Vietnam Still Holds Much E&P Opportunity

Topics: Asset/portfolio management
Photo courtesy of Petrovietnam
Gas and condensate production facilities in the Hai Thach-Moc Tinh field of the Nam Con Son Basin.

As oil companies struggle with the collapse in crude prices and industry upheaval, assessing the future of exploration and production (E&P) in specific countries requires a longer term vision of a market in which prices will have stabilized and rebounded to a level yet undetermined. Seen in this lengthier view, Vietnam holds substantial E&P opportunity because of its resource potential, its expanding economy and surging internal energy demand, the diverse group of global operators active in the country, and the interest of national oil company Petrovietnam in expanding partnerships with international E&P players.

At the same time, a limitation on this upside lies in the dispute between Vietnam and China over territorial waters, which is affecting international investment in some E&P prospects. While sporadic tensions have arisen between the countries, Vietnam and China remain in discussions over the disputed areas. A peaceful resolution could benefit both countries and the oil and gas industry. Notably, well to the north of the disputed waters, Petrovietnam and China National Offshore Oil Company have a joint exploration agreement covering the Gulf of Tonkin.

In the decades since the end of the Vietnam War, exploration and development in Vietnam have grown by leaps and bounds. With 4.4 billion bbl of oil reserves, the country now ranks No. 3 in the Asia-­Pacific region, trailing only China and India.

Always an Interest

“Vietnam has always been an interest among international oil and gas companies,” said Suraya Tulot, Vietnam EP upstream researcher at IHS. “It is an opportunity that companies are looking at, especially the independents.”

Almost all of Petrovietnam’s domestic upstream activity has been offshore in shallow water. From the beginning, the Cuu Long Basin has been the center of Vietnamese E&P. However, activity has spread to the Nom Con Son, Song Hong, Phu Khanh, Phu Quoc, and Malay-Tho Chu basins, as well as others, and deepwater development is getting under way. 

“Vietnam is relatively underexplored,” Tulot said. “While the focus has been on Cuu Long, there are opportunities in the Nam Con Son and Song Hong basins and elsewhere.” Petrovietnam’s Ky Lan 1X gas discovery in the Song Hong Basin late last year is one example. That success has piqued interest among other com­panies. Eni and KrisEnergy have recently acquired exploration blocks in the vicinity.

 

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Vietnam Still Holds Much E&P Opportunity

Joel Parshall, JPT Features Editor

24 February 2016

Volume: 68 | Issue: 3