Home / Industry / Energy /  Vietnam says Chevron to sell gas stake, Exxon makes ‘huge’ find

Ho Chi Minh City: Chevron Corp. is in talks to sell its interest in a Vietnamese offshore natural gas field after years of negotiations with the state-owned oil company on a price for the fuel failed to reach an agreement.

“We couldn’t come up with an agreement on the gas pricing," Do Van Hau, chief executive of Vietnam Oil & Gas, known as PetroVietnam, said in an interview in Ho Chi Minh City. “They decided to sell out their interest."

“India’s state-owned Oil & Natural Gas Corp., known as ONGC, is one of many companies interested in coming in," Hau said. Separately, he said Exxon Mobil Corp. has made one of the nation’s biggest gas discoveries.

Plans to tap the fields in the Gulf of Thailand were announced a decade ago by Unocal Corp., since bought by Chevron, which said in 2009 that the $4 billion project’s economics were based on developing about 4 trillion cubic feet of gas. Vietnam has the biggest reserves of natural gas in East Asia after China, Indonesia and Malaysia, according to BP Plc.

ONGC’s ONGC Videsh Ltd. (OVL) unit is looking to buy a stake in the Chevron Block B gas project, according to a 24 November Press Trust of India report which didn’t identify its sources. Chevron wanted a gas price of between $7 and $10 per million British thermal units, while Vietnam was willing to pay no more than $6, the Press Trust of India said.

“Chevron regularly evaluates its assets to ensure strategic portfolio fit," said Chevron’s Singapore-based spokesman Alexander Yelland, in e-mailed comments on Thursday. “As a company policy we do not comment on speculation or confidential commercial discussions."

Chevron owns 42.4% of a production sharing contract with Vietnam that covers areas known as Block B and block 48/95, according to a filing with U.S. Securities and Exchange Commission. It also owns 43.4% in the adjacent 52/97 area. Hau didn’t specify if Chevron plans to sell all its stakes.

ONGC Videsh

D.K. Sarraf, managing director at OVL, ONGC’s overseas unit, didn’t answer two calls to his mobile phone seeking comment. ONGC said last week in an e-mailed statement that it had been offered five blocks by PetroVietnam, and that Vietnam was among its focus countries.

Chevron said in a U.S. Securities and Exchange Commission filing this year that the Block B gas project would produce natural gas from the Malay Basin for delivery to state-owned PetroVietnam.

The project, which would include installation of wellhead and hub platforms, a floating storage and offloading unit, a central processing platform and a pipeline to shore, would target maximum daily production of 490 million cubic feet of gas and 4,000 barrels of condensate, according to the filing.

PetroVietnam plans to pump gas from Block B, 48/95 and 52/97 through the Block B-O Mon gas pipeline system, which consists of a 246-kilometer (153 mile) offshore pipeline and a 160 kilometers onshore, according to the company’s 2010 annual report.

“We were talking actively with Chevron for the Block B gas, because we wanted to take gas for our power generation center in O Mon, in southern Vietnam," Hau said. “The delay in the project will have some impact on Vietnam’s electricity supply," he said.

“While the Block B project faces delays, PetroVietnam is pressing ahead with talks with Exxon Mobil to develop a huge discovery it made offshore central Vietnam," Hau said in a separate speech at an oil conference on Thursday.

Exxon Mobil

Exxon Mobil said last year it had made a discovery in Vietnam, and that resource additions from the U.S., Canada, Australia, Indonesia and Vietnam had added 4.1 billion oil- equivalent barrels to its resource base, without specifying the quantity from each country mentioned.

“It is one of the biggest gas discoveries in Vietnam," said Hau, who estimated the reserve at between 6 trillion and 8 trillion cubic feet. Vietnam’s proved natural gas reserves at the end of 2012 were 21.8 trillion cubic feet, according to the BP Statistical Review of World Energy.

“Unfortunately it’s a bit contaminated with CO2, but it’s still commercial, it’s still viable to develop," said Hau, who estimated the discovery’s carbon dioxide content at about 30%.

Plans call for bringing the gas ashore in a pipeline, according to Hau, who said PetroVietnam is working actively with Exxon Mobil to start the implementation of a first phase.

“We start working on the masterplan, with the commercial scheme," Hau said. Later on we’ll talk about an MOU and talk about the main principles for gas pricing. “I do hope that if both sides will be active on that, then we may have first gas maybe late 2020."

Exxon Mobil Texas-based spokesman David Eglinton declined to comment by e-mail. Bloomberg

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