Huge gas finding expected to launch Vietnam industry

Huge gas finding expected to launch Vietnam industry

HANOI (Reuter): British Petroleum announced a big natural-gas
discovery off Vietnam yesterday that will launch a major industry
for the country.

"The gas discoveries could be expected to play a key role in
supplying Vietnam's emerging domestic gas market," the company
said in a statement issued in Hanoi on behalf of its partnership
with Indian and Norwegian companies.

They would work closely with Vietnamese authorities "to ensure
optimum use of this resource and to try to achieve an early
commercial development," it said.

BP said it had found "encouraging discoveries of gas" in the
Nam Con Son Basin southeast of Ho Chi Minh City, with recoverable
reserves from two adjacent fields estimated at two trillion cubic
feet (57 billion cubic meters) of gas.

It was the first big natural-gas discovery announced by
foreign companies exploring for oil and gas off Vietnam.

Michael Yeldham, BP's chief executive in Vietnam, said the oil
equivalent would be 350 million barrels, in the same range as
Vietnam's offshore Dai Hung (Big Bear) oilfield, where operator
BHP Petroleum of Australia expects to start pumping crude next
month.

"In world terms, it's not enormous. But it's an interesting
volume," Yeldham told Reuters.

Yeldham said Vietnam still had to decide how the gas would be
used.

Electricity

The reserves were enough to generate electricity for Ho Chi
Minh City, the country's biggest city with four million people,
for 25 years. Or it could be used to make fertilizer or for other
industrial uses.

Vietnamese officials have also talked of the possibility of
exporting gas by pipeline to Thailand or in liquid form to Japan
and other Asian markets.

BP and partners Statoil of Norway and India's state Oil and
Natural Gas Corporation (ONGC) hoped to get government approval
to start a detailed feasibility study by the end of the year, he
said. The study would take another year.

BP, with 30 percent, is the operator for the partnership in
Vietnam's Block Six. ONGC has 55 percent and Statoil 15 percent.
State oil firm PetroVietnam has an option to acquire five percent
equity from BP and Statoil.

"The gas reservoirs are highly productive achieving flow rates
in excess of 80 million cubic feet (2.2 million cubic metres) per
day during testing operations," the statement said.

"The partnership is confident that the recently completed
appraisal drilling program has successfully identified
potentially commercial quantities of producible gas," it said.

It said developing the gas was expected to require the laying
of a submarine pipeline from the fields to the coast, 400 km (250
miles), and transportation of the gas to the Ho Chi Minh City
area.

Yeldham said the development cost would be US$1 billion, and
the cost of facilities, for instance, a big power plant, could
also reach $800 million to $1 billion.

The BP wells West Orchid and Red Orchid make up Vietnam's
first field for gas alone.

But another consortium of British Gas, TransCanada Pipelines,
Japan's Mitsui and Company and PetroVietnam, will probably be
Vietnam's first producers.