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.