Vietnam's government is clearing paths to production gains by international producers.

Vietnam appears intent on increasing its oil and gas production, and it's making the right moves to make more territory available and to attract operators.
Late last year, the nation's Petro Vietnam signed deal with BP, Statoil and India's Oil and Natural Gas Corp. that will result in a US $1.5 billion natural gas-producing project. That agreement, called the Nam Con Son deal, had been in negotiating stages for 5 years, but the result was the largest investment to date by the oil and gas industry in Vietnam.
Under that agreement, the producers will find and produce gas from a 2.1 Tcf discovery in the Nam Con Son Basin, some 290 miles (467 km) southeast of Ho Chi Minh City. The producers will build a $582 million pipeline to deliver 94.5 Bcf/d of gas to mainland power plants.
That single deal injected antibiotics into a sickly Vietnam investment environment plagued with accusations of corruption and haphazard government decision-making. Investment had trailed off to some $600 million from $2 billion in the 1996-1997 fiscal year.
"I think it brings a new impetus. They (investors) will see Vietnam as a better place to invest," said Pham Chi Lan, executive vice president of the Vietnam Chamber of Commerce and Industry.
Vietnam also has formed working groups with China to work out boundary disputes between the two countries in the Gulf of Tonkin and the Spratly Islands. The Nam Con Son Basin lies about halfway between mainland Vietnam and the Spratlys.
Those negotiations are paying off. On Dec. 25, 2000, the two countries signed a maritime agreement that established the boundaries between China and Vietnam in Tonkin Bay and opened potential exploration for both countries. That dispute had been in place for years. The two countries also signed an agreement delineating the 745 miles (1,200 km) of inland border, including 70 disputed areas that had caused a war between the two countries more than 20 years ago.
Some of the clashes remain, however. Both countries claim undeveloped blocks between Vietnam and the Spratly Islands, and those disputes are preventing Conoco and Petro Vietnam from exploration. Vietnam's Dai Hung (Big Bear) oil field is on the boundary of waters claimed by China.
The Spratlys will remain a problem for some time as Vietnam, China, the Philippines, Brunei, Taiwan and Malaysia all claim ownership.
The large consortium isn't the only entity working the Nam Con Son Basin. Samedan Vietnam, an arm of Noble Affiliates Inc., picked up exploration rights in blocks 12W and 12E in the basin last November. Prospects lie in about 300 ft (92 km) of water. Samedan will operate the license. Its partner, Opeco Natural Gas, holds the other 22% ownership. If they find hydrocarbons in commercial quantities, Petro Vietnam can back in for a 15% working interest. Samedan plans two wells on the 1.6 million acres this year.
Much of the attraction for Vietnam, however, comes from recent activity in the offshore Cuu Long Basin, about 120 miles (193 km) east-southeast of Ho Chi Minh City. In September 2000, Conoco made a major oil discovery in Block 15-1 in that basin, working in partnership with the Korean National Oil Co., SK Corp. of South Korea and Geopetrol of France. The discovery well tested at 12,600 b/d. Conoco also had interests in nearby Rang Dong field producing 40,000 b/d in Block 15-2 in 160 ft (49 m) of water until it hit another well that pushed production close to 50,000 b/d.
Conoco's successful Rang Dong stepout well tested at a rate of 8,500 b/d from a single zone.
"The major discovery we announced in Block 15-1 in September, the success we're announcing today and the encouraging activity from our seismic studies in Block 16-2 put us well on our way to achieving our aggressive growth goals for Vietnam," said Rob McKee, Conoco's executive vice president of exploration and production.
Soco Ltd. also became a player in the Cuu Long Basin in December when it signed a contract with Petro Vietnam for Block 9-2, a 656-sq mile (1,700-sq km) parcel. That contract gives Soco a half interest in the block with Petro Vietnam. The tract is near Rang Dong field.
Soco will spend $18 million on an exploration program in the area. If the seismic program shows prospective structures, the company plans to drill two exploratory wells this year. Soco also has exploration on Block 16-1.
This was the 43rd contract of this kind that Petro Vietnam has signed with international firms since 1988 and the sixth signed in 2000.
At the beginning of 2000, Vietnam had proved reserves of 600 million bbl of oil and 6.8 Tcf of natural gas. It produced 264,000 b/d between January and August last year, and it produced 19.4 Bcf/d of gas in 1998.
Vietnam is a net oil exporter. It has no refineries, so all of its production must go to other countries, but it consumed only 207,000 b/d, which gave it net exports of 57,000 b/d.
It used all of its gas production in the country.