Thursday, August 28, 2008

Thai-Cambodian oil talks stall

Border dispute blocks long-sought deal

YUTHANA PRAIWAN & NAREERAT WIRIYAPONG

Negotiations involving overlapping claims to undersea oil and natural gas fields in the Gulf of Thailand are likely to drag on as both Thailand and Cambodia still need to seek agreement on the disputed border area, says Krairit Nilkuha, the director-general of the Department of Mineral Fuels.

The two countries had opened negotiations in 1995 in a bid to tap into potentially rich reserves.

The talks led to a memorandum of understanding signed in 2001 by the Thai and Cambodian prime ministers.

Under the pact, they agreed in principle to join in development and share profits from a total of eight blocks of petroleum fields in the overlapping claims area (OCA).

The 2001 agreement still needs approval of the Thai House of Representatives to comply with provisions in the 2007 Constitution governing international agreements and treaties.

However, the main obstacle centres on two petroleum blocks, designated Block 5 and 6, where clarification of the disputed sea border is still sought.

Since the memorandum of understanding was signed in 2001, only five meetings have been held with no real progress made, even though both sides have clearly expressed their willingness to reach a conclusion as soon as possible.

Committees and working groups are working to seek an agreeable solution for the whole 26,000-square-kilometre OCA.

Leaders from both countries last failed to hammer out a formal arrangement in 2006 during a visit to Cambodia by former prime minister Thaksin Shinawatra.

However, Mr Krairit said he was optimistic that negotiations could be concluded soon, with a goal of seeing production from the areas begin within 10 years.

''All state agencies related to the OCA are accelerating efforts to seek the best solution that could help resolve the disputed sea border between the two countries, so we could resume talks,'' he said.

Thailand first awarded exploration licences to work in the areas in 1968 to Idemitsu, Chevron, British Gas and Mitsui Oil.

However, the dispute first arose in 1972 when Cambodia claimed its overlapping sea border. The Phnom Penh government also later awarded the licences over the exact same areas in 1997 to Conoco Phillips, Shell and Idemitsu.

As the dispute remains, those licence holders are unable to gain access to the areas in question.

Mr Krairit said he believed that resources in the area were plentiful, based on results from blocks nearby in the Pattani basin in Thai territory, where there are proved reserves of 5.4 trillion cubic feet of natural gas by US-based Chevron and Thailand's PTT Exploration and Production.

No data on petroleum reserves within the disputed areas have been revealed due to the extreme sensitivity of the border claims.

Mr Krairit said the talks should rely on the International Territory Law following the model of a Thai-Vietnamese sea territory clarification in 1997, or the Malaysia-Thailand Joint Development Area (JDA) in 1990.

Viraphand Vacharathit, the Thai ambassador to Cambodia, agreed that the prospects for the talks seemed brighter, adding that the two governments had agreed in principle that the benefit-sharing model of the Thailand-Malaysia JDA was the best solution.

''What has yet to be concluded is sharing ratio for the spilt of the resources,'' said the ambassador.

Authorities on both sides have discussed OCA issues occasionally. Talks have been positive so far because both parties want to reap benefits from the untapped gas deposits.

''It is believed that the OCA has more natural gas reserves than oil. However, the amount of reserves has yet to be confirmed,'' Mr Viraphand said

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