Vietnam has approved a $714 million oil production project with ConocoPhillips and partners as the third-largest crude producer in Southeast Asia tries to stem declining output from its fields.
Deputy Prime Minister Hoang Trung Hai backed the exploration plan for the northeastern portion of the Su Tu Den oil field at offshore block 15.1, according to an approval notice on the government Information Agency Web site. Oil is expected to flow from the field by December 2009 through 12 wells, according to the government statement.
ConocoPhillips, the third-largest U.S. oil company and the biggest foreign investor in the existing Su Tu Den field, confirmed the approval to move forward with the extension. The field may produce about 40,000 barrels a day at its peak, according to the company. Janet Grothe, a spokeswoman, declined to comment on the potential production of the field or how development costs would be allocated.
Oil output by Vietnam Oil & Gas may fall for a third year in a row as the state-owned producer was behind its target in the first quarter. The country needs to expand its energy output for the government to reach its goal of economic growth of more than 9 percent next year.
Oil production in Vietnam is behind a target of 17.5 million, or about 360,000 barrels a day, set for 2007 by Prime Minister Nguyen Tan Dung in January. Output from the Bach Ho field, the largest in the country, slumped 8 percent in 2006 from 2005.
Su Tu Den production declined for a second year in 2006, falling to an average of 55,000 barrels a day from about 71,000 in 2005. The output of the field was cut in late 2005 because of concerns about an increase in the level of water produced together with its crude oil.
Su Tu Den, which means Black Lion in Vietnamese, started flowing in 2003.
ConocoPhillips owns a 23.3 percent stake in the operator of Su Tu Den, Cuu Long Joint Operating, based in Ho Chi Minh City. Other partners include a unit of Vietnam Oil & Gas, known as PetroVietnam, with a 50 percent stake; Korea National Oil, which has 14.25 percent; SK Energy with 9 percent; and French company Geopetrol with 3.5 percent. The numbers total more than 100 due to rounding.
The venture also is developing the Su Tu Nau, the Su Tu Trang and the Su Tu Vang projects in Vietnam, according to ConocoPhillips.