Cambodia's Oil Export Ambitions Sink with "Stolen" Tanker Standoff

Prak Chan Thul and Aradhana Aravindan
Friday, August 27, 2021

When Cambodian officials commemorated the start of the country's first oil project in June by preserving the first drops of production at a high-profile ceremony, they heralded the country's emergence as a budding oil exporter at the heart of Asia.

But instead of reaping royalties, Cambodia's government has filed a theft complaint against the crew of the tanker that stored the crude, after they sailed away with the oil amid a payment dispute with the oil field's developer.

Singapore-based KrisEnergy, which owns a 95% stake in the offshore Apsara field in the Gulf of Thailand, was forced into liquidation shortly after production began in December 2020. Cost overruns and poor oil yields from the project had left the company unable to repay debt.

KrisEnergy's collapse also ended hopes of further oil sale proceeds for the Cambodian government, which owns the remaining 5% stake. All operations were halted and are deemed unlikely to resume given poor extraction rates, according to a local media report citing the Cambodian Ministry of Mines and Energy in July.

That's likely to be a major disappointment to Cambodian authorities, who had anticipated roughly $500 million in tax and royalty revenues over the project's lifetime.

The output stoppage means all there is left to show for Cambodia's oil production efforts now lies in the belly of the MT Strovolos, the 300,000-barrel tanker that had stored the oil produced at the site until it was forced to divert last month in search of a fresh crew and has now been detained by the Indonesian navy.

The Cambodian energy ministry, KrisEnergy, and its liquidators did not respond to requests for comment.

MT Strovolos - Credit: TTH/MarineTrafic.com

LEGAL DEADLOCK

With the fully-laden vessel now impounded in Batam, and KrisEnergy's liquidation proceedings still underway, lawyers who have been tracking developments predict a lengthy dispute over who owns and can sell the oil.

"I expect that if the Cambodian Government wants to detain the cargo and have it shipped back to Cambodia, there may arise competing claimants who are saying they are lawful owners of the cargo, potentially including the liquidator of KrisEnergy," said Peter Doraisamy, managing partner at PDLegal LLC.

"It is likely to take several years at the very minimum depending on which jurisdiction is seized of the case, and there is a possibility that cases may be brought in more than one jurisdiction and by different parties."

A key fundamental question is who actually owns the crude cargo, currently valued at around $20 million, now that KrisEnergy has become insolvent.

"The shipowner may not actually know who owns the cargo, and he's not a party to any of those contracts, he just gets told what to do by the charterer," said Leon Alexander, partner at Clyde & Co.

"But the shipowner owes a legal obligation to that person who is the cargo owner, he's got to look after and care for the cargo. And he's not allowed to deliver the cargo to the wrong person or act in a manner inconsistent with the rights of the cargo owner, or he faces a legal claim in conversion."

Indonesian authorities have taken steps to secure the vessel and its contents for investigation, Laode Muhamad, a spokesman for the Indonesian Navy told Reuters.

"Based on the provisions of the shipping law, the ship and its documents and cargo are evidence for which approval for confiscation is requested for investigation purposes,” he said.

DIM FUTURE

While legal maneuvering around the cargo is just getting underway, oil analysts say production at the field will likely remain stopped, even with the recovery in oil prices and demand this year.

"The poor publicity surrounding Apsara leaves the government with a Herculean task trying to attract other players into the Cambodian hydrocarbon sector," said Rystad analyst Readul Islam.

"I suspect that the shadow of Apsara will hang over Cambodia’s hydrocarbon attempts for some time."

(Additional reporting by Florence Tan in Singapore, and Agustinus Beo Da Costa in Jakarta; Editing by Gavin Maguire and Kim Coghill)

Categories: Production Asia Oil Tankers

Related Stories

All Gas from Conrad’s Mako Field to be Sold to Indonesia’s PLN

Sapura Energy Nets $720M from Multiple Drilling Services Contracts

Six New Gas Wells in Line for BP’s Shah Deniz Field in Caspian Sea

ONGC and BP Sign Deal to Boost Production at India's Largest Offshore Oil Field

McDermott Concludes Work at PTTEP’s Kikeh Gas Field Off Malaysia

Santos Hires Weststar-GAP for Timor-Leste Offshore Helicopter Services

Vestas Lands First 15MW Offshore Wind Turbine Order in Asia Pacific

China’s CNOOC Brings Bohai Sea Oil Field On Stream

AI & Offshore Energy: The Higher the Stakes, the More Value AI Creates

Floating LNG Conversion Job Slips Out of Seatrium’s Hands

Current News

INEOS Wraps Up Acquisition of CNOOC’s US Oil and Gas Assets

Fire at Petronas Gas Pipeline in Malaysia Sends 63 to Hospital

Japan’s ENEOS Xplora, PVEP Ink Deal for Vietnam Offshore Block

CNOOC Makes Major Oil and Gas Discovery in South China Sea

Valeura’s Assets in Gulf of Thailand Remain Operational After Earthquake

Op-Ed: Kazakhstan’s National O&G Firm Positioning Itself as Global Energy Player

Woodside to Shed Some Trinidad and Tobago Assets for $206M

CNOOC Sees 11% Profit Growth in 2024 Driven by Record Oil Production

‘Ultra-Mega’ Offshore Deal for L&T at QatarEnergy LNG’s North Field Gas Scheme

Keel Laying for Wind Flyer Trimaran Crew Boat

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com