Japanese firms boost Vietnamese oil industry

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Sept. 29 -- Japanese firms are stepping up their involvement in Vietnam's oil industry, entering both upstream exploration and production and downstream refining and marketing.

State-owned Petrovietnam and Nippon Oil Corp. subsidiary Japan Vietnam Petroleum Co. have begun producing crude oil at offshore Phuong Dong oil field. JVPC holds a 64.5% stake in the venture, while Petrovietnam E&P holds the remaining 35.5%.

Production at the field, located on Block 15.2, about 120 km off Ba Ria-Vung Tau province in southern Vietnam, is expected to increase to 15,000 b/d in 2009 from the current 10,000 b/d.

The field has reserves estimated at 36.3 million bbl of crude, 5.3 million bbl of condensate, and 3.16 billion cu m of natural gas.

Meanwhile, VRJ Petroleum, a joint venture of Idemitsu Kosan subsidiary Idemitsu Cuu Long Petroleum Co. 15%, Petrovietnam 35%, and Zarubezneft 50%, plans to develop Block 09-3, which lies in water 50 m deep some 135 km off southern Vietnam.

In January, after drilling three exploration wells, VJR Petroleum announced a find at Block 09-3, saying one well had an oil flow of 4,150 b/d. Earlier, in 2006, the company estimated that Block 09-3 holds 50-70 million tonnes of oil.

The VJR Petroleum JV plans to invest ¥70 billion to build production facilities, with production of 20,000 b/d slated to start in the latter half of fiscal 2009.

In connection with downstream activities, Idemitsu Kosan and Mitsui Chemicals announced in April that they would take part in a 200,000-b/d, $5.8 billion oil refinery and petrochemical complex project in Vietnam.

Idemitsu intends to cater to sharply rising demand in Vietnam for oil products and ensure a steady supply of crude oil, while Mitsui is looking to expand the profits of its purified terephthalic acid and related operations through stable procurement of aromatics feedstock.

To implement the project in the Nghi Son economic zone in Thanh Hoa Province, 180 km south of Hanoi, a joint-venture company tentatively called Nghi Son Refinery & Petrochemical was established, with Idemitsu holding a 35.1% stake, Kuwait Petroleum International 35.1%, Petrovietnam 25.1%, and Mitsui 4.7%.

On Sept. 19, Petrovietnam deputy director Truong Van Tuyen and Masayasu Kawasaki, a representative from Marubeni Corp, signed a contract at Vietnam's Dung Quat oil refinery plant.

Under the contract, Marubeni will buy 75,000-150,000 tonnes/year of propylene products from the refinery.

Last week, Petrovietnam announced plans to import 52,500 tonnes of diesel to test-run the 140,000 b/d Dung Quat refinery, which is due to start operations in 2009 (OGJ Online, Sept. 23, 2008).

In 2002, the Vietnamese government awarded the contract to build the Dung Quat refinery to a consortium comprised of Technip-Coflexip of France and JGC Corp.of Japan.

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