Surging oil and gas production in the short term
Source: PVN’s report
The country has emerged as an oil producer since the discovery of the Bach Ho (White Tiger) oil field in 1987. One of the biggest new oil field developments is the Su Tu Vang (Golden Lion) field, started in 2008, and Te Giac Trang (White Rhino), started in 2011.
Vietnam’s oil production grew 3.11% per annum between 1998 and 2009, and will reach a peak of 420 mbo/d in 2014, reflecting a CAGR of 3.71% in 2009-2014. However, oil production is projected to gradually decline in the period of 2014 – 2020 and achieve only 150 mbo/d by 2020.
Source: PVN’s report
Gas production increased by 21.9% per annum between 2002 and 2009, and it is projected to grow by 6.3% in 2012 – 2020 with a peak in production in 2018 of c.1,400 mmcf/d. According to PVN press releases, many gas pipeline projects have been invested to feed the rapid expansion of Vietnam’s gas industry. PVN plans to invest US$ 1.3 billion to develop a second gas pipeline from Nam Con Son Basin to Southern Vietnam, which will boost onshore gas production by 30% - 40%. In 2010, a US$ 1 billion BCC was signed between PVN, Chevron (America), MOECO (Japan) and PTTEP (Thailand) to build a 400 km pipeline from Cuu Long Basin to Can Tho, which is expected to start production by 2014.
Important Asian market with promising new reserves
Vietnam has 1 million km² sea areas and the country has the 4th largest oil reserves in Asia Pacific. The national crude oil reserve is expected to reach 1.1 million m3 in 2020 and 3.1 million m3 in 2022 . Moreover, it is located in close proximity to major oil consumer China.
PVN as the key partner in exploration and production
PVN is by far the most important oil and gas producer in Vietnam. PVN has an 85% market share in the oil/liquid production market and a 71% market share in the gas production market. The company has built several partnerships with international oil companies. The largest partnership is Vietsovpetro, which is a joint venture of PVN and the Russian Government. The company currently accounts for approximately 40% of Vietnam’s crude oil production and operates the biggest oil field, Bach Ho (White Tiger).
In addition to development of domestic oil fields, PVN has expanded its network in Asia, Commonwealth of Independent States (CIS), the Middle East, Africa and South America. In recent years, PVN has participated in exploration and production 17 contracts in 14 countries.
The government actively promotes foreign involvement in the oil and gas exploration and production :
- Private Ownership: Foreign companies are allowed to independently explore for oil and gas. Although the presence of the State is still required for all producing projects, international oil companies can hold majority of shares and have the right to receive a share of output .
- More open and transparent licensing scheme: The Oil and Gas Law amended in 2000 provides more open and transparent scheme about duty and right of foreign investors in this industry in terms of extension of contract time, level of cost recovery for exploration, development and production, etc.
- Attractive tax framework: Special tax scheme is applied for petroleum investment promotion projects, i.e. encouraged project could enjoy preferential corporate income tax rate of 32% and reduced royalty rate. Moreover oil and gas investors are exempted from some special tax rate, i.e. 0% import tax for machinery equipment and materials used for oil and gas activities.
PVN is now offering a number of joint exploration projects in Vietnam. The project details are outlined in the following project profiles.
OVERSEAS OIL AND GAS EXPLORATION AND PRODUCT PROJECTS