Cambodia Targets Import Market and Oil Refinery to Build Energy Independence

Cambodia is relying on Singapore and Malaysia as critical energy lifelines as domestic gas, oil and fuel prices continue to climb, with Energy Minister Keo Rottanak emphasising that building a national refinery within four or five years is a solution to ensure long-term supplies and energy security.

The government is accelerating negotiations for its first-ever oil refinery as a direct response to the current energy shock, with hopes high it could be operational within four to five years, while the nation also seeks more import markets and increased green energy initiatives amid the global fuel shortage and price increase pressure.

On March 17, the Ministry of Commerce announced that the price of regular gasoline will be 5,500 riel per litre and diesel 6,550 riel per litre. However, it did not confirm the date of the price changes. However, it noted petrol prices have risen by more than 30 percent and diesel by more than 60 percent.

In an interview with USA’s Bloomberg, Minister of Mines and Energy, Keo Rottanak, stated that dependency on fuel, oil and gas is not only a challenge for Cambodia, but for the rest of the world, making seeking alternatives imperative.

In the midst of the current global fuel crisis, the Energy Minister recently announced that Cambodia is exploring plans to develop the country’s first oil refinery, which forms a part of energy independence.

The Minister highlighted the three important components of national policy: energy efficiency, injecting more green energy into the national grid and building an oil refinery.

“Energy efficiency has been, and will always be, at the core of our energy security going forward. Secondly, we have to really improve electricity further by going cleaner by at least 70 percent by 2030, but also move to a faster rate of electrification, transport, manufacturing and agriculture,” Rottanak said.

“If we can do that, it would certainly lessen the dependency on the import of petroleum and gas products. Now, with our energy system, just like many, many systems in the world, we would not be able to disconnect entirely from oil and gas anytime soon.”

He said developing a domestic oil refinery is an important step towards achieving energy independence, enabling Cambodia to stave off any future shocks in the global fuel market.

“Therefore, we are working hard to have a refinery because when we have a refinery, we can do strategic stockpiling in terms of crude oil. So far, stockpiling has been around petrol, gas and diesel, which is not the best scenario.”

The Minister also confirmed that the government, under the Ministry of Mines and Energy, is in negotiation with proposals from the United States, China, Japan and other countries to look at the possibility of an oil refinery. He hopes Cambodia will be able to do so in the next four or five years

Rottanak told Bloomberg that Cambodia has seen a 77.8 percent slump in oil imports this year. When asked whether this is an indication that energy efficiency and clean energy transition plans are working, or an indicator of a slowing economy, Rottanak said the country’s electricity sector has seen much success.

“We used to import a lot [of electricity] from neighbouring countries, but we have been able to reduce imports, for example from Thailand to zero, because we can do a lot more domestically. We were also successful to some extent in terms of the energy efficiency programme.”

According to Reuters, Rottanak said that to fuel the gap in supply shortages from Vietnam and China, Cambodia is importing extra fuel from Singapore and Malaysia. Gasoline and diesel exports from the two countries in the first 18 days of March were 25 percent higher than the same period last year, but 40 percent lower than in the final 18 days ‌of February.

He added, “We’re still able to import a little bit from China. But because we have strong partnerships with global suppliers such as Total and Chevron, they are able to mitigate some of the risk.”

According to Rottanak, the slowing down of the economy has also affected energy supply and use, however, he confirmed that does not signal that the electricity sector is not improving. He noted that manufacturing in Cambodia continues to grow, which requires a reliable, quality electricity supply.

“But energy efficiency has been successful in curbing the energy intensity in manufacturing. But in terms of the recommendation, we are also able to do more for EVs (electric vehicles). So we’re rolling out a larger-scale EV charging station across the country right now,” the Minister added.

Dean Rizzetti, Regional Director – Energy Policy at EnergyLab Asia, told Khmer Post USA, “The best way to reduce Cambodia’s dependency on volatile international fossil fuel markets is to help as many families as possible shift to EVs. These vehicles are powered by Cambodian sun, wind and rain, and are much more efficient and cheaper to run.”

Soeung Saroeun, Executive Director of NGO Forum on Cambodia, which works on climate resilience and natural resource governance, said that while an oil refinery could offer Cambodia some short-term energy security and reduce dependence on imported fuels, it also carries high financial, environmental and long-term transition risks, especially as global markets shift away from fossil fuels.

“Therefore, the government should proceed cautiously with a full cost-benefit analysis, strong environmental and social safeguards, and transparent impact assessments,” Saroeun suggested, adding that it is important to speed up the ramping up of green energy alternatives.

“Alternatives like solar energy and EV initiatives that are abundant, faster to deploy, increasingly cheaper and less exposed to global price shocks, combined with storage and grid improvements, may provide a more sustainable, economically sound and climate-aligned pathway for Cambodia’s energy future,” he added.