Petronas agrees to take over Vietnam's Dai Hung oilfield
Petronas agrees to take over Vietnam's Dai Hung oilfield
KUALA LUMPUR (Reuter): Malaysia's state-run Petroliam Nasional
(Petronas) said yesterday it had agreed to take over Vietnam's
Dai Hung oilfield from Australia's Broken Hill Propriety Co Ltd
under the old contract terms.
"We can confirm that Petronas has bought a 43.75 percent stake
in the Dai Hung offshore oil project in Vietnam from (BHP)," a
Petronas spokesman told Reuters.
The agreement, pending approval from Vietnamese authorities,
would raise Petronas' stake in the project, once thought to be
the largest oil find in Asia, to 63.75 percent from 20 percent.
The spokesman confirmed there would be no change in the
contract terms. Petronas has declined to say how much it paid for
BHP's stake.
The other partners in the field are Vietnam's state-run
Petrovietnam, with 15 percent, and Japan's Sumitomo Corp and
France's Total SA, each with 10.625 percent.
A senior Petrovietnam official said yesterday Petronas'
announcement was premature.
"They need to submit any necessary document to Petrovietnam
for review and approval and then submit it to the government for
a modified business license," said Do Van Ha, chief international
negotiator for Petrovietnam.
Oil analysts yesterday said BHP did well to exit the deal and
said it remained to be seen how Petronas would fare.
"I think BHP did well to wash its hands of the affair," said
energy stocks analyst Lars Reierson of Morgan Stanley Asia in
Singapore.
Petronas president Hassan Merican told The Edge financial
weekly on Monday: "We are quite happy with it. It will be tough,
but I believe we can make money under the old terms.
"It's still early days for Dai Hung," Hassan said. "Only three
fields have been drilled so far; there are still three more to
go. Petronas is willing to continue investing and take the risk."
Dai Hung was once touted as the biggest oilfield in Vietnam
and one of the biggest untapped fields in Asia with 700 million
barrels of recoverable reserves.
The BHP and Petronas consortium signed a production sharing
contract for Dai Hung in 1993 and the first oil was produced a
year later. Dai Hung has since been a major disappointment for
BHP.
Production is estimated to have fallen to 12,000 barrels per
day (bpd) from an initial 35,000 barrels and estimates of the
reserves have been pared to just 100 million barrels.
BHP, which wrote down its A$151 million investment in Dai Hung
in its 1995/96 accounts, had been trying to renegotiate the terms
of its contract with Petrovietnam after estimates of the field's
reserves were cut.
Industry analysts said it was never likely that would happen,
as a change in one agreement would result in pressure from other
contractors to change terms.
Hassan told The Edge that while Dai Hung's reserves were over-
estimated, "we base our economics on a much lower figure. A lot
depends on costing factors, too, and more drilling needs to be
done".
"There will always be risks in oil and gas exploration. The
prospective seismic studies and interpretation of data may look
good, but until the well is drilled you can never be sure."
Hassan said Petronas, which owns blocks 01 and 02 adjacent to
Dai Hung, could mobilize its manpower more efficiently.
"We can tap the expertise from the team doing drilling in 01
and 02 for Dai Hung," he said. "I believe we can become a more
efficient player."
Petronas' Ruby field in Block 01 and 02 has estimated reserves
of 200 million barrels. Petronas says Ruby is expected to produce
9,500 bpd by year-end and 85,000 bpd by 2003.
Petronas has also made discoveries in its Topaz and Emerald
fields, giving it the means to be a major long-term player in
Vietnam's oil industry, analysts said.