VIETNAM Operators increase exploration, development off newest Asian province

International interest escalating as discoveries indicate sizeable reserves

Dev George
Managing Editor - International

• Vietnam activity areas.

• Contest for the South China Sea. Vietnam and China are still at loggerheads over suzerainty in the highly prospective South China Sea. Although negotiations have been on-again, off-again for some time, the temperature appears to have risen, with each country sending in exploration teams to do seismic or drill or both. Other countries with claims on the region are settling their differences either by establishing new frontiers or setting up Joint Development Zones, as is the case with Malaysia, Indonesia, and Thailand. Vietnam is, in addition, negotiating with Thailand and the Philippines.

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. Furthermore, he maintains, in only 25 years, the country may become one of the major industrialized nations of the region, based on its projected oil export revenues and its mineral and human resources.

Of course, the government of Vietnamese Premier Vo Van Kiet is pursuing that goal. It has established favorable terms for foreign oil companies' participation in every aspect of the petroleum industry in Vietnam, and has not only spread the welcome mat, but has toured the world's petroleum capitals with seminars and presentations promoting the Vietnamese venue.

Needless to say, they have come. Every major oil company in the world has poured over the blocks on offer and what seismic and drilling data there is from the past two decades, and chosen the concessions it wanted. Others have farmed in where the prospects look particularly fruitful. And it's now paying off both for the international oil companies and for Vietnam - although about 13 nearshore blocks are still unallocated (122-130 overlapping contested waters off central Vietnam, and 25-41 skirting the Quan Long Peninsula into the Gulf of Thailand).

Although Vietnam was sorely underexplored before foreign companies entered the play, serious 2D and 3D seismic acquisition programs have now been completed or are underway throughout the concession areas, and exploratory drilling is proving the analysts right - there is tremendous prospectivity here, particularly in the Nam Con Son and Vung Tau Basins off the south coast.

Vietsovpetro

Mobil Oil made the first discoveries offshore Vietnam in 1975, Bach Ho (White Tiger) and what became Dai Hung (Big Bear). With its withdrawal from the country, however, these fields passed to the Vietnamese-Soviet joint venture Vietsovpetro, which was granted exclusive rights to a large irregular exploration block that encompassed all of what is today Blocks 04 and 05, 09-11, 15, and 16. Ironically, following PetroVietnam's reallocation of Vietsovpetro's holdings, all of the new discoveries except those by British Petroleum in Block 06 have been in ex-Vietsovpetro aquatory.

Vietsovpetro, however, continues to be a major player despite its financial and technical problems. Following disintegration of the Soviet Union, its Soviet ownership was transferred to the Russian Petroleum Import & Export League, and a more major role in its operation and management has been turned over to the Vietnamese. Until last year, Vietsovpetro's Bach Ho Field was the only source of Vietnamese oil, producing an average of 136,700 b/d oil. Dai Hung, however, was brought onstream by operator BHP Petroleum in October 1994, with initial oil flow at 25,000-35,000 b/d, and Vietsovpetro's own Rong (Dragon) Field, also in Block 16, came onstream at the end of 1994 with an oil output of 24,000 b/d.

PetroVietnam predicts that it will produce at least 220,000 b/d oil and 144 million cf/d gas by the end of 1995, and over 400,000 b/d oil and 288 million cf/d gas within five years.

Discoveries

The level of exploration in the Nam Con Son Basin has reached a frenzy, due primarily to the number of discoveries being made there. At least nine major fields were found in the area only last year, and an equal number are anticipated in 1995. They are:

• Ruby Field, in Block 01, discovered by Petronas in early 1994, with undisclosed reserves that have tested 1,750 b/d oil, 7.2 million cf/d gas.
• Flying Horse Field, 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, by first indications.
• 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 Japan Vietnam Petroleum, with reserves of 400-600 million bbl oil, that tested 10,346 b/d & 4,043 b/d from two levels.

Foremost among these is most likely the Aurora Field, a phenomenal, multilevel find relatively near shore, which will facilitate its development considerably. Operator Japan Vietnam Petroleum, a joint venture of Mitsubishi (51%) and Japan National Oil Corp. (49%), plans two more wells this year for further delineation.

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 this year.

The BP Orchid Fields in Block 06 are also of major significance, particularly to Vietnam's potential gas production. The 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.