Vietnam invites bids for 9 oil/gas blocks, boosts investment

Petrovietnam has launched the 2011 licensing round for nine oil and gas blocks offshore Vietnam,the first since 2007 and the most in recent years, while Vietsovpetro will boost investments as the country works on reversing declining output and export

Vietnam, a net oil exporter and Southeast Asia’s third-largest producer, has been facing falling output from ageing fields and is seeking to ramp up domestic and overseas production to meet growing demand and feed Dung Quat, its first oil complex, while more refineries are being planned.

The licensing round lasting between Aug. 1 and Jan. 5, 2012 covers blocks 43, 03, 10/11, 41, 11-2/11, 05-3/11, 50, 22/03 and 12/11 in Nam Con Son, Phu Quoc and Malay-Thochu basins, state oil and gas Petrovietnam group said in a statement on Tuesday.

“These are the blocks with much potential,” said a Petrovietnam official. He declined to reveal details of their reserves estimates since Petrovietnam’s data were “preliminary”.

The blocks lie further to the south and southwest of the Spratlys and Paracels in the South China Sea, and outside the areas where China has been embroiled in territorial disputes with many of its southern neighbours.

Oil firms from the United States to Europe have expressed interest in the bidding round, the Petrovietnam official said, without naming the companies.

The Nam Con Son basin covers the Lan Tay and Lan Do gas fields, in which BP Plc sold its stakes to its Russian joint venture TNK-BP late last year.

“The Nam Con Son basin should be pretty attractive, as should the Malay-Thochu basin. I suspect, they’ll find more gas than oil in the areas though,” said H.S. Yen, an analyst at FACTS Energy, adding the round will attract many bidders because it involves the most productive areas.

“My guess is that their projections for crude/gas production will be similar to ours, peaking around 2014-2015, so this would be an attempt to cover falling output by having potential new fields that could enter into production around the 2015-2016 period to keep its output and exports stable,” Yen said.

Registration and data review will be held between Aug. 10 and Oct. 7, and the official said Petrovietnam would strive to release the results in January.

The data included around 49,000 km seismic 2D, 1,700 square km seismic 3D, processed and 33 wells drilled, showing similarity to recent oil and gas discoveries in the country and the region, the statement said.

NEW FIELDS, INVESTMENTS

Other than Vietnam, major Southeast Asian oil and gas producers Indonesia and Malaysia are also grappling with lower output from ageing fields and are turning to enhanced oil recovery technology for deepwater and marginal fields.

Myanmar is also aiming to become a big regional producer and has invited bids for firms to operate 18 onshore oil blocks across half a dozen provinces, the largest number in a single such offer in recent years.

Vietnam’s crude production from old fields, including the major Bach Ho (White Tiger) oilfield in the Cuu Long basin, has been falling. July’s output fell 5.6 percent from the same month in 2010 to 1.21 million tonnes, or 285,000 barrels per day (bpd), government data show.

Vietnam-Russia oil venture Vietsovpetro’s latest projection of 6.31 million tonnes (126,719 bpd) of crude output this year is also down from a 2002 peak of 13.5 million tonnes (271,109 bpd) and 6.4 million tonnes last year.

It plans to invest hundreds of millions of dollars in offshore oil rigs to shore up production, and is aiming for average annual output of 6.4 million tonnes (128,526 bpd) up to 2015. Vietsovpetro reported in June a new oil flow of 4,560 bpd at a well near the Bach Ho field.

Last month, Petrovietnam said it has started production at four new domestic and overseas oilfields and will bring additional oil from an expanded project at the Dai Hung field in the second half of this year. The new fields will help the country produce 310,300 bpd of crude.

State oil marketer PV Oil this week sold the first two cargoes of medium sweet crude from Te Giac Trang — one of the new fields — for September-October loading via tender, trade sources said.

PV Oil is also expected to offer cargoes of the other new crude, Chim Sao, in the next one to two months, traders said, which could help turn round the fall in exports.

Petrovietnam started its first international licensing round in 2004, having awarded exploration rights in three blocks in the offshore Phu Khanh basin near the central coast, to firms from the United States, Canada and India.

The next came in 2007 when Petrovietnam offered seven oil blocks, all located in the Song Hong (Red River) Basin offshore northern Vietnam, and was awarded the following year. – Reuters

Tags: Vietnam oil and gas industry