Vietnam looks to Russia for Dai Hung
HO CHI MINH CITY - Vietnam's
state oil and gas monopoly said on Wednesday it was looking at
offering operation of the ill-fated Dai Hung oilfield to a
Vietnam-Russian joint venture.
``We are having discussions with our Russian partners,'' said Ho Si
Thoang, chairman of Petrovietnam's management board.
``Vietsovpetro is the co-owner of Dai Hung and we're looking how
to handle the project further,'' Thoang said in an interview on the
sidelines of an international oil and gas exhibition in southern Ho Chi
Minh City.
Vietsovpetro, a joint venture between Petrovietnam and Russia's
Zarubezhneft, already operates Vietnam's main Bach Ho oil field off
the country's southern coast.
Thoang said earlier this month Petrovietnam would take over as
operator of Dai Hung because Malaysia's Petroliam Nasional Bhd
(Petronas) (PETR.KL) would withdraw from the field, which traders
estimate produces 10,000-15,000 barrels per day (bpd).
The Petronas withdrawal mirrored that of The Broken Hill Pty Co
Ltd (BHP.AX) from Australia, which pulled out of Dai Hung in
1997 saying the field off southern Vietnam was not profitable.
Thoang also said he did not know when a deadlock would be
broken over pricing the country's largest gas reserves.
The BP (BPA.L) and Statoil Alliance STAT.CN, a venture between
BP Amoco and Norway's Statoil, has been negotiating with
Petrovietnam over sale of the gas, which was first discovered in
1994. The reserves in the Nam Con Son Basin have been estimated
at 58 billion cubic metres.
India's ONGC (ONGC.BO) will also hold a stake in the final
consortium composition.
The international oil and gas expo, communist-ruled Vietnam's
fourth, was the smallest to date with only two major players present
-- the BP and Statoil Alliance along with Petronas.
Thoang blamed the low turnout on gloomy prospects for the world
market, rather than dimming interest in Vietnam's oil sector.
He said that unlike OPEC countries, Vietnam, which accounts for a
tiny portion of world crude production, had no intention of cutting
output this year and it planned to pump some 14.5 million tonnes in
1999.
``Petrovietnam is a special case because Vietnam is a very small
country, it's very poor and has a very small production,'' he said.
``So it would be nonsense (to cut production).''
Thoang said he was optimistic exploration contracts with foreign
firms would be signed for offshore blocks 09-2, 09-03, 16-1, 16-2,
52/97.
He added the government needed to improve the business climate,
which oil firms and other investors say is difficult.
``Oil and gas is not exclusive to Vietnam. We need to compete, we
need to attract investment,'' he said, adding that cumbersome
bureaucracy -- even within Petrovietnam -- was a major hurdle.
``At a macro level the policy of the government is favourable... but
at lower levels not only foreign companies but Vietnamese
companies face problems,'' Thoang said.
Reuters - March 24, 1999.
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