Deadlock over pricing major Vietnam gas reserve
HANOI - Vietnam's state oil firm is deadlocked with foreign partners over pricing the country's biggest gas reserves four years after they were discovered, industry
officials said on Wednesday.
Project licensee, the BP and Statoil STAT.CN Alliance, and state oil monopoly Petrovietnam have been talking for about a year, but no deal is in sight despite high level lobbying by the British government.
``Petrovietnam wants a solution to bring mutual benefit,'' Truong Thien, vice president of Petrovietnam's management board, told Reuters on Wednesday.
``We and BP-Statoil still need to talk more but the price offered by BP is still too high. We have to make the price reasonable.''
Steve Walker, director general for the BP and Statoil Alliance in Vietnam, said substantive negotiations on a commercial agreement for the gas price dated back to last May when the alliance received a letter of intent from Petrovietnam.
``I've given up predicting in Vietnam how long things take,'' Walker told Reuters. ``Negotiating is the way to get an answer, talking and trying to find an outcome.''
Walker declined to disclose figures.
The gas, discovered in 1992 and 1993, is 370 km (231 miles) off Vietnam's southeast coast in the Nam Con Son Basin in the Lan Tay and Lan Do fields. Reserves are officially estimated at 58 billion cubic metres.
Vietnam's Prime Minister Phan Van Khai is due in London this week for the second Asia-Europe Meeting (ASEM) and Walker indicated the project would be a subject in round-table talks between Britain and Vietnam.
A European ambassador in Hanoi, a keen supporter of the project, said it was too important for either side to allow it to slip.
``If big contracts go through this sends a tremendous message when Vietnam is facing problems for foreign investors,'' he said.
The BP-Statoil alliance has invested a total $500 million in Vietnam of which around $200 million has gone into the gas find.
The gas will be brought ashore through a new pipeline to be built by a BP-Statoil-led
consortium that will allow links to other future gas producers in the region.
Gas piped ashore is planned to be used by state-run Electricity of Vietnam gas-fired power stations and an integrated power and urea fertiliser plant.
A consortium led by the Korea Petroleum Development Corp (PEDCO) last week
announced another gas find in the Nam Con Son Basin of 34 billion cubic metres.
PEDCO has said the gas will hopefully be piped into the main BP-Statoil pipeline.
Industry analysts say actual gas reserves in the Basin could be as high as 174 billion cubic metres and that Petrovietnam stands to gain as much as $300 million a year from gas sales.
The government also is to levy a 50 percent tax on upstream producers and tax the pipeline consortium. Income will also come from Petrovietnam's 38 percent stake in gas transport, analysts say.
BP's Walker, while declining to explain how far apart the two sides were, remained convinced that a commercially viable deal would come.
``This is the first major gas investment for (Vietnam) and there is a lot to learn on both sides,'' he said.
``The fundamentals here are rock solid. The country needs power, power needs gas and we have the gas.''
Andy SOLOMAN - REUTERS, April 1st 1998.
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