Petrovietnam Investment and Development Co (PIDC) was awarded 20 percent of the exploration rights in the North East Madura II offshore block in East Java province in late August. State run Korea National Oil Corp (KNOC) holds 80 percent of the block.
Exploration in the blocks had been set to start in October 2003, but were held up by cost allocation planning and other factors.
Another offshore block in the same area, North East Madura I, was awarded to a consortium of Petrovietnam, KNOC and South Korea's biggest oil refiner, SK Corp, with exploration rights of 20 percent, 50 percent and 30 percent, respectively.
"The project is very promising," said an official from the Vietnamese oil firm in Hanoi.
Petrovietnam and its South Korean partners had set up two companies, named after the two blocks -- North East Madura I and North East Madura II -- in Kuala Lumpur to operate the projects.
The official said first wells would be drilled at the start of 2005 once all geology and geophysics preparations had been completed.
Total investment for the extraction and production phase of 25-30 years is estimated to reach more than $1 billion for all three companies involved in the two projects.
Recoverable crude reserves for Madura I and Madura II are estimated at 40 million tons and 30 million tons (293.2 million and 219.9 million barrels) respectively, a preliminary appraisal from Petrovietnam showed.
Last year, Petrovietnam said it would invest more than $9 million in exploration activities in the two blocks during a three-year oil search that would begin this month.
PIDC, the investment arm of Petrovietnam, has business interests in Malaysia's blocks PM 304 and SK 306, Mongolia's Tamtsag, the Amara field in Iraq and the Algeria block in Algeria.
The investment arm also has a 12.5 percent stake in the PM-3 project operated by Talisman Energy in the Malay-Tho Chu Basin, off southern Vietnam.
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