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Cambodian Oil & Gas II

Oil may fuel Cambodian corruption

By Hamish Macdonald in Sihanoukville, Cambodia
Al Jazeera

Cambodia could lose millions of dollars worth of international aid if it fails to tackle rampant corruption. That's according to Robert Zoellick, the World Bank president, who visited the region over the weekend.

There now are fears that the recent discovery of off-shore oil could add to the problem. Al Jazeera follows the trail of Cambodia's latest secret.

Cambodia is one of the most corrupt countries in the world, ranked 151 out of 163 in a global corruption list.

Anti-corruption laws have remained in the "drafting" stage since 1994, but have never been implemented.

The World Bank has issued a stern warning to the Cambodian government, saying that anti-corruption laws were a key element.

"And it's not only passing the law, but its implementing it," said Zoellick.

'Curse or blessing?'

A third of Cambodians live on less than 50 cents a day

Meanwhile, the oil and gas reserves discovered off the country's south coast have already been divided up for exploration and production.

So although the fossil fuel find is estimated to be worth $80bn, it could be more of a curse than a blessing for the average Cambodian.

In the villages of southern Cambodia, people are living in poverty. But not far away from there lies a potential fortune.

Cambodia, where one-third of its population live on less than 50 cents a day, has discovered oil but the government is keeping the find under wraps.

Strangely though, the government is keeping much of the detail secret.

Theary C Seng, of the Centre for Social Development, said the government should have "clearer and more transparent procedures and information" about the oil discovery.

"Ultimately this is our money and we want a say in it," he said. "This is why the government needs to be transparent and engage the public. It's not their money. It’s the public's money."

Secret contracts

The sleepy coastal town of Sihanoukville is likely to see the first signs of major development, and poised to become the heart of the local oil industry.

Al Jazeera has learned that the Cambodian government has now completed contractual negotiations with 13 foreign companies for 100 per cent of the country's off-shore oil and gas reserves.

This it has managed to do without informing either the parliament or the public, and there are no guarantees as to how the profits will be spent.

Te Duong Tara, from the Cambodian National Petroleum Authority, has led negotiations on behalf of government and is optimistic about the future despite the absence of anti-corruption and freedom of information laws.

"I know people talk about the anti-corruption laws or something, but for me what is important is the spirit of the people," he said.

Money from oil could boost Cambodians' weekly shopping budget of less than $10

According to him, there is no indication of how long the oil reserves will last, or how much they will be worth.

But confidential documents prepared for the oil industry and obtained by Al Jazeera reveal clearer details.

It says oil reserves should last 20 years, and projects that government revenue would hit between $3-$4 bn annually at current values. On last year’s figures, that is 50 per cent of Cambodia's GDP.

But even some of the politicians are being prevented from getting that information.

Keo Remy, an opposition legislator, said: "Right now we know nothing about the oil".

At the markets in the capital, Phnom Penh, Cambodians shop with a weekly budget of less than $10. This is where oil revenues could make a real difference.

But Cambodians are all too aware that oil could turn out to be a curse. For now, though, there's a belief they will share in the spoils at the end of the rainbow.


Anonymous said...

Protes jeat rong roeung pruos projea ,Jeat vetanear prous Leaders, if Cambodia
loosing aids or gaining from the aids but it people still starving , need shelters ,justice and human rights but Hun Sen government proud of themselves that live on Cambodian PPL tears and blood, so we are all Cambodian PPL has nothing to loose but the big concern we are worrying is all the money from the aids ,the oil and gas it just feed the dectators leaders regime to stay in power,too long to oppress it own peole.
At this time if all aids and oil money could hold on till we get new clean leader
like Israel and use those money for missiles hight tech weapons to blow the Viet cong and it slaves out of Cambodia and stop the domination,occupation,imperialism and colonization so our beloved Cambodian will be freed and live with happiness.
912 that all my wish

Anonymous said...

Vote for other government in 2008!!! They'd better start telling the truth now!!!!!!!!

Anonymous said...

How sad that everyone knows, but Cambodian people?

500riel toilet said...

The best thing the government could do is to raise civil servant salary, teachers, police, etc... that's how you stop corruption. Give these people enough to live on , then they won't have to work for bribe.

Anonymous said...

AH Te Duong Dara said “I know people talk about the anti-corruption laws or something, but for me what is important is the spirit of the people,"

According to the above statement and I don't understand what the fuck ah TE DOUNG TARA is trying to say! I mean Cambodian people can charge all corrupted Cambodian officials with anti-corruption law! But can Cambodian people charge all corrupted Cambodian officials with the spirit of the people? I mean when people die and they became a spirit! So how is that possible to charge corrupted officials with the spirit or death people?

Cambodia must have anti-corruption law now before the first drop of oil is pumped otherwise it would be too late! No more playing game with all you Vietcong slave officials! All of you corrupted official mother fuckers can kiss the ground six feet under if you continue to think that anti-corruption law is not important!

Pass anti-corruption law now!

Anonymous said...

all the oil & gas revenue should go straight to the cambodian national budget.

National budget should set high control with proper check & balance and who has the authority to signed off on government budget...Priminister alone is not the answer...the entire state representative & senate must know and understand about the government's shall not be wasted...people are starving...

Anonymous said...

Fuck the HUN SEN government. They think they own Cambodia. Let call for a massive protest to have the corruption law be passed. They won't pass it by themselves b/c they benefit from it. I bet you at least 50 percent of the oil and gas money will disappear. Now do your part.......

Anonymous said...

Khmer People lived in abroad please vote Samdach Hun Sen for 2008 and 2013 comment by H.E.Long Saroath.

Anonymous said...

From H.E Long Dick!

Long Saroath! You kept saying vote for HUN SEN for 2008 and 2013 but you never give no reasons to why Cambodian people should vote for AH HUN SEN Vietcong slave!

You can't called yourself H.E. Long Saroath and make irresponsible comments like this and expect Cambodian people to vote for HUN SEN! Since you are such a good business man, you need to sell AH HUN SEN Vietcong slave to Cambodian population if he want the vote! You owed Cambodian people an explanation and why Cambodian people should for him!

Until then, H.E.Long Dick will be observing H.E. Long Saroath!

Anonymous said...

Well done, H.E. Long Dick! I hope H.E. Long (Loon Krom Sarong Lok Chumteav Bun Rany) Saroath will get your message.

When Te Duong Tara said “I know people talk about the anti-corruption laws or something, but for me what is important is the spirit of the people,", he referred to poor Cambodian people who died because of the murder, corrupt health system and lack of proper nutritions and incomes, but their spirits live on regardless.

That's very important to Te Duong Tara, because the increasing number of people spirits means that there would be less number of physical people protesting government corruptions. The spirits cannot protest, and they can't haunt these corrupt government officials because Tep Vong and his comrades would cast the protection spells on his friends.


Cambodia's Oil Curse

By Toby Shute May 18, 2007 Comments (0)

"We are not so stupid to suffer the so-called oil curse."
Cambodian Prime Minister Hun Sen

Corruption doesn't occur because people are stupid. On the contrary, people can be quite cunning when it comes to skimming. In light of the recent clamor over Cambodia's potential oil reserves -- first discovered by Chevron (NYSE: CVX) two years ago -- I think it's worth considering the effect that the development of these reserves may have on the country.

The World Bank's Doing Business project, which I've written about here, has ranked Cambodia 143rd out of 175 countries in terms of the ease of transacting business there. This puts the country on fairly equal footing with nearby Laos (No. 159), but compares extremely unfavorably to its neighbors Thailand (No. 18) and Malaysia (No. 25). I find the ranking a useful proxy for the amount of corruption in a country, because the more transparent it is to conduct business, the less incentive there is for bribery and black markets. I'm not casually leveling a corruption charge based on this ranking alone, however -- it fits into a much broader picture of corruption in a country that is recognized for such by everyone from the United Nations to Transparency International to Cambodian civil society groups.

I just don't see the benefits of this oil revenue trickling their way down through to the less privileged members of society. Why not? The institutions simply aren't there, and it seems inadequate to blame their absence on a lack of state revenue. Education, for example, has not been prioritized in the past, and I don't see a reason to believe that will suddenly change.

We've seen what oil can do to an impoverished country like Nigeria. It's hard to say if such a situation would occur in Cambodia, because the extent of its oil and gas reserves is presently unknown. But the last thing the world needs is another humanitarian disaster in an unstable country because of crude oil.

This find is great news for offshore drillers like Transocean (NYSE: RIG) and GlobalSantaFe (NYSE: GSF) who get to eat, drill, and leave. But it's not necessarily good news for average Cambodians, integrated oil producers that will partner in the development and production process, or the oil markets.

For related Foolishness:


Critics Say Cambodia Oil Revenues May Curse Rather Than Benefit

15 May 2007
Byrne report - Download 1.15 MB (mp3) audio clip
Listen to Byrne report audio clip

Revenues from large deposits of oil and gas discovered in Cambodia's territorial waters are expected to start flowing by the year 2010. The government says the funds will be used to pay for much-needed infrastructure projects and to cut borrowing. But as Rory Byrne reports from Phnom Penh, some critics are warning that oil money could fuel corruption and undermine economic development rather than benefit the country.

The exact amount of oil and gas lying off Cambodia's southern coast is still being assessed, but it is substantial. Last month, a Chinese exploration company announced it has found about 230 million barrels of oil plus half a trillion cubic feet of natural gas in just one of Cambodia's six exploration blocks. Other Asian companies and the U.S. oil giant Chevron are also exploring.

The oil could mean millions, and perhaps billions, of dollars for Cambodia's small economy each year. The government says the money will go into the central budget for development projects, to pay civil servants and to cut state borrowing.

But some development experts say there is a danger that Cambodia could be dragged deeper into poverty and corruption by what some call the oil curse.

Corruption is already widespread in Cambodia, and revenues from other state-owned natural resources including timber and precious stones have gone into private pockets. Ek Siden is the Development Issues Program Coordinator for the NGO Forum on Cambodia, representing more than 70 international and Cambodian non-governmental organizations.

"The institutions in Cambodia are very weak, and power is centralized - just only with one-man-show - and we are afraid that the government will use that budget in another way, not to serve the country and not [to] benefit the society as a whole, it will benefit only a few elites," said Siden.

Economists warn that if handled improperly, oil revenues can fuel corruption and contribute to inflation, which could mean key industries like garment manufacturing lose their competitive edge, pushing up joblessness and poverty.

John Nelmes, the resident representative of the International Monetary Fund in Cambodia, says an overhaul of the country's financial management systems will be required.

"I think there are big challenges, there's a lot of work to be done. One of the keys is that they have to put in place strong macro-economic management, that means budgetary policy that is sound and that directs money towards productive uses," said Nelmes. "Another key is to ensure that inflation remains low and that the economy remains competitive."

Cambodian Tang Solin, 59, pours gasoline into a smaller bottle at her road-side store in the capital Phnom Penh, Cambodia (File)
Cambodian Tang Solin, 59, pours gasoline into a smaller bottle at her road-side store in the capital Phnom Penh, Cambodia (File)
Human rights groups fear an oil-rich government may ignore the needs of the public and give in to authoritarian tendencies. Ek Siden of the NGO Forum says economic disparities could lead to social unrest and political instability.

"The government may spend a large amount on the military in order to keep just on

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