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Thursday, December 21, 2006

Analysis: Cambodia oil, blessing or curse?

PHNOM PENH, Cambodia, Dec. 20 (UPI) -- The buzz about Cambodia's petroleum potential has many energy firms chomping at the bit to begin drilling, though some predict that the blessing of black gold will be a curse in disguise for a nation that's experienced its share of hardship.

Leading the charge toward full-scale extraction operations is U.S. oil company Chevron, which in the last year sunk many exploratory wells and is reportedly eager to begin offshore drilling in the Gulf of Thailand.

According to the World Bank, Cambodian reserves could contain as many as 2 billion barrels of oil and 10 trillion cubic feet of gas, which would make Cambodia the next untapped "hot spot" for multinational oil players.

"Depending upon the world price of oil, Cambodian reserves may be contributing annual revenues of $2 billion per annum -- several times the current level of domestic revenue and ODA [overseas development aid] combined -- within perhaps five to 10 years," read a recent World Bank report.

With that in mind, Chevron and other oil giants are beginning to turn their attention toward Cambodia.

"Energy firms will be eager to capitalize on what could be the world's next great petroleum resource," Dorothea EL Mallakh, director of the International Research Center for Energy and Economic Development, told United Press International.

El Mallakh's prediction of increased interest comes with a caveat, however, a warning that Cambodia ought to be "wary of the pitfalls often associated with petroleum wealth."

Event the World Bank has issued warnings.

"International experience suggests that such petrochemical wealth may equally well result in a 'resource curse' that actually retards development and poverty reduction."

Before inviting the world oil companies, Cambodia might want to take a closer look at other nations that have done the same, such as Nigeria.

Nigeria, which has the highest oil production in Africa, is straining under the "oil curse" amid a growing militancy, which has targeted oil installations, and environmental risks.

Cambodians could easily follow Nigeria's footsteps.

Prime Minister Hun Sen has been accused of traditionally showing little interest in the rights of his people and earlier this month a leading human rights group accused the Cambodian government of interfering with ongoing preparations in the trial of former Khmer Rouge officials.

The Khmer Rouge regime (1975-1979) -- led by Pol Pot -- is accused of killing almost 2 million Cambodians during their short-lived reign.

International legal officials have expressed dismay with Cambodian authorities, with whom they are trying to draft legal parameters for the trial, saying the Cambodians appear unwilling to cooperate so the trials can commence.

"Political interference has brought the whole process to a screeching halt," said Brad Adams, Asia director of Human Rights Watch.

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