A decades-old dispute between Cambodia and Thailand over potentially resource-rich waters is back in the spotlight as rising prices press governments to find new energy sources.

Thai officials have floated a new approach to long-stalled negotiations over the overlapping claims area (OCA), a 27,000-square-kilometer swath of the Gulf of Thailand claimed by both countries.

Estimated to contain up to 11 trillion cubic feet of natural gas plus large oil deposits, the area has been contested since the 1970s. An agreement in 2001 set out a framework for talks on the issue that states any deal to develop energy resources must be negotiated “simultaneously” with another on territorial issues.

But with Thailand facing a worsening energy security outlook, Thai Deputy Prime Minister Pirapan Salirathavibhaga this month proposed dividing the two issues and pushing ahead with discussions on joint development.

“We need energy from the OCA, not the delimitation of the territorial sea. It’s difficult and takes time to settle disputes over territory since no country can easily accept the change in its boundaries,” Pirpan, who is also energy minister, said, as reported by PBS Thai.

Production at Thailand’s domestic gas fields is declining, leaving the country’s electricity grid more reliant on expensive LNG imports, which surged by 30% year-on-year in the first six months of 2023.

The OCA also offers the best chance for Cambodia to revive its long-held dreams of producing oil after KrisEnergy, the operator of its first oil field, went bankrupt in 2021 mere months after pumping began. The case resulted in the convictions of 22 people — including KrisEnergy senior officers and the crew of a tanker — in a Cambodian court in August, a ruling seen by Nikkei Asia shows.

Both countries’ new leaders are facing public pressure as electricity and fuel prices rise.

Thai Prime Minister Srettha Thavisin has pledged to reduce energy costs as part of an economic stimulus package announced in September. In October, Cambodian Prime Minister Hun Manet vowed to stop power price increases from impacting workers.

Limiting increases will be tough, as Cambodia is totally dependent on foreign sources of energy, prices of which have increased since Russia’s invasion of Ukraine.

Rising prices are likely a factor in the renewed emphasis on the OCA, said Angus Rodger, an analyst at energy consultancy WoodMackenzie. Highly exposed to the LNG spot market to meet short-term needs amid an “acute energy crisis,” Thailand got a “rude shock” when prices spiked last year, he said.

“This is one of the primary drivers for the Thai government to get serious about these OCA talks,” said Rodger, the vice president of SME upstream in APAC and the Middle East for the consultancy. “We believe the outlook for OCA resolution is looking more positive than it has for many years. The underlying factors driving both sides together — the availability of these large, affordable and secure energy resources right on their doorstep — are becoming increasingly urgent and important.”

Chris Larkin, managing director of CLC Asia, a government affairs and corporate advisory, however, said there was little to indicate that the recent announcement would deliver concrete results.

“Until there is strong political will from both sides at the very top to push this forward beyond a photo op,” Larkin said, “then I’m not betting any money that things are going to happen anytime soon.”

The talks have been derailed several times since the framework was agreed to in 2001, during Thaksin Shinawatra’s stint as Thai leader.

In 2007, a Cambodian official told a U.S. business delegation that the countries were “very close” to a resolution before Thaksin was toppled in a 2006 coup, according to a U.S. diplomatic cable released by WikiLeaks.

Talks were revived after being suspended amid tension in 2009, but periodic commitments to reach a resolution have fizzled.

After meeting Manet in Phnom Penh in September, Srettha promised to form a new committee to oversee the negotiations under the Foreign Ministry, overhauling the previous setup.

In the same week, Keo Rattanak, Cambodia’s minister for mines and energy, met with Thailand’s ambassador to Cambodia to discuss the issue.

“Cambodia is open to discussing and resolving the issue of overlapping areas in the sea,” Ratanak said, reported local news.

Cheap Sour, a spokesman from Cambodia’s Ministry of Mines and Energy, told Nikkei Asia that it was too early to provide an update.

“You need to wait a bit more to see the progress as the newly formed government still has many other things to do,” Sour said.

Larkin says that while the countries’ relationship has improved, mutual suspicion remains. Cambodia likely worries that Thailand would be the biggest winner of any deal to extract the underwater resources, thought to be concentrated further toward the Thai side.

In addition, Thailand has the more advanced extraction industry. “So just by default,” Larkin added, “it’s not a great leap of logic to think that Thailand’s oil and gas industry will be the major beneficiary from the contract works, and Thai consumers will be the major users of whatever comes out of the OCA.”

Cambodia’s attempts to cultivate nearby resources have been less than successful.

Chevron, which operates gas fields in Thailand, was contracted to pump oil in Cambodia but sold its rights to Block A, a concession next to the OCA, to KrisEnergy in 2014.

KrisEnergy pumped the first oil from the concession in December 2020 but declared bankruptcy in June 2021 after production was far lower than forecast.

The collapse was followed by controversy when the oil tanker MT Strovolos, which was holding all of the almost 300,000 barrels of crude extracted from the site, left the oil field.

World Tankers, the ship’s owner, said the captain had to leave because KrisEnergy had stopped paying to resupply the vessel. The Cambodian government accused the operators of stealing the oil, leading to a raid on the tanker in Indonesian waters and a subsequent legal case in Cambodia.

On Aug. 9 this year, a Phnom Penh Municipal Court judge convicted 22 people in absentia for violating customs law and for the criminal offense of stealing state property. Among those convicted were KrisEnergy CEO Kelvin Tang and the company’s offshore operations manager, Martin Dick, according to court documents obtained by Nikkei Asia. The pair did not respond to requests for comment.

Each conviction resulted in a two-year suspended prison sentence — meaning four years in total — for each of the 22 defendants and fines of between $1,200 and $2,400.

KrisEnergy and the involved shipping companies were banned from Cambodia.

Cambodia received $14 million from the sale of the oil, local outlet Cambodianess reported last year.