Petrovietnam eyes ConocoPhillips's offshore stakes

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, July 12 -- State-owned Petrovietnam said it is considering the purchase of ConocoPhillips's shares in three oil and gas projects off Vietnam valued at $1.5 billion.

"The reason why [ConocoPhillips] is selling the stakes might be it is restructuring itself," said Phung Dinh Thuc, Petrovietnam director general.

ConocoPhillips, which has not yet announced its intentions, holds a 23.3% stake in a group of five fields on Block 15-1, a 36% stake in Rang Dong field on Block 15-2 in the Cuu Long basin, and a 16.3% stake in the Nam Con Son gas pipeline project.

Thuc’s remarks came as ConocoPhillips is expected to update investors on a 3-year restructuring plan, presented in late 2009 and expanded this year, which includes selling as much as $17 billion in assets.

In May, Alan Hirshberg, Conoco's senior vice-president of planning and strategy, told an energy conference that the company is looking at leaving countries where it has a small presence.

According to Thuc, Vietnam would have priority rights to any purchase of ConocoPhillips’s holdings in the southeast Asian country.

Meanwhile, Petrovietnam said it is starting production at fields in this year’s second half, including two overseas, and also is beginning construction on a second refinery.

Petrovietnam said it expects to begin production this month at Russia's Nenetsky field, while in August it will begin production at Dana field on Malaysia's SK305 block.

Petrovietnam also said production at Te Giac Trang and the second phase of Dai Hung field will start in August, while output at Chim Sao field will begin in September.

The state firm also raised its proven oil reserves by 10.2 million tonnes with a report of two new commercial findings. The first was made by Vietsovpetro, a joint venture of Petrovietnam and Russia's JSC Zarubezhneft, which found more oil in Bach Ho field off southern Vietnam with tests confirming flow of 4,560 b/d of oil. The second commercial find was made by Malaysia's Petronas and Petrovietnam off Vietnam with confirmed oil flow of 5,200 b/d.

Meanwhile, Petrovietnam said it will continue oil exploration on Vietnam's continental shelf in this year’s second half, aiming to raise its proven oil reserves by 20-25 million tonnes in the period.

The US Energy Information Administration estimates that Vietnam holds some 600 million bbl of proved oil reserves, and that the country produces about 346,000 b/d of oil.

Meanwhile, Petrovietnam said it and its partners—earlier named as Kuwait Petroleum Corp., Idemitsu Kosan, and Mitsui Chemical Inc.—will start construction in the third quarter on the Nghi Son refinery in northern Vietnam.

The 200,000 b/d refinery, which alone will cost $5 billion, will process Middle Eastern crude, turning out polypropylene in addition to gasoline, diesel oil, kerosine, and jet fuel (OGJ, Dec. 20, 2010).

Contact Eric Watkins at hippalus@yahoo.com.

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