Energy firm KrisEnergy has signed a deal that would allow it to develop a Cambodian oilfield in the Gulf of Thailand.

KrisEnergy will operate in the north-eastern section of the concession, where there is potential for oil and gas production. It is the first of seven potential fields to be developed.

Although Cambodia has had no oil or gas production, exploration work in this concession area during the mid-2000s resulted in fields being discovered.

The agreements signed with the Cambodian government yesterday give the firm 60 days to make a final investment decision.

If it takes up the option, the project is expected to take up to 24 months to produce its first oil.

As part of the deal, a 5 per cent interest in the entire concession area will be transferred to the Cambodian government. KrisEnergy will hold the remaining 95 per cent.

The contract area covers 3,083 sq km in the Khmer Basin in the Gulf of Thailand.

Wood Mackenzie analyst Jean- Baptiste Berchoteau said: "Given the relatively small size of the field, executing the project on time and within budget will be crucial to achieving a positive return on the investment.

"In order to generate much- needed cash flow and reduce capital expenditure, KrisEnergy has announced its intention to farm out up to half of its stake in the block. With the fiscal terms for the block now clarified, we expect interest in the project from both local and international players."

KrisEnergy shares closed up 0.7 cent, or 6.03 per cent, at 12.3 cents yesterday after the announcement. KrisEnergy had said last week that the signing of the agreement had been scheduled for yesterday.