Hanoi (VNA) - Cambodia has begun extracting crude oil from fields in its waters off the southwestern coast of Sihanoukville, Prime Minister Hun Sen said on December 29.

PM Hun Sen announced the news on social media, hailing the first extraction of crude oil "a new achievement for Cambodia's economy".

Meanwhile, Singapore’s KrisEnergy Ltd, which has joined hands with the Cambodian government in the project, said the concession started production on December 28 and would progress in phases once new wells were commissioned and completed.

Kelvin Tang, chief executive of KrisEnergy's Cambodian operations, called the event "an important strategic milestone" for the company.

The Gulf of Thailand boasts significant oil deposits, with Chevron first finding proven reserves off Cambodia in 2005.

But production stalled as the Cambodian government and the US giant failed to reach a revenue-sharing agreement, leading the firm to sell its stake to KrisEnergy in 2014 for 65 million USD.

Cambodia and KrisEnergy signed a pact in 2017 to develop 3,083 sq km of the basin in the Gulf of Thailand known as Block A.

KrisEnergy currently holds a 95 percent stake of the block where the oil was taken from, while the government holds the rest.

The company expects a peak production rate of 7,500 barrels a day from the initial phase.

Cambodia hopes to earn at least 500 million USD in royalties and taxes from the first phase of the project./.