Benefits from ‘black gold’ Revenue from Cambodian oil fields could provide a big boost to development, if it’s done right
If Cambodia’s oil and gas sector is well managed, and transparent, it could provide the country a golden opportunity for investment, development and poverty reduction, said independent economist Chan Sophal, who spoke at a recent gathering looking at the economies of oil-producing countries.
Chan Sophal said crucial areas such as human resource development, agricultural production improvements and infrastructure construction, such as roads and irrigation systems, need large investments, which oil and gas could provide.
“These areas have enough absorption capacity as there is a lot of room for development,” he said. “Using a large share of the [oil and gas] revenue would help.
Potential revenues from Cambodian oil and gas production are forecasted to reach up to US$1.7 billion a year, according to a book on the country’s natural resources by Cheam Yeab, a Cambodian lawmaker and chairman of the National Assembly’s Finance and Banking Commission. This number is higher than Cambodia’s 2011 domestic revenue, which reached US$1.5 billion.
While Cambodia’s oil and gas sector is still undeveloped, the government expects to issue American oil giant Chevron an production permit license for exploration in the Gulf of Thailand by the end of this year. Between 70 and 80 percent of total revenue is expected to flow back to the government, officials said in September. However, revenues are not expected until around 2016.
There are still concerns that Cambodia risks being afflicted by the socalled “resource curse,” where oil-rich countries with poor regulations and high levels of corruption, such as Nigeria and Chad, were actually dragged deeper into poverty after the discovery of “black gold.” Revenues can end up in the pockets of corrupt officials or end up being spent on grandiose projects with little larger social benefit.