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Next Stop for Big Oil: Cambodia?

As Chevron and partner Mitsui Oil explore offshore, skeptics worry that Cambodia will fall prey to the "oil curse"
A Cambodian smuggler (L) rides his motorbike in Kandal province loaded with gasoline he got from neighbouring Vietnam, some 40 kms south of Phnom Penh.
A Cambodian smuggler (L) rides his motorbike in Kandal province loaded with gasoline he got from neighbouring Vietnam, some 40 kms south of Phnom Penh. TANG CHHIN SOTHY/AFP/Getty Images

In the world of $90-a-barrel oil, oil companies have plenty of incentive to search in unusual places for the fossil fuel. One of the newest energy frontiers is in the clear blue waters off the coast of Cambodia. Here, where fishing sampans sail among scattered, picturesque islands in the Gulf of Thailand, U.S. oil giant Chevron (CVX) has drilled 15 exploratory wells 150 kilometers offshore from the tourist town of Sihanoukville. If all goes according to plan, Chevron will begin extracting oil and gas from these wells by 2011.

Onshore, many Cambodians are watching—some hopefully, others nervously—about what oil might mean for one of the world's poorest nations. Prime Minister Hun Sen has recently called discussion about the oil finds "premature" and "speculative," and will say little about the prospects, which Chevron initially estimated at 400 million barrels. That's not much compared to neighboring Indonesia, with 4.3 billion barrels in reserve, or Malaysia, with 3 billion. But for a poor country like Cambodia, which has precious few energy resources, it's a big deal. Quietly, the premier has been lining up undisclosed partners for a small domestic oil refinery while the Cambodia National Petroleum Authority has begun talking about setting up a national oil company.