HOUSTON (Dow Jones Newswires), Oct. 25, 2011
U.S. oil giant Exxon Mobil said Tuesday it found oil and gas off Vietnam's central coast, raising hopes the South Asian nation will be able to reverse a decline in fossil fuel production and exports.
Exxon Mobil, the world's largest publicly-traded oil company by market value, said it drilled its second exploratory well offshore Danang City in August and encountered hydrocarbons. A company spokesman said data from the well, located in Block 119, are being analyzed.
The Texas-based company said the first well it drilled offshore Vietnam didn't encounter oil and gas. The company didn't disclose any additional details.
Exxon Mobil's discovery is key for Vietnam, which is trying to boost its oil and gas production as its aging fields are failing to meet growing domestic demand. The country, a net oil exporter and the third-largest oil producer in South Asia, started awarding exploration rights in 2004 to companies from the U.S., Canada and India.
For Exxon Mobil, the find is good news at a time when major oil companies are struggling to increase production and replace reserves due to increasingly limited access to new resources.
"It's hard to know how significant this find is for Exxon because we don't know the size of it, but it's definitely positive for a company to have a discovery in a region many people believe could be very prolific," says Phil Weiss, an analyst at Argus Research.
The discovery lies in the South China sea, where Vietnam boasts rich oil reserves. State-run PetroVietnam and other international oil companies are already producing several major fields in the area.
A number of companies have also scored recent oil finds in the region, including Malaysia's Petroliam Nasional Bhd., or Petronas, U.K.'s Premier Oil, Russian Gazprom and France's Total.
The discovery, however, comes amid a dispute between China, Vietnam, the Philippines, Taiwan, Malaysia and Brunei about territorial rights in South China Sea. China, which claims all of the South China Sea including the Paracel archipelago east of Danang, asked Exxon Mobil to abandon an exploration deal in the seas off Vietnam in 2008, according to local media. But it is not clear if Block 119 was part of those alleged objections. Exxon Mobil declined to comment on the reports.
Copyright (c) 2011 Dow Jones & Company, Inc.
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