Since Vietnam's golden exploration year of 1996, when 19 wells were drilled around its shores, high expectations have given way to resignation. Numerous multinational combines have exited their production sharing contracts (PSC), disillusioned by the slow pace, high cost, and mostly low yield from their exploration efforts.
Yet, as analysts Wood Mackenzie point out in a recent report, wells drilled over the past decade around Vietnam have generated a cumulative 8.6 tcf of gas (mainly offshore). A big chunk happens to be in the hands of a few major companies with the financial strength and will to exploit their finds. Some of these shortly will be channeled through a new long-distance submarine pipeline to Ba Ria-Vung Tau province in southern Vietnam.
Since 1988, key gas discoveries have included AEDC's Moc Tinh, BP Amoco's Hai Thach and Lan Tay, and Pedco's Rong Doi. In addition, 800 bcf of associated gas is theoretically available from the 1995 oilfield discoveries, Rang Dong and Ruby, which are both in production (gas is being flared). Further out into the Malay Basin, in joint Malaysian-Vietnamese waters, oil is being produced from Lundin's Bunga Kekwa Field, but no markets have yet been found for the 1.89 tcf of gas discovered within the same PM3 license.
Market for gas
In the gas producer's favor is Vietnam's continued reliance on wood, dung, and rice husks to fuel a high percentage of total energy needs. On the minus side, energy demand per capita will likely remain one of the lowest in the Far East, despite an economic growth forecast of 5.2% to 2005. Although prospects for new power schemes look bright in Vietnam's major cities - particularly the Ho Chi Minh City area, with over 12 million citizens - rural areas still account for three-quarters of the nation's population. This may curb expansion of the domestic gas distribution network.
Vietnam's industry, however, could use extra supplies to produce fertilizers which currently are imported. This would ease pressure on the government's balance of payments. Wood Mackenzie suggests that industry could take 50 bcf/year of in-digenous gas produc-tion by 2010.
Current Vietnamese gas generating capacity is estimated at 600 MW, of which 80% is situated close to the capital. Much of that volume is supplied by Vietsov-petro's offshore Bach Ho Field. But the figure could climb to 3,330 MW by 2010, assuming that development of the Nam Con Son Basin gasfields goes according to schedule.
Four new gas-fired power plants are planned for the Phu My complex based near Ho Chi Minh City, plus a second-phase expansion of the Phu My 2.1 plant currently burning imported diesel, and Bach Ho gas.
This complex is 25 km inland from the proposed Nam Con Son pipeline landfall at Vung Tau. To the southwest, Enron and Electricite du Vietnam propose two further gas-fired schemes by the Mekong Delta. Both could eventually be powered by gas from the Malay Basin fields.
Lan Tay and Lan Do in Block 06-1 are considered the most commercial discoveries in the Nam Con Son Basin, containing 2 tcf combined. The block is operated by BP Amoco (26.67%), with partners ONGC Videsh (55%), Statoil (13.335), and PetroVietnam (5%). The latter may have exercized its right to take an added 12.5% of the licence, assuming that development contracts have been signed. Gas from the fields will pass through a new 370 km, 26-in. two-phase pipeline to Vung Tau.
Production from the fields will probably not exceed 350 MMcf/d, although capacity in the line will be 700 MMcf/d. The balance will come from the other discoveries close to the route of the new line, led by Hai Tach (now operated by BP Amoco), Moc Tinh, and Rong Doi.
But, the extra supplies these developments could provide would probably not be needed before 2005, according to Wood Mackenzie. Just to the south, Vamex, a subsidiary of Texas-based Sterling Project Co, has just been awarded blocks 07 and 08, and plans to acquire seismic, once a foreign partner has been recruited.
Bach Ho's 16-in.100 km gas export line, in the Cuu Long Basin to the southwest, is capacity constrained. This militates against development of associated gas from the Ruby or Rang Dong fields, which are both within touching distance of this line.
Mekong Delta corridor
Malay Basin gas discoveries are operated by Lundin, Total PetroFina, and Unocal. Prospects of a new corridor to the Mekong Delta may depend on a joint development arrangement. Unocal has undertaken a study relating to a potential gas line to Ca Mau province. The Mekong Delta area is thinly populated, so power from the two proposed gas-fired stations here could actually be diverted through a new Vietnamese transmission network.
But, the Delta's needs could also be sourced from Phu My. Assuming the government adopts this latter course, a Malay Basin offshore development looks to be some way off. In Vietnam's main northern population center in Hanoi, Anzoil is negotiating to take its onshore Song Try Ly gas reserves to the Tien Hai power station for use as feedstock.