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Vietnam Raises Oil Exports But Moves Toward Net-Importer Status

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HANOI - Vietnam is set to increase its crude-oil exports before it implements plans to expand refining capacity, irrevocably putting it on track to become a net oil importer.

Vietnam Oil and Gas Group, or Petrovietnam, said Thursday that its 2012 crude-oil output will exceed its initial target thanks to production at several new oil fields starting ahead of schedule.

The state-owned integrated oil company has been on an oil and gas producing asset buying spree while actively developing domestic resources and planning to expand refining operations to increase its throughput capacity multifold. The expanded refining capacity will cut into export revenue from crude oil, which currently accounts for around 7% of Vietnam's total export earnings.

Petrovietnam's crude-oil output this year will likely reach 16.4 million-16.5 million metric tons, or around 330,000 barrels a day, exceeding an initial target of 15.81 million tons and up from last year's output of 15.18 million tons, it said in a statement.

PVEP, Petrovietnam's leading exploration and production unit, said earlier this month that it and its partners put five new oil fields into operation ahead of schedule this year, accounting for better-than-planned output.

Vietnam's crude-oil exports in the first 11 months of this year rose 13.9% from a year earlier, to 8.75 million metric tons, or 191,500 barrels a day, data released Thursday by the Vietnam Customs Department showed.

The country imports some crude, mainly to blend with its own grade at its 130,000-barrel-a-day Dung Quat refinery. Customs said this totaled 644,000 tons in January-November, up 2.4% from a year earlier.

Imports will rise steadily once the country's second refinery goes into service.

Petrovietnam Chairman Phung Dinh Thuc said last month that Petrovietnam and its partners had reached an agreement to proceed with the 200,000-barrel-a-day Nghi Son refinery, and the company was planning to sign an engineering, procurement and construction contract this month.

Meanwhile, provincial officials said last month that Thailand's PTT PLC was considering building a massive refinery with a capacity of 660,000 barrels a day in the Nhon Hoi Economic Zone in coastal Binh Dinh province. One of the officials said Petrovietnam is one of the potential partners in the refinery, which if constructed would be one of the world's largest and would require more crude oil than Vietnam could possibly produce.

Mr. Thuc last month asked Russian oil company Rosneft to consider selling crude oil to Vietnam for its future refineries.

At the same time, Petrovietnam is aiming to expand its operations overseas, especially in Russia, to boost its crude-oil output. It has set up several joint ventures with Russia's JSC Zarubezhneft and Gazprom Neft that operate in both Vietnam and Russia.

PVEP said in October that it had completed the purchase of a stake in Block 67 in Peru's Maranon Basin from Perenco, raising the number of projects it has in Peru to three.

PetroVietnam, which has operations in 18 countries, hopes to raise its annual overseas crude-oil output to 4 million-5 million metric tons, or 80,000-100,000 barrels a day, by 2015 and 8 million-10 million tons by 2020, it has said, with most of the output coming from Russia and Venezuela.

Petrovietnam said Thursday that it has raised its proven crude-oil reserves by 37 million tons so far this year, without providing a figure for its current reserves. 

Copyright (c) 2012 Dow Jones & Company, Inc.

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