KrisEnergy's management signed the fiscal and technical agreements in Phnom Penh yesterday, paving the way for the formal launch of the Block A development with a rapid final investment decision required within 60 days.
First oil is expected within 24 months of that date.
KrisEnergy, the operator of the Cambodia Block A since 2014, plans to develop the Apsara area in the north eastern section of the concession, which is one of seven geological trends in the licence where there is potential for oil and gas to be trapped.
The Asian oiler has 95% of the 3083sq.km Block A, which sits in the Gulf of Thailand, while the Cambodian government will have a 5% participating interest, although KrisEnergy is hoping to defray the risks with a substantial farm-out.
Cambodian Ministry of Mines and Energy secretary Meng Saktheara said the signing of the paperwork was the end of years of work.
KrisEnergy's chief operating officer Kelvin Tang said the development was landmark project, which would be a "historic milestone for the economy and people of Cambodia as well as for KrisEnergy".
"Our technical and project teams have a successful track record of bringing greenfield oil developments in the Gulf of Thailand into production on time and to budget," Tang said.
"Apsara marks only the first phase of the development of Cambodia Block A, there remains further potential in other geological trends within the contract area for future investigation."
Block A sits in the Khmer Basin in the Gulf of Thailand in 50-80m of water.
The company has numerous blocks in the Thai side of the border, including the Wassana and Nong Yao producing fields and the Rossukon development, and sees the Khmer Basin as shares many similarities to other Thai, Malaysian and Vietnamese basins, particularly in terms of water depth and geology, and sees no reason why the Khmer Basin won't have the same development pathway.
Phase 1A of the Apsara development consists of a single unmanned minimum facility 24-slot wellhead platform producing to a moored production barge capable of processing up to 30,000 barrels of fluid per day with gas, oil and water separation facilities on the vessel.
The oil will be sent via a 1.5 km pipeline for storage to a permanently moored floating, storage and offloading vessel.
The individual oil accumulations in Cambodia Block A are small in size and spread over a large geographic area, requiring significant funds and time to fully develop.
Further, reservoir performance in the Khmer Basin has yet to be proven, which is why the first phase development has been designed with a level of uncertainty regarding long-term production rates, reserves and commercial viability.
Assuming things go to plan, Phase 1B, which envisages up to three additional platforms producing to the Phase 1A facilities.
Phase 1C will potentially add up to six additional platforms for the full 10-platform Apsara development.
KrisEnergy has talked of two additional phases outside the Apsara trend targeting the Poulo Wai and Basit trends for Phase 2 and the Angkea Sel, Rotanak, Bokor and Da Trends in Phase 3.
However, Wood Mackenzie analyst Jean-Baptiste Berchoteau said the fact KrisEnergy had been able to finalise a contract in Cambodia did not mean the holiday was over.
"KrisEnergy will benefit from more attractive fiscal terms than the default Cambodian terms notably in terms of income tax, tax holidays and export duty. These revised fiscal terms are on par with other Southeast Asian countries [but] it is still premature to say whether or not this agreement could attract more upstream investment into Cambodia," Berchoteau said.
"Given the relatively small size of the field, executing the project on time and on budget will be crucial to achieving a positive return on the investment."
He said that plans to farm out up to half of the project should be aided by the fiscal terms, with interest expected from both local and international players.
Block A has been subjected to 2D and 3D surveys over the years, with seven prospective areas identified between 1994 and 2003.
Of 27 wells drilled to date within the original Block A, area 13 encountered oil, with eight oil and gas discoveries and two high-CO2 gas discoveries.
The six most promising wells were drilled in the Apsara Trend, two of which were tested at rates between 410-860bopd.
Production plans were submitted by Chevron in 2010, but the development stalled on a mismatch on the fiscal terms and the technical challenges of developing relatively small, dispersed pools, and the US oiler pulled out, leaving KrisEnergy as operator in 2014.
The potential of the Apsara trend is estimated at 8.5MMbbl (2C) and 14.87MMbbl (3C).