VietNamNet Bridge – Reserves are a basic parameter for oil and gas economic calculations, especially as turnover from crude oil export accounts for 22-28% of Vietnam’s total budget revenue each year (data from Vietsovpetro).

Some countries exporting large oil volumes, such as Nigeria and Indonesia, are encountering difficulties as they have not properly managed their resources (Indonesia), or have not been able to curtail corruption (Nigeria). So what is the situation in Vietnam?

Oil

Vietnam’s oil output has been falling; last year the country’s crude oil output was around 370,000 barrel per day on average, a fall of nearly 10% (403,000 barrels/day) compared to 2004. The reduction of crude output in 2004-2005 was due to the reduced production at the White Tiger field (source: US Energy Department – EIA/DOE), from which the majority of oil flows.

This result was forecast as far back as 2001.

“According to oil and gas experts, from now to 2005, Vietnam’s crude oil output may reach 16 million tonnes per year, and it will fall very quickly if the country doesn’t find any new sources of oil. Experts also said that it is difficult to find large oil fields like the White Tiger (source: VNA March 13, 2001).

According to the Vietnam Oil and Gas Corporation (PetroVietnam), by January 2000, Vietnam’s oil and gas reserves were 2.7 billion barrels and 12,800 billion Tcf, ranking 35^th and 42^nd in the world. This data differs from statistics in Oil and Gas Journal, which said that Vietnam has 600 million barrels of oil in reserve. Based on the above numbers, one can see that the number of remaining days that Vietnam can still exploit oil at the current speed:

-          2.7 billion barrels/0.37mil barrels per day = 7,297 days (more than 20 years)

-          600 million barrels/0.37mil barrels per day = 1,621 days (4.5 years)

There are reasons that explain the fall of oil output. For the past 20 years, Vietsovpetro, a joint venture between PetroVietnam and Russia’s Zarubezhneft, has continuously exploited the White Tiger oil field. Between 1981 and 1988, oil and gas exploration and exploitation were placed in the hands of only a few companies (source: PetroVietnam).

“After 13 years implementing the Law on Foreign Investment in Vietnam, since 1987, and seven years of the Law on Oil and Gas, Vietnam attracted $3bil in foreign investment in this field, mainly for exploration (PetroVietnam).

In 2002, the Golden Tuna and White Elephant fields were found, with reserves of 250 million barrels for the first. In April 2003, PetroVietnam discovered the Big Bear, which had daily output of around 6,300 barrels. In early 2004, another discovery at Block 15-1 of the White Lion oil field with daily output of 8,682 barrels was announced, and should be in operation in 2008. In July 2004, Vietsovpetro claimed it had found more oil reserves on the Dragon field.

Three months later, a joint venture by American Technologies, Petronas, Singapore Petroleum and PetroVietnam announced the discovery of an oil reserve with 100 million barrels. In October 2004, Japan’s Nippon Oil Exploration, Idemitsu Kosan and Teikoku Oil (30 percent), stated their plan to contribute capital to blocks 05.1b and 05.1c in the Nam Con Son basin.

Two months later, the Korean National Oil Corporation and some other oil and gas firms of the Republic of Korea decided to invest $300mil in block 11-2. Last October, India’s ONGC was licenced to work block 127 at the Phu Khanh basin, at the same time with Chevron Texaco was approved to tap block 122 and Phu Khanh basin (source: EIA/DOE).

According to experts of the World Bank, the oil and gas potential of Vietnam has not been explored fully compared to neighbours like China, Indonesia, Malaysia and Thailand. They advised Vietnam to use product sharing contracts in cooperation with foreign partners instead of the current insistence on joint venture.

They also advised Vietnam to use economic tools that encourage exploitation of small oil fields.

Gas

Vietnam has exploited oil for 20 years and gas for 25 years, beginning with the Tien Hai gas field, which has reserves of 1.3 billion cu.m.

The industry aims to fully exploit associated gases from the White Tiger field, tapping of which began in 1986, but the volume of gas burnt off is still increasing, up to 1bil cu.m/year. There is no official explanation for the burning of associated gas from this field.

In 1993, PetroVietnam presented a $460mil project to take full advantage of this associated gas resource by installing gas pipes from the oil field to the Ba Ria Power Plant in southern Ba Ria – Vung Tau province. This system initially provided 1bil cu.m of gas per day, which grew to 5.8bil cu.m/day in late 2001.

The Dinh Co liquefied gas plant was put into operation in December 1998, processing 4.2mil cu.m of gas each day into LPG and condensate. PetroVietnam is considering increasing the capacity of the gas pipelines from the Mekong basin to the mainland to carry 2bil cu.m/year.

In 1993, BP – Statoil found that the Lan Tay and Lan Do gas fields had reserves of 57bil cu.m, which can provide 2.7bil cu.m of gas per annum. At the same time, many gas fields in Nam Con Son basin were discovered, promising 5-6bil cu.m of gas per annum in the near future.

In March 2005, BP, Statoil, Mobil and BHP signed a cooperative agreement with PetroVietnam to conduct feasibility research. Along with the implementation of the Nam Con Son project, a project to lay the Phu My – HCM City gas pipe system was prepared. Associated gas that was burnt before is now used to generate many gas-fueled power plants in Phu My, which account for over one half of the total electricity capacity of Vietnam. 

(Source: Tuoi Tre)