CAPITAL: Hanoi

MONETARY UNIT: Dong

REFINING CAPACITY: None

OIL PRODUCTION: 180,000 b/d

OIL RESERVES: 600 million bbl

GAS RESERVES: 6 tcf

Construction of Viet Nam`s first oil refinery began early in 1998.

The $1.5 billion Dung Quat refinery, located in the central part of the country, will have capacity of 130,000 b/d of crude by 2004.

State-owned Petrovietnam proceeded with the project despite withdrawal in 1995 of Total SA of France and other backers, who argued against the plant location.

In another milestone, Vietnam Oil & Gas Corp. let contracts for the country`s first gas processing plant. The 150 MMcfd plant at Vung Tau, 80 km southeast of Ho Chi Minh City, was to process gas from Bach Ho field operated by the Vietnamese-Russian joint venture Vietsovpetro.

The plant was to separate condensate, propane, and butane from the gas stream. Condensate was to enter the field`s oil export line, gas was to fuel a nearby power plant, and LPG was to be sold locally.

Upstream work slows

Upstream activity in Viet Nam shifted from exploration to appraisal of scattered discoveries.

A report by Wood Mackenzie Consultants Ltd. noted a 55% drop in gross acreage under license in Viet Nam`s offshore during the year and withdrawal from the country of several companies that had been exploring.

An all-time high 26 offshore wildcat and appraisal wells had been drilled in 1996, Wood Mackenzie said. It expected drilling of 19 new-pool wildcats and 17 appraisal wells between the start of 1997 and the end of 1999.

The consultancy said industry interest focused on oil-prone Cuu Long basin, where international operators were awaiting award of several blocks.

BP Exploration Operating Co. Ltd. was negotiating for development of Lan Tay and Lan Do gas fields.

Viet Nam`s oil production came from four fields. Gas production of about 30 MMcfd went to electric power plants. Wood Mackenzie said production by 2004 could reach 300,000 b/d of oil and 450 MMcfd of gas.

At the end of 1997, Unocal Vietnam Exploration Ltd. and partners reported a Malay basin gas discovery that flowed a combined 52.9 MMcfd in two drill stem tests from Miocene sands. The B-KL-LX well was on a prospect called Kim Long.

Fina Exploration Minh Hai BV had a string of discoveries on Block 46 off the southwestern part of the country. Early in the year, well 46-PT-1X flowed 2,507 b/d of light oil from the lowest tested interval, 15.5 MMcfd of gas from an intermediate interval, and 16.2 MMcfd from an upper interval.

Later on the same block, Fina confirmed an extension of Bunga Kekwa field with the 46-CN-1X well, flowing 6,700 b/d of oil from one interval and 49 MMcfd of gas with 440 b/d of condensate from a higher interval. Bunga Kekwa is on Block PM3 shared by Viet Nam and Malaysia (see Malaysia section).

On Block 51 in the Malay basin, a joint venture operated by Fina tested a combined 36.4 MMcfd of gas and 500 b/d of condensate in the 51-UM-1X discovery.