Cambodian Premier Says Oil Discovery Will Bring Benefits, Not Problems

Cambodian Premier: Oil Could Be a Boon
Thursday February 22, 11:59 am ET
Cambodian Premier Says Oil Discovery Will Bring Benefits, Not
Problems

PHNOM PENH, Cambodia (AP) -- Expected revenues from recently
discovered oil off the coast of Cambodia will be a boon to the
impoverished country, not a curse, Prime Minister Hun Sen said
Thursday.
Addressing concerns that huge and sudden income from the oil found in
2005 could exacerbate Cambodia's already widespread corruption, Hun
Sen promised to direct the revenues "to productive investment and
poverty reduction."

The oil money will help developing the country, he said at a seminar
called "Cambodia: Economic Outlook for 2007."

U.S. energy giant Chevron Corp. discovered the oil in 2005 off the
Cambodian coast, 87 miles southwest of the seaport of Sihanoukville,
which is 115 miles southwest of the capital, Phnom Penh.

The company found the crude oil in four wells in an area called Block
A and plans to drill 10 more wells by the end of 2007.

It is not clear yet how much oil Cambodia could expect to extract.

Last month, Te Duong Tara, the director-general of the Cambodian
National Petroleum Authority, said that recent estimates that Block A
holds 400 to 500 million barrels were mere speculation.

Still, he said income from the oil could have a "profound" impact on
the future of Cambodia, where 35 percent of the country's 14 million
people live below a national poverty line of 50 cents a day.

Hun Sen said that oil money will help bolster Cambodia's medium- to
long-term growth, promote greater economic diversity and help reduce
poverty.

"We will make sure that oil is a blessing, not a curse," he said
Thursday.

U.S. Ambassador Joseph Mussomeli is among those who have voiced
concern about how Cambodia would handle a sudden surge in national
income.

Mussemeli said late last year that oil production could generate
considerably more than $1 billion a year in revenue for Cambodia,
although it might not begin until 2010.

Mussomeli noted that the prospective new income would be "an
extraordinary jump" for a country that currently relies on some $500
million from aid donors every year.

"It's a lot of money to pump into the system," he said. "If Cambodia
can put in place the proper mechanisms for accountability and
transparency for the oil revenue, then this country can change
dramatically in the next decade."

If not, "it simply will make the corruption problem in Cambodia even
worse," he said, adding "then the blessing will become a curse."

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