Oil revenue no short-term fix to economic growth: PM

An oil rig worker toils on the KrisEnergy platform in the Gulf of Thailand. AKP

Prime Minister Hun Sen has said that oil revenues will have less of an impact in the short term on the country’s overall economy than other traditional business sectors.

His statement was made during a joint ceremony for the inauguration of the Chamkar Mon Water Treatment Plant and the ground-breaking of the Bakheng Water Treatment Plant yesterday.

“Recently, there has been analyses on whether the oil yield can support the Cambodian economy. I would like to emphasise that the revenue from oil resources is still small and cannot support the Cambodian economy yet,” the Prime Minister said.

According to Mr Hun Sen, the first well has been operating for 33 days and has extracted 1,236 barrels per day for a total haul of 40,788 barrels to this point.

“If a barrel of oil costs more than $50, this means we can get just over $30 million a year, which is less than the income [derived] from travel visas issued to one million foreign tourists,” he explained.

Mr Hun Sen said that the second well has only just started operations, with the third, fourth and fifth wells scheduled to follow one at a time.

It is estimated that Cambodia will receive more than 7,000 to 7,500 barrels a day once all the wells are operational, he added.

Late last year, Cambodia began actual oil production from its offshore fields in the Gulf of Thailand, via its joint venture with Singaporean company KrisEnergy Ltd.

Cambodia’s current peak production estimate of 7,500 barrels per day is relatively low, compared with Thailand, which produces more than 500,000 a day.

However, the good news is that the government believes there are hundreds of millions of barrels of oil to pump from its offshore waters, meaning yields could provide a source of long-term funding even if relatively small now.

Earlier this month, the prime minister announced that the government would make “good use” of oil revenues, especially in the development of the education and medical fields.

Phay Siphan, spokesman for the Council of Ministers, agreed, saying any oil revenue generated is a blessing for Cambodia.

“The oil money will be used to modernise Cambodia’s education sector in order to enhance our human resources. We will also use the money to strengthen welfare and medical services,” he added.

The director-general of the International Relations Institute of Cambodia at the Royal Academy of Cambodia, Kin Phea, agreed, saying that Cambodia’s future oil revenues will bring great benefits to the Kingdom.

“When talking about oil production, it is both a celebration of Mr Hun Sen’s determination as well as a national achievement for us all.” Khmer Times