News » Breaking news
Vietnam expands global energy role
  • | Wall Street Journal | December 11, 2009 02:04 AM

Vietnam's state-run oil company said it has signed an oil and natural-gas cooperation agreement with Sudan's national oil producer and plans to do the same with an Angolan oil company later this month as it moves to raise its profile overseas.

Vietnam is expanding global energy role.

The agreement with Sudan's Sudapet Ltd. will enable the two companies to jointly invest in oil and gas projects in Sudan, Vietnam and elsewhere, according to Vietnam Oil and Gas Group, known as PetroVietnam. The Vietnamese company said it will sign a similar agreement with state-owned oil company Sonangol in Angola later this month, with more detailed oil and gas contracts expected to follow early next year.

"The agreements are part of our plan to expand oil and gas exploration and production to Africa," said PetroVietnam Deputy Director Nguyen Van Minh. "We are also focusing on expanding investment in oil and gas projects in other countries, especially in Russia and South America," Mr. Minh said.

Although many details of the projects remained unclear, many analysts said it is only a matter of time before Vietnam's oil company tries to become a more important competitor in global energy markets.

It has maintained a relatively low profile in recent years, especially compared with other energy powerhouses in emerging Asia, such as China National Petroleum Corp., China's Cnooc Ltd. and Malaysia's Petroliam Nasional Bhd., which have invested huge sums to land major assets in Kazakhstan and elsewhere.

PetroVietnam, by contrast, has focused mainly on developing domestic fields in conjunction with foreign investors such as ConocoPhillips.

One reason is that Vietnam remains a net exporter of crude oil, meaning it hasn't faced the same urgency to locate more oil elsewhere. It currently produces about 330,000 barrels of oil a day and consumes 320,000, according to FACTS Global Energy, a consulting firm.

But Vietnam's domestic production is expected to taper off by the middle of the next decade, and its economy continues to grow rapidly, boosting incomes and demand for energy. It also will need more supply to feed its 130,000-barrel-a-day Dung Quat oil refinery, Vietnam's first oil-processing plant, which became operational earlier this year.

"Certainly the leadership in Vietnam seems to be more outward-looking than it was in the past, and since these are state companies, that may correspond with some move overseas" in oil production as well, says Jeff Brown, a Singapore-based analyst at FACTS.

PetroVietnam said it has so far joined more than 20 oil and gas exploration and production projects abroad, including in Algeria, Iraq, Peru, Iran, Myanmar and Venezuela. Many were signed during the past 12 months.

Last month, PetroVietnam Exploration Production Corp., a production unit of PetroVietnam, signed an agreement with the Cambodian National Petroleum Authority for oil exploration and production at Cambodia's Tonle Sap Lake.

Another PetroVietnam official said crude-oil output from the company's overseas operations is expected to be about one million metric tons this year, with total expected crude-oil output of some 16 million tons.