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The Vietnam News

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Russian-backed group strikes oil off Vietnam coast

A company with Russian and Japanese investment said it made a commercial oil discovery off the Vietnamese coast, and plans to begin production as soon as 2009. BR>
VRJ Petroleum Co., which includes Russia's OAO Zarubezhneft, Vietnam Oil & Gas Group, and a unit of Japan's Idemitsu Kosan Co., has drilled three exploration and appraisal wells on the Doi Moi structure, located on Block 9-3 about 135 kilometers off the coast of the port city of Vung Tau, according to a statement from the joint operating company. The drilling proved the “availability of oil'' in the area, located in water depths of about 50 meters, VRJ said.

Production may start next year and may be sustained at a rate of between 15,000 barrels and 20,000 barrels per day, with the field operating for as long as 25 years, according to VRJ General Director Victor Anosov, who's based in Vung Tau. “We can't say exactly yet about reserves, we have to prepare a development plan,'' Anosov said on Tuesday by phone. “We are optimistic, very optimistic about this field.'' Vietnam is Southeast Asia's third-biggest oil producer after Indonesia and Malaysia.

Output fell for a third year in 2007, slipping eight percent to about 15.5 million metric tons, the Vietnam News Agency reported January 2, or about 318,000 barrels per day. State-owned Zarubezhneft has a 50 percent stake in Block 9-3, with a unit of Vietnam Oil & Gas Group, known as PetroVietnam, taking 35 percent and a unit of Idemitsu Kosan holding 15 percent, according to a 2006 statement from the Japanese company.

Vietsovpetro, which Russian President Vladimir Putin described in October as “one of the most economically effective oil-producing companies in the world,'' also operates the Rong field, which is in block 9-1 and is adjacent to VRJ's area. The proximity to Rong means that “we can work together with Vietsovpetro and use their infrastructure,'' said Anosov. The new field, to be named Nam Rong-Doi Moi, contains “pure oil, no gas,'' he said. The partners began seismic surveys in the area in 2002, saying then that total investment in the event of a commercial discovery may reach US$1 billion. “We have to hold a management committee meeting in May to discuss further exploration of the block,'' said Anosov. “But for now we are focused on starting development of what we have already found.”

Bach Ho field

PetroVietnam Trading Co., a unit of PetroVietnam, offered to sell Bach Ho crude oil for loading from April to September at a higher premium, said traders who received offers. PetroVietnam Trading, also known as Petechim, offered buyers a premium of $6.90 a barrel, a 34 percent increase from the premium received for shipments from April to September last year, said three traders who asked not to be identified because of confidentiality agreements with the company.

Petechim had last year agreed to sell the crude at a premium of $6.15 a barrel from October 2007 until March 2008. Petechim's Bach Ho premium is based on the price of benchmark Indonesian grade Minas crude oil derived from assessments published by two oil-pricing services, the Asian Petroleum Price Index and Platts. Petechim typically sells crude oil in cargo sizes of between 400,000 barrels and 600,000 barrels. Bach Ho oil is pumped from a field off Vietnam's coast by a Russian-Vietnamese joint venture. Bach Ho is a so-called medium- sweet crude oil, with 0.035 percent sulfur by weight. The crude oil is processed in refineries in China, Singapore and Japan.

Royal Dutch Shell Plc., Sumitomo Corp., Chevron Corp. and China International United Petroleum & Chemicals Ltd. (Unipec), are among the buyers of Bach Ho.

Bloomberg - January 11, 2007.