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Cambodian Petrochemical Company and Sinomach China Perfect Machinery Industry Corp jointly announced on Friday to build the first oil refinery in Cambodia and the construction is expected to be completed at the end of 2015.

Zhang Sugang, president of Sinomach China Perfect Machinery Industry Corp, said the oil refinery will cost 2.3 billion U.S. dollars and it will take 36 months to be constructed on the 80- hectare area within the boundary of Preah Sihanouk province and Kampot province.

"When the construction is completed, the plant will be capable to produce 5 million tons of oil a year," he said after a signing ceremony here.

He said the firm's decision to invest in Cambodia was thanks to well-developed relationship between China and Cambodia, and Cambodia's potential for oil industry.

"We believe that when the project comes to fruition, it will greatly contribute to developing Cambodian economy," he said.

During a signing ceremony on Friday, the Cambodia government signed to grant an oil refinery license to Cambodian Petrochemical Company to build the factory.

The agreement was inked between Cambodian Deputy Prime Minister Sok An, Chairman of Cambodian National Petroleum Authority, and Siv Kong Triv, president of Cambodian Petrochemical Company.

Also, there was a contract signing between Siv Kong Triv and Zhang Sugang on the engineering procurement construction for the factory.

The ceremony was also witnessed by Chinese Ambassador to Cambodia Pan Guangxue.

Mao Chetra, administration chief of Cambodian Petrochemical Company, said the firm would build an oil refinery with the high- and-latest technology that has not been used in the Southeast Asian nations.

"The would-be plant will help boost the development of Cambodian economy, increase state's revenues and generate thousands of jobs," he said.

Speaking after the ceremony, Sok An said the oil refinery project reflected the progress in developing Cambodian oil and gas sector.

"This also mirrors local and foreign investors' trust in Cambodian business and political situation," he said. "When the project is completed, it will greatly contribute to developing economy and reducing poverty in Cambodia."

Sok An said that currently, Cambodia's oil demand is more than 1 million tons a year, but the demand will reach 3 or 4 million tons a year in coming years thanks to a steadily growing economic size.

According to the figures recorded by the Ministry of Commerce, the country spent 1.33 billion U.S. dollars to buy 1.35 million tons of oil from Vietnam, Thailand and Singapore in the first ten months of this year.

The country's seabed is believed to be rich in oil and gas, but exploitation is not made yet.

Sok An said that U.S.' Chevron has invested about 150 million U. S. dollars for oil and gas exploration in Cambodia's offshore Block A and it is estimated that the firm needs to invest another 600 million U.S. dollars to exploit oil and gas from the Block.

"But, now, the negotiations between the government and the company have not yet completed on the issue of tax payment," he said.

Cambodian Government expects that it will earn tax revenues of 200 million U.S. dollars a year from oil and gas sector when oil production begins.