Cambodia Begins Oil Production, But Who Will Benefit?

Manekseka Sangkum: 

$500 millions in oil revenue to spend? That's probably far less than what we know is lost through elite corruption annually, according to estimates and US embassy's leaked report on corruption in the country. 

The new earnings will be spent, but not on national projects.

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Blog Post by Joshua Kurlantzick

January 7, 2021 Council on Foreign Relations

   

Chairman of the KrisEnergy Group Tan Ek Kia (L) shakes hands with Cambodian Minister of Economy and Finance Aun Pornmoniroth during a signing ceremony in Phnom Penh, Cambodia on August 23, 2017. Samrang Pring/Reuters

Late last year, Cambodia finally began oil production, from offshore fields in the Gulf of Thailand. A joint venture between the Cambodian government and Singaporean company KrisEnergy Ltd started production, and will be ramping up new wells in the coming months. Cambodia has known about its offshore oil for more than a decade, and other oil firms like Chevron had invested in Cambodian offshore exploration in the past. But production had been delayed for years as some companies were scared off by the low global price of oil and as the Cambodian government initially could not reach a deal on production with an oil company.

The offshore fields will start with a peak production of around 7,500 barrels of oil per day, a relatively small amount: major oil states like Russia produce well over 10 million barrels each day, and neighboring states like Thailand produce more than Cambodia as well. But even that modest output will reportedly create some $500 million in new revenue for Cambodia, where GDP per capita is only around $1,500. Cambodian government believes there are hundreds of millions of barrels of oil in its offshore waters; revenues could increase as new wells are developed after the project’s first phase. Announcing the production online, Prime Minister Hun Sen called the oil output “a blessing.” And yet, in one of the most authoritarian and corrupt countries in East Asia, a place where Hun Sen has throttled the remnants of Cambodia’s pseduodemocracy in recent years, who will actually benefit from the new oil production?

For more on Cambodia’s new oil production, and its impact on the country, see my new World Politics Review article.