KNOC Eyes Vietnam Gas Development Project

KNOC has been discussing the participation in a Vietnam gas development project with companies from the U.S. and the U.K. according to a KNOC official. The official declined to name the firms involved in the talks. KNOC is leading a consortium of eight South Korean companies in a gas exploration and production project at Block 11-2 in Vietnam. The consortium fully owns the block, since buying a 45% stake in it from former partner, ExxonMobil.

KNOC and its partners expect to earn about $2.8 billion from sales of natural gas from the block over the 23-year period of commercialization. The block has natural gas deposits of 1.2 trillion cubic feet. KNOC plans to sell the entire recoverable volume of 900 billion cubic feet to the state-run oil company PetroVietnam. It signed a letter of intent with PetroVietnam for the gas sales earlier this year, the official said, adding that the two countries are still negotiating the terms of the deal.

Natural gas developers usually secure buyers before starting development to finance heavy costs. Drilling for natural gas will begin as soon as KNOC gets development approval from the Vietnamese government, expected by October this year, the official said. Commercial production is scheduled to begin in October 2005, he added.