CAPITAL: Hanoi

MONETARY UNIT: Dong

REFINING CAPACITY: None

OIL PRODUCTION: 190,000 b/d

OIL RESERVES: 600 million bbl

GAS RESERVES: 6.8 tcf

The Vietnamese government promised in 1998 to improve the climate for energy investments and created Joint Operating Companies (JOCs) to replace existing Production Sharing Contracts (PSCs) for exploration blocks.

The plan was for the JOCs to be converted into production joint ventures between Petrovietnam and foreign investors.

But oil firms said bureaucracy, restrictive policies and rules, and high taxes continued to inhibit their operations. Several international firms left Viet Nam, and others were trying to sell their PSC interests.

In 1999 Malaysia`s Petronas quit Dai Hung field, to be replaced by Vietsovpetro. Petronas continued to operate the profitable Ruby field.

Viet Nam was negotiating with BP Amoco PLC and Statoil AS for the $1.5 billion development of an offshore field. It would be Viet Nam`s single largest foreign investment. The deal was delayed after Thailand canceled a plan to buy some of the gas.

BP Amoco would own 24% of the proposed venture, Statoil 30%, and Petrovietnam the rest.

The field, in the Nam Con Son basin off the coast near Ho Chi Minh City, had reserves of more than 2 tcf. A 244-mile pipeline to the field would cost $100 million. Production would begin in 2002.

Nam Con Son gas would fuel the 3,600-Mw Phu My power station complex in southern Ba Ria-Vung Tau province.

In the same province, TotalFina and two Vietnamese firms planned to build a $198.5 million asphalt plant.

The plant would produce 1.1 million tonnes/year of asphalt along with diesel and fuel oil. Start-up would be in 2003.

Fina would have 70%, while Petrovietnam and the Ba Ria-Vung Tau Production and Services and Trade Co. each would have 15%.

Petrovietnam planned the nation`s first refinery at Dung Quat in Quang Ngai province. Vietross, a joint venture of Petrovietnam and Russia`s Zarubezhneft, would own the $1.3 billion, 130,000-b/d refinery.

CAA drilling

Lundin Oil AB, Stockholm, and partners announced plans to drill another production well under Phase 1 development of Block PM-3 in the Commercial Arrangement Area (CAA) between Malaysia and Viet Nam. The CAA covered a once-disputed area on which Malaysia and Viet Nam reached a settlement in 1996. Production from Bunga Kekwa field, where the new well would be drilled, began in 1997. The firms hoped the well would produce 2,000-3,000 b/d of oil, increasing production to as much as 17,000 b/d. Phase 2 of PM-3 development would boost production to 40,000 b/d of oil and 250 MMcfd of gas but was delayed due to lack of buyers for the gas.

PM-3 had five oil and gas fields: Bunga Kekwa, Bunga Raya, Bunga Pakma, Bunga Seroja, and Bunga Orkid. The geology was complex, with more than 100 separate reservoirs.

Interests in PM-3 were Lundin with 41.44%, Petronas 46.06%, and Petrovietnam 12.5%.