PHNOM PENH, Cambodia -- Singapore-based oil and gas company KrisEnergy signed a long-awaited production- sharing agreement with the Cambodian government on Wednesday for the first-ever extraction of petroleum from Block A in Cambodian territorial waters.

The deal was inked here between KrisEnergy's chief operating officer Kelvin Tang and Cambodian Industry, Mines and Energy Minister Suy Sem and Economy and Finance Minister Aun Pornmoniroth.

KrisEnergy holds a 95 percent stake in the 3,083-sq-km offshore block, and the Cambodian government owns the remaining 5 percent.

Kelvin Tang said the agreement was a significant milestone for Cambodia in its long journey to become an oil-producing nation.

"This is a major step. It is Cambodia's first oil field," he said after the signing ceremony.

"Shortly after the signing, we will declare final investment decision and proceed to deliver 1st oil in 24 month -- sometime in 2019," he said, denying to disclose the investment cost for the project.

Suy Sem said the agreement was the crucial commencement towards first crude oil production from offshore Cambodia.

"It is estimated that Phase 1A and Phase 1B (of the stage one of Block A) will provide more than 30 million barrels over the period of nine years, and it is sufficient commercially to make Cambodia become an oil producing country in the future," he said.

"The development of Block A is also a catalyst to more intense exploration works in another five offshore and 18 onshore blocks," he said.

The minister said the oil business would be a major new impetus for social advancement, human resource development, building Cambodia's competitive capacity, and growth of domestic production and service chains.

He added that the ministry was working hard to push forward the finalization of Law on Petroleum Sector Management and other regulations to ensure investment atmosphere and clarity in the private sector investment.

According to Aun Pornmoniroth, the petroleum agreement was first signed between the Cambodian government and U.S. oil giant Chevron in 2002. Later on, KrisEnergy gradually increased its share in 2011, 2014 and 2016, respectively to become the main operator with 95 percent share.

"Today's signing of agreement is just the starting point of a very long journey which requires participation from all related parties to realize the production of first oil drop in Cambodia," he said, promising to provide necessary support to KrisEnergy.

Currently, Cambodia totally imports petroleum from Vietnam, Singapore and Thailand as its seabed's oil and gas have not yet been extracted.

Cambodia spent nearly 1 billion U.S. dollars to buy 2.55 million tons of oil in 2015, according to government figures.

In May, private firm Cambodia Petrochemical Company broke ground for Cambodia's first oil refinery in southwestern Preah Sihanouk province.

When the first phase of the project is completed in mid-2019, the 620-million-U.S.-dollar plant is expected to have an annual refining capacity of 2 million tons of crude oil per year.

Source: NAM NEWS NETWORK