Cambodia: Plans spilt for oil refinery

Cambodia: Plans spilt for oil refinery

A mysterious cluster of crude oil storage tanks recently constructed on the
coast near Kampot are linked to a $400 million project by timber baron Try
Pheap to build an industrial park and oil refinery, government officials
confirmed yesterday.

The five 2-million-litre tanks are part of 20 crude oil storage tanks slated
for construction on a 51-hectare port project the tycoon is developing in
Kampot province's Teuk Chhou district, and connected to a special economic
zone (SEZ) and oil refinery that his subsidiary petroleum company intends to
build on an adjacent 268 hectares of land, they said.

PAPA Petroleum Co Ltd, Pheap's wholly-owned private fuel distribution
company, submitted plans for the SEZ and refinery to the Council for the
Development of Cambodia (CDC), which has appointed the Ministry of Commerce
to verify the company's claim of land ownership, according to Sam Serei
Rath, an undersecretary of state at the ministry.

"Government policy means that the CDC gives the final approval for Try
Pheap's development," he said. "We were just assigned to inspect the
investment site to see if it was ready."

According to Serei Rath, the master plan under review is split into four
segments with an international deepwater seaport, a smaller port, an
industrial area and an oil refinery.

In May, Hong Kong-based Hutchison Port Holdings Ltd announced an agreement
with Pheap's eponymous holding company to develop a $300 million
international seaport on the tycoon's property in Kampot. The seaport was
designed to handle oil shipments, but at the time the possibility of crude
oil imports or a refinery was not discussed.

Serei Rath confirmed that plans for an oil refinery have now been tabled.
Pheap, however, is not waiting for approval and has already started building
a crude oil storage depot and begun clearing land for the SEZ and refinery.

"The company is already in the process of constructing fuel facilities on
the 51 hectares of land, [and is also preparing] the special economic zone,"
he said. "We are waiting to see if Try Pheap has control over the rest of
the land with official hard titles."

Local administrators have also taken notice of the development, claiming
Pheap's company was clearing the land and constructing fuel storage tanks at
an impressive pace.

"We know that Try Pheap has a real commitment to this investment," said Soem
Sothear, Kampot provincial cabinet chief. "I think the development is not
complicated because the land belongs to Try Pheap and it is not an economic
land concession."

He added that the tycoon was continuing to expand his land holdings in the
province, and had been buying the titles to properties surrounding the
proposed SEZ from local villagers.

According to Kong Bunra, a local commune chief who claimed he was informed
but not involved in the project, a total of 20 crude oil storage tanks are
to be built at the port by the time the oil refinery becomes operational.

"We are now in the first stage of oil refinery construction," he said. "So
far we already have five storage facilities and we expect to have a total of
12 completed by March or April."

Hann Khieng, managing director of Cambodia Petrochemical Company (CPC),
which has partnered with Chinese firms to build a $2.3 billion oil refinery
in Kampot province, said Pheap's proposed refinery is an unrelated project.

"I have seen a lot of new petroleum trucks in the area and brand new
petroleum storage tanks," he said. "But as for the Try Pheap plan for a
refinery and SEZ on that land, I do not have any details about it as it is a
private investment."

Pheap appears to have been courting Russian investors for the refinery
project. In July, in a meeting brokered by Mines Minister Suy Sem, the
tycoon discussed the potential for joint ventures with visiting executives
of Putin Consulting, a firm owned by the nephew of Russia's president.

"The meetings with the head of Try Pheap Group and the Minister of Energy
were held during this trip," Roman Putin, founder of Putin Consulting,
confirmed in an email to The Post in October, adding that his delegation
proposed several projects, including "oil processing".

Russia has actively pursued opportunities to invest in Cambodia's upstream
and downstream oil activities. A state visit by Prime Minister Hun Sen to
Moscow in May resulted in agreements on a number of energy projects.

Among them, heavyweight Russian oil and gas company Tatneft signed a
memorandum of understanding with the Ministry of Mines and Energy to
research and implement an oil refinery project to be completed by 2020.
Russia's state-owned Gazprom, a company in which Putin has shares, also
signed an agreement to deliver crude oil and assist with refinery
procedures.

Neither Putin Consulting nor Tatneft responded to inquiries about a
potential refinery deal.

Dith Tina, secretary of state at the Ministry of Mines and Energy, and the
official in charge of handling oil permits and refinery applications, did
not respond to phone and email requests for an interview.

Ministry spokesman Meng Saktheara said while he was not aware of whether or
not Pheap was seeking government approval to build an oil refinery, the
capacity to process crude oil shipments would be beneficial to the economy.

"If there is a refinery project, providing that it is built well and does
not destroy the environment, it would be good for the country to start
opening up new markets and new industries," he said.

Representatives of Try Pheap Group and PAPA Petroleum declined to comment on
the project.

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com