local needs from companies processing petroleum from Cambodian oilfields.

Companies processing petroleum from Cambodia’s oilfields are required
to provide a maximum of 25 per cent to meet local needs, according to a
law that has been signed off by King Norodom Sihamoni on July 12. It
was passed by the Senate in late June.

However, petroleum exports can be banned in the event of an emergency
shortage in local supply, states the Law on the Management and
Production of Petroleum, a copy of which was obtained by The Post on
Sunday.

The Post reported in May that KrisEnergy Ltd, the Singapore-based
firm that operates Cambodia’s Block A offshore oilfield, has claimed the
first drop of oil will be extracted late this year, with commercial
production scheduled to begin next year.

The law has nine chapters, 72 articles and is “effective immediately”.

It details the authority tasked with managing production,
environmental protection, punishments for negligent production and other
concerns related to the processing of petroleum, as well as the nature
of agreements.

The law divides production into “upstream” and “downstream”
activities. Upstream activities include prospecting, research and
development, and production.

Downstream activities include the treatment, transportation, stocking and trading of petrol products.

The Ministry of Mines and Energy will oversee the management of the
sector and all activities therein. All individuals and legal entities
seeking involvement in the sector must receive permission from the
ministry.

All contractors must provide data regarding their operations to the ministry, the law states.

“Petroleum agreements must be valid for no longer than 30 years from
the date of the agreement. Petroleum contractors can renew the validity
of their agreements for a period of not more than 15 years,” Article 17
states.

Contractors that have been inactive for five years will have their contracts terminated as stated in Article 24, it adds.

Article 27 says contactors must negotiate with those in legal
ownership of land before starting operations. They can request
arbitration from the Ministry of Mines and Energy if no agreement can be
reached with landowners.

Chapter 7 outlines punishments for breaking the law. These include
the revoking or suspension of rights, the payment of compensation and
imprisonment.

“Individuals who explore for, develop or produce petroleum without an
agreement or if the agreement has been suspended face two to five years
in prison and a fine of 100 million riel to 250 million riel
($25,000-$62,500)).

For legal entities, the fine will range from 4,000 million to 40,000 million riel ($1 million-$10 million), Article 58 states.

Contractors not abiding by technical and international standards and
who affect the environment or society or cause death due to negligence
will be fined between 400 million and two billion riel, it says.

“Those who provide data or information with the intention to cause
public confusion or misrepresent the Ministry of Mines and Energy will
be sentenced to between one and three years in prison with a fine of
between 50 million and one billion riel,” the law states.

Social analyst Meas Nee said he was concerned by how rigorously
debated the law would have been before being passed by the single-party
Senate.

“A second concern regards implementation because legal enforcement remains weak in Cambodia.

“Like in the mining sector, an important resource could end up in the
hands of some powerful people. It could be used as a tool to pressure
those who criticise the management of the petroleum sector,” he said.

Kin Phea, the director of the International Relations Institute at
the Royal Academy of Cambodia, said a transparent law in this sector was
needed to ensure its effective management and to guarantee reliable
revenue streams.

However, he disagreed with Nee on the nature of the law’s passing. He
said beneficial laws could be passed without the participation of an
opposition party.

“Generally speaking, the laws in Cambodia are good because they are
passed after consultation with assistance providers and many development
partners.

“However, it is questionable whether they are always implemented effectively, consistently and equally,” Phea said.

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