According to the Vietnam News Agency, crude oil export volume was only 7.68 million tonnes valued around US$3.7 billion in the first six months of 2007, fulfilling 46.55 per cent of the full year’s target, and only 90 per cent of the same period last year.
The target set by the Vietnam National Oil and Gas Group (PetroVietnam) is to export 17.5 million tonnes of crude oil in 2007, or 1.46 million tonnes a month, but the monthly average was only 1.28 million tonnes in the first half of this year.
Lower output, lower price
According to PetroVietnam, the main reason for lower exports is shrinking crude oil output. This results from unpredictable changes in oil production. Block PM3 CAA has low oil and gas production output because the gas bed with low CO2 concentration is falling. A CO2 separating platform has just been put into operation, but only two units are fully operating while another four are in trial run. Dai Hung oilfield has low output because of bad weather. This field has to suspend operations 73 days to repair and replace pipelines. The decline in production volume led to the unexpected lower crude oil export.
Besides, the crude oil price this year is not as high as previous years. In the first six months of this year, the average global crude oil hovered at US$60 a barrel, much lower than the rate of US$70-80 a barrel in the same period last year. Crude oil is the largest forex earner for Vietnam; thus, falling export of this commodity affected general export growth. If crude oil is excluded from export categories, export growth was higher than previous years. While crude oil export value declined 10 per cent, general export revenue was up nearly 20 per cent against the same period last year.
Before the target of exporting 17.5 million tonnes of crude oil in 2007, the Government instructed PetroVietnam to seek measures to raise domestic crude oil output within technical limits and field safety, while urging the oil monopoly to intensify overseas oil and gas exploration and exploitation activities to offset the domestic deficiency. However, Mr Tran Ngoc Canh, General Director of PetroVietnam, said Vietnam could possibly miss both the crude oil production target and the export goal.
In the last six months of 2007, PetroVietnam only set the export target at 8.82 million tonnes, lower than the initial 9.82 million tonnes. The Minister of Industry sent a report on the difficulties to the Prime Minister and asked for reduction of the crude oil production and export targets. At present, PetroVietnam is waiting for the Prime Minister’s decision. However, even if the target of crude oil production is reduced by one million tonnes, PetroVietnam will have to try its best and continue exploratory and appraisal activities to increase reserves to 34-40 million tonnes of oil equivalent this year to fulfil the amended target.
Stepping up exploration and production activities
PetroVietnam said it signed two new oil exploration contracts to explore oil abroad in the first six months this year, raising its total number of overseas oil exploration deals to nine. At present, PetroVietnam is processing 3D seismic data, drilling two assessment wells and establishing reports on overall investment and field development. The group is actively seeking investment opportunities in Venezuela, Cuba, Ecuador, Kazakhstan, Myanmar, Tunisia, Indonesia and Iran. In early 2007, PetroVietnam signed four new contracts to explore oil in Vietnam’s territory. So far, PetroVietnam has signed 57 oil and gas deals with foreign companies to search for oil and gas in Vietnam, including 35 valid contracts.
In exploration, the group drilled 15 wells, conducted by PetroVietnam and foreign contractors, finding oil in Hai Su Trang well with estimated daily output of 14,800 barrels in Block 15-2/01, Te Giac Trang (White Rhino) structure with estimated daily flow of 5,000 barrels in Block 15-2/01 and Thang Long-2X well with expected daily output of 4,700 barrels and 38 million cubic feet of gas in Block 02/97.
Many world-leading oil firms plan to make investment and expand operations in Vietnam, especially BP and ConocoPhillips which are already operating in Vietnam; Thai firms and other countries’ firms. BP Vietnam wants to continue close cooperation with the Vietnamese Government to effectively carry out new projects and expand the operations of existing projects in the next 10 years. BP calculated that it and its partners need around US$2 billion to raise the output of Lan Tay and Lan Do gas fields, develop several gas fields and build a gas-fuelled power plant in Dong Nai Province.
BP is now the operator of Nam Con Son gas project with the estimated investment capital of US$1.3 billion. This project brings ashore three billion cubic metres of gas a year. Early this year, BP, PetroVietnam, Electricity of Vietnam (EVN) and the Ministry of Industry (MoI) signed a cooperation agreement to develop a power plant in Nhon Trach, which will use gas from offshore Vietnam. Nhon Trach power plant is estimated to consume 2.5 billion cubic metres of gas a year and has a designed capacity of 2,640 MW. In addition to gas field exploitation and power plant construction, BP is working with Vietnamese partners on the possibility of investing in liquefied petroleum gas (LPG) production, a potential market segment in the company’s business strategy in Vietnam.
ConocoPhillips (US), which has become one of the biggest investors in Vietnam with aggregate US$1 billion in the past 10 years, recently announced that the company will inject an additional US$1 billion into oil projects in Vietnam in the next 10 years. ConocoPhillips said it would invest around US$115 million to develop its operational oilfields in Vietnam.
Recently, PetroVietnam has also discussed with its partners a petrochemical complex with the estimated investment capital mounting to US$2 billion. In July, PetroVietnam and partners including Vietnam Chemicals Corp. (Vinachem), Thailand’s SCG and TPC, will negotiate the joint venture contract on the southern petrochemical complex. Currently, Thailand’s SCG is conducting feasibility studies, reviewing joint venture schemes and outlining joint venture contracts. Under the plan, the joint venture will be set up to carry out the project within the fourth quarter of 2007. The complex is expected to go on-stream in late 2011.
Khai Minh
Vietnamese
