BP Amoco Says May Sign Vietnam Gas Contract by June SINGAPORE - BP Amoco Plc said it will likely sign the final agreement in June for a $1.5 billion natural gas and pipeline project in Vietnam, the country's largest foreign investment to date, ending more than three years of negotiations. BP Amoco, the world's third largest listed oil company, and partners Norwegian state-run oil company Statoil and India's Oil and Natural Gas Corp. plan to tap natural gas fields off Nam Con Son basin and funnel it to shore through a 400 kilometer pipeline. ``BP Amoco is desperate to get their production profile up and running because it's lagging behind companies like Total Fina in production growth'' worldwide, said Peter Hitchens, an oil analyst with brokerage Williams de Broe in London, who has a ``sell'' recommendation on the company. ``BP Amoco has driven up earnings through cost cutting and are now trying to beef up the company's organic growth,'' Hitchens added. BP Amoco shares in London gained as much as 15.5 pence, or 3 percent, to 526p. The group has invested more than $500 million in the project so far, mainly in oil exploration, though BP Amoco won't commit more money to build an offshore platform, terminals and pipelines until all commercial contracts are signed, said a BP Amoco executive who declined to be named. Power BP Amoco, Statoil and PetroVietnam will build the pipeline, which will pump in gas to fuel three planned power plants in southern Vietnam with a combined capacity of 2,200 megawatts. The plants could generate about 13 billion kilowatt/hours of electricity a year, equivalent to some 60 percent of Vietnam's total demand. Vietnam needs that power to drive its economy, which is expected to grow at 5-6 percent a year during the next five years, said Ngo Hop, Vietnam's trade representative in Singapore. The companies have reached a basic agreement with the government on gas price, foreign exchange remittance and taxes, but no documents have been signed, the BP Amoco official said. The biggest hurdle will be getting Vietnamese authorities to accept agreements that lower the foreign oil companies' risk exposure. ``We have come a long way to resolve commercial issues like gas price, minimum gas volume and foreign remittance, but there are still some issues yet to be resolved,'' said Olav Heigre, chief representative of Statoil's operations in Vietnam, though he declined to give details. ``We are moving forward and we have made significant progress in negotiations but the contract can only be signed when everything has been agreed. With strong willingness from both sides I hope this can happen as soon as possible'' Heigre said. Delays Likely Even if the project goes ahead, the delivery of gas from the Lan Tay and Lan Do fields will likely be in August 2002, eight months behind schedule, said another executive with BP Amoco in Vietnam. The field has estimated reserves of 2 trillion cubic feet of natural gas and 10 million to 15 million barrels of condensate, an ultra-light crude oil. BP discovered the gas seven years ago in Block 06.1 in the Nam Con Son basin off Vietnam, about 400 kilometers southeast of Ho Chi Minh city. Clinching Nam Con Son will be ``a nice little addition'' to BP Amoco's crude oil and natural gas reserves, raising it between 1 percent to 2 percent, or 20,000 to 30,000 barrels of crude oil equivalent a day, said Hitchens. By Lim Le Min - Bloomberg - February 17, 2000.