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Chevron may begin work on $4 bln Vietnam project by August
Chevron Corp. may begin work on a US$4 billion offshore natural gas project in Vietnam by August, said the company’s top official in this nation, seven years after the plan was proposed by the now-acquired Unocal Corp.
The project’s economics are based on developing about four trillion cubic feet, according to Hank Tomlinson, Hanoi-based president of Chevron’s Vietnam unit.
Negotiations on volumes and gas prices have made “tremendous progress” this year, and may conclude by the end of July, Tomlinson said in a June 16 interview in Hanoi.
“We are very close,” Tomlinson said of the negotiations with Vietnam Oil & Gas Group, known as PetroVietnam. An agreement by next month “would allow us to start engineering work,” he said.
PetroVietnam hopes talks may conclude as soon as this month, Chairman Dinh La Thang said.
Vietnam is hoping to tap proved reserves of gas that more than tripled over the last decade and surpassed those of Thailand, according to BP Plc, operator of the country’s largest gas project.
The Chevron-led venture is expected to run for more than 20 years and boost Vietnam’s electricity supply by 20 percent, Tomlinson said.
The current year-on-year growth rate for power demand in Vietnam is about 10 percent, according to Martin Rama, Hanoi-based country economist for the World Bank.
“Power demand in Vietnam will grow strongly in the future, at least in the double-digits if perhaps not at the 16 percent rate we saw before the global slowdown,” Rama said in a telephone interview Friday.
“Vietnam has hydropower, it has coal, and it has natural gas. With the demand growth there should be enough space for using the gas.”
Peak output
Plans call for production to peak at 500 million cubic feet per day within five years of start-up, according to Gareth Johnstone, a Chevron spokesman in Singapore.
The engineering work includes designing platforms, wells, electrical and mechanical equipment, and living quarters, Tomlinson said by telephone Friday from Singapore.
It will be followed by early 2011 with tenders for engineering, procurement and construction contracts, he said.
An agreement to develop the resources would ultimately include construction of a 380-kilometer pipeline to supply power plants in Vietnam’s Mekong Delta.
In 2002, Unocal, Mitsui Oil Exploration Co. and PTT Exploration & Production Plc first announced they had found at least 2.5 trillion cubic feet of natural gas in Vietnamese waters. California-based Chevron bought Unocal in 2005. Mitsui Oil and PTT Exploration are still partners in the project.
“Getting the project on-line quickly is in the best interest of Chevron and PetroVietnam,” Tomlinson said, though declining to give a projected start date or comment on a Vietnam Investment Review report this week that the first gas from the project may flow in 2014.
PetroVietnam’s Thang said this week that the group was targeting 2012 for the first gas.
Bloomberg, VietNamNet
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