PetroVietnam to Start Output at 5 New Fields in 2nd Half

HANOI (Dow Jones Newswires), July 6, 2011

State-run Vietnam Oil & Gas Group said that it is starting production at new fields in the second half of the year and beginning construction on a second refinery, as it seeks to increase production to feed its fast-growing economy.

The company, known as PetroVietnam, said it will begin producing at five oil fields, including two that are overseas. The announcement comes amid uncertainty about Vietnam's offshore program due to an increasingly bitter territorial dispute with China, which has involved Chinese harassment of Vietnamese oil prospecting activities.

PetroVietnam said it expects to begin production at Russia's Nenetsky field this month and at Dana field in Malaysia's SK305 Block in August.

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, it said. The fields are between 100 kilometers and 350 kilometers off Vietnam's southern coast, an area that is far away from the area of dispute with China.

The company reported two new commercial findings in the first half, raising its proven crude oil reserves by 10.2 million metric tons.

Late last month, Vietsovpetro, a joint venture between PetroVietnam and Russia's JSC Zarubezhneft, announced that it had discovered additional oil in the Bach Ho field off Vietnam's southern coast, with tests confirming strong oil flow of 4,560 barrels a day.

Meanwhile, Malaysia's Petroliam Nasional Bhd., or Petronas, said last month that it and PetroVietnam have discovered oil offshore Vietnam, with confirmed oil flow of 5,200 barrels a day.

PetroVietnam said Wednesday that it will continue oil exploration Vietnam's continental shelf in the second half of this year, aiming to raise its proven crude oil reserves by 20 million-25 million tons in the period. It didn't say how large its current reserves are.

Meanwhile, the company said it and its partners will start building the Nghi Son oil refinery in northern Vietnam in the third quarter.

PetroVietnam said previously that it would work with Kuwait Petroleum Corp., Idemitsu Kosan and Mitsui Chemicals on the 200,000-barrel-a-day refinery in Thanh Hoa province.

PetroVietnam is targeting output of 7.8 million tons of crude oil in the January-June period, which will take its full-year output to 15 million tons, flat from last year.

It will sell 7.3 million tons of crude oil in the period, including 1.66 million tons to the Dung Quat refinery, which will likely produce 2.48 million tons of oil products in the second half, taking its 2011 output to 5.6 million tons, the company said.

The 130,000-barrel-a-day refinery is scheduled for a maintenance shutdown for two months starting July 15.

PetroVietnam had pretax profit of VND49.9 trillion in the January-June period, up 44% from a year earlier and meeting 68% of its full-year target, the company said.

Copyright (c) 2011 Dow Jones & Company, Inc.


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