BANGKOK (Commodity Online) : Unwanted tensions between South East Asian neighbors, Thailand and Cambodia turned ugly Monday with Thailand cancelling an eight-year-old MoU with Cambodia on the oil and gas-rich overlapping area in the Gulf of Thailand.

In a statement issued here Thailand foreign minister Kasit Piromya said, "We cannot negotiate any more based on this MoU as it will affect our economy and security".

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The MoU was signed in June, 2001, when Thaksin Shinawatra was the Prime Minister.

Tension between the two neighbours rose Thursday when Bangkok recalled its ambassador to Phnom Penh in retaliation over Cambodia's decision to appoint the fugitive Thaksin as its economic advisor.

Under the agreement signed in 2001, Thailand and Cambodia, which share 26,000 square kilometres of overlapping area, agreed to delimit and develop as a joint development area for oil and gas exploration.

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