SOUTHEAST ASIA PetroVietnam's Ho Si Thoang outlines successes, predicts future gas industry
Dev George
Managing Editor
Bach Ho Field.
In an exclusive interview conducted in Ho Chi Minh City, Vietnam recently, Dr. Ho Si Thoang, Chairman of the state oil company PetroVietnam, spoke optimistically about current offshore activities and the prospect of Vietnam becoming a major oil and gas producer in the near future.
Vietnam's oil and gas production is still low, but rising steadily as new fields come onstream. The current output of 220,000 b/d oil and 144 million cf/d gas is expected to rise to over 400,000 b/d oil and 288 million cf/d gas within five years.
The East-West Center's Charles Johnson has estimated that the Vietnamese continental shelf contains 1.5-3.0 billion bbl of oil and at least 10 tcf of gas. According to Johnson, the country may become one of the major industrialized nations of the region in only 25 years, based on its projected oil export revenues and its mineral and human resources.
Thus Chairman Thoang has reason to be optimistic. Vietsovpetro's Bach Ho and Rong Fields and BHP's Dai Hung Field are in full production and a lengthy list of fields in development and newly discovered wait in the wings to come onstream as well.
In the Nam Con Son Basin alone, at least nine major fields are expected to add to the country's production. These include:
- Ruby Field, in Block 01, discovered by Petronas, with undisclosed reserves that have tested 1,750 b/d oil, 7.2 million cf/d gas.
- Flying Horse Field (Hou Trang), in Block 04-2, discovered by Lasmo, with estimated reserves of 1.2 tcf gas, that has tested 2 million cf/d gas.
- Red Orchid (Lan Do) & West Orchid (Lan Tay) Fields, in Block 06, discovered by BP, with reserves of 2 tcf of gas, that have tested at 80 million cf/d. (In disputed waters abutting Chinese Wan'ai Bei 21 concession, which was granted to Crestone Energy.)
- Sunflower North & South Fields, in Block 06, discovered by BP, with undisclosed reserves and untested, although said to have had significant showings of both oil and gas.
- Unnamed Field, in Block 11-1, by Total. Said to be very large, with a flow rate of 2,100 b/d oil and 32 million cf/d gas.
- Unnamed Field, in Block 11-2, discovered by Shell/Pedco, with reserves of 70 million bbl oil, that have tested 3,419 b/d oil, 22 million cf/d gas.
- Aurora (Rang Dong) Field, in Block 15-2, discovered by Mitsubishi-led Japan Vietnam Petroleum, with reserves of 400-600 million bbl oil, that tested 10,346 b/d & 4,043 b/d from two levels. Two recent test wells came in at 14,400 b/d oil on one and 1,100 b/d oil and condensate with 8 million cf/d gas on the other.
"I think we have achieved much in our brief 20 years of activity," said Troang. "During the wartime, it was very difficult to work on exploration in Vietnam, especially in the North Vietnam area, from the early 1960s until 1975. We did, however, find a small gas field in Tien Hai Province, near Hanoi and the sea, which, until recently, was our only source of natural gas.
"In the 1970s, several important structures were found off South Vietnam by American companies, but in 1975, when they withdrew from the country, the Vietnamese-Soviet joint venture Vietsovpetro was granted exclusive concession to most of the prospective area."
Vietsovpetro operated a large irregular exploration block that encompassed all of what is today Blocks 04 and 05, 09 through 11, 15, and 16. Ironically, following PetroVietnam's reallocation of Vietsovpetro's holdings, all of the recent discoveries except those by British Petroleum in Block 06 have been in ex-Vietsovpetro aquatory.
"Beginning in 1988, exploration picked up," Troang said. "Several new foreign companies came to Vietnam and started to work in the area. They undertook quite a wide 2D seismic acquisition program and drilled several wells, and found oil in many locations, but nothing proved commercial enough for production.
"From 1992 until today, however, activity has been good. In the north, we have Anzoil exploring in Haiphong and onshore in Hanoi Province, and OMV has done seismic and is now drilling in Block 104.
This area is near Hainan Island, and many companies have found gas both southwest and northwest of the island in Chinese territory, and are now producing gas in the area and piping it to Hongkong. So I think that NorthVietnam will be a major gas producer, too. We simply must continue to study the area and do further exploration and development. We want companies to do well here.
"The central coastal region of Vietnam has not proven very prospective. Several companies have tried to find significant reserves in the area without much success, and most have relinquished their acreage, including Sceptre (Block 111), IPL (Block 115), and BHP (Blocks 120, 121). This area is not very encouraging, too many high concentrations of CO2, but, who knows, maybe discoveries will still be made here.
"Offshore South Vietnam is really where our success has been; its very attractive to foreign operators. Vietsovpetro started working here in 1981 and started to produce oil in 1986. Now the company is producing 180,000 b/d and this production will be increased as Bach Ho and Rong Fields are improved.
"Recently, Vietsovpetro found very good oil results in Rong Field's basement, more than 1,000 tons per day, or 8,000 b/d. At this time, in fact, we are producing mainly from White Tiger's basement, maybe 80%. Basement oil is very important in this area. That is the reason Vietsovpetro found it here.
"Last year, Mitsubishi's discovery was also from the basement, with production of about 15,000 b/d, 10,000 b/d from the basement. And Petronas also found basement oil. So this area of the Mekong Basin is very interesting for its basement possibilities.
"PetroVietnam is still considering the second round of proposals for Block 15-1 from four groups (Conoco/Pedco/Yukong, Mobil, Geopetrol, and BP/Exxon/Mitsubishi/Statoil. A final decision will most likely come in a month or so."
The other part of South Vietnam's aquatory that has drawn the most interest has been the Nam Con Son Basin. Since signing a PSC with BHP and Petronas in 1993 for Dai Hung in Block 05-1, considerable activity has swirled around that block as other blocks are let to a wide range of operators. Considerable drilling has occurred, as well, and several important discoveries made, but Dai Hung itself has proven to be a mere shadow of what it was first thought to be and is now only producing 30-35,000 b/d. BHP, the operator with 43.75%, is actually considering abandoning the project entirely and is having discussions at this time with PetroVietnam as to what to do. The field, at first thought to hold 800 million bbl oil, is now thought to have less than 100 million bbl. BHP has said the field's operating costs will exceed its income.
Another field that has drawn much international attention is Thanh Long (Blue Dragon), on Block 05-1B, which was though to also be a giant oil and gas reserve. Following seismic and some test drilling, however, the Mobil-led consortium is down-grading its estimates with the hope that new drilling next year will prove greater potential production than has so far been shown.
"I am very pleased, however, that BP, British Gas, and Lasmo have each has considerable success with their blocks. In particular, it is important that BP/Statoil found both oil and gas in their Block 6, particularly the gas at a level of 2 tcf in the Orchid Fields, because it indicates that considerable gas is present in the area and can play a significant role in our country's future gas industry."
The BP Orchid Fields lie, however, a difficult 370 km from land, a factor that will definitely affect not only their development but its cost of over $1 billion. BP and its partners Statoil and ONGC have proposed three possible alternatives for the gas: export via pipeline to Thailand, LNG shipments to Japan, or, most likely, supply via pipeline to the domestic market.
Lasmo's Flying Horse Field could also prove to be not only a prime source of gas in Vietnam's future gas production, but a major source of export oil as well, if the field's 2 tcf gas is shown to be accompanied by the a predicted 700 million bbl oil reserve. The joint venture of Cieco Con Son, Union Texas Petroleum, and operator Lasmo will be drilling further appraisal wells next year.
"Likewise, we think it is an important indication of further prospectivity that Total has found hydrocarbons in its 11-2 Block. For this reason, we are speeding up the process of masterplanning information in Vietnam. We want very much to advance in these areas, but we are not sure what the results will be in these areas. But we hope that the gas in this area should be enough to pipeline to the shore. If it is enough, perhaps we can also export the gas and produce LNG in the country for markets in Japan, Korea, and the rest of Asia.
Gas development
"We have many open blocks in North, Central, and South Vietnam, and we have important areas that we hope will soon see exploration and development. Although we know that oil is an important part of our future, we believe that ultimately gas will prove to be Vietnam's primary petroleum product, thus we are now working together with BP and others in developing a masterplan for gas utilization in Vietnam. the first study is to have developed a gas industry in the country by 1998-99. The consumption of gas in Vietnam is not very high now, but we want to develop the market in the country and to develop the gas for export. We are studying methods of building refineries in Vung Tau and other locations along the South China Sea, then we intend to develop other industries related to oil and gas - power generation, petrochemicals, fertilizers, and so on.
"The Vietnamese government has determined, however, that we must prove reserves of at least 19 tcf if we are to undertake such an industrial development."
The East-West Center estimates Vietnam's potential gas reserves at between 12 and 35 tcf.
Confidence that the gas is there, however, is wide-spread. Unocal is entering Vietnamese explorations with gas as its only objective, taking over the ex-Fina Block B in the Vietnamese sector of the Gulf of Thailand, where it will not only be able to utilize its extensive expertise in Thai waters, but be able to tie into its massive Bongkot gasfield pipeline network. The company is also negotiating for aquatory in the Gulf of Tonkin.
Vietnam's first pipeline bringing production ashore from its Can Son Basin went into operation last month. The 64-km pipeline from Bach Ho to Vung Tau will be transporting 700,000 cm/d by the end of this month. The pipeline was built by Hyundai.
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