Cambodia signed an agreement with Singapore-listed KrisEnergy Ltd on Wednesday to develop an offshore oil field that could finally see Cambodia produce its own oil after years of delays.
Cambodia has struggled to develop oil fields in the Gulf of Thailand, as few companies are willing to invest in the area following the 2014 global oil price slump.
The agreement between Cambodia and KrisEnergy covers 3,083 sq km (1,190 square miles) of the Khmer basin in the Gulf of Thailand known as Block A, the company said in a statement. Oil will be produced from the Apsara field within the block and output is expected within 24 months of the official launch of the project.
"Shortly after signing, we will declare a final investment decision and proceed to deliver first oil in 24 months - sometime in 2019," said KrisEnergy Chief Operating Officer Kelvin Tang at a signing ceremony in the Cambodian capital Phnom Penh.
Tang said that KrisEnergy is looking for partners to invest in the project and that Cambodia will receive around $500 million in fees, taxes and royalties over the project's lifespan.
Cambodia's Finance Minister Aun Pornmoniroth said the area is estimated to yield over 30 million barrels over a nine-year period and that Cambodia was ready to learn from other countries' lessons and would not become oil-dependent.
"It will not allow itself to become a heavily oil dependent economy," Aun Pornmoniroth said. "It will instead use oil revenue to fuel structural transformation to sustain economic growth."
According to the agreement, KrisEnergy will own a 95 percent interest in the field while the Cambodian government will own the rest.
The first phase of development of the Apsara field will start with a single production platform and could potentially expand to 10 platforms depending on a final oil output determination, KrisEnergy said in their statement.
KrisEnergy bought out U.S. oil major Chevron Corp's operating interest in Block A in 2014 for $65 million. Chevron found oil in 2004 in the block but failed to reach a development agreement with the Cambodian government.