Green light for Vietnam gas

April 30, 1999, 16:10 CEST

Three agreements signed by Statoil and its partners on 29 April lay the basis for a major natural gas project in Vietnam.

This venture comprises several elements, including development of the Lan Tay and Lan Do gas and condensate discoveries in block 06.1 off southern Vietnam.

In addition come a gas pipeline to land from these fields in the Nam Con Son Basin, and new facilities to utilise the production for power generation and fertiliser.

This ranks as the country's most extensive development project with foreign participation to date, and strengthens the basis for continued economic growth and social development in Vietnam.

The agreements were signed at a ceremony in the capital, Hanoi. One covers sale of gas and condensate from the block, another deals with the transport solution and tariffs, and the third embraces guarantees and approvals from the authorities.

Through these deals, the partners have agreed a gas price and a transport tariff.

They give Statoil and the other companies involved in the project the security required to continue work on detailed agreements for the development. Vietnam has also secured a good financial basis for generating gas-fired electricity.

The partners are concerned to secure a hard-currency return on their investment. Work on establishing payment mechanisms will continue in coming months.

"These agreements provide a strong basis for the gas project and for developing Vietnam's new gas industry," says Rolf Magne Larsen, senior vice president for International Exploration & Production in Statoil.

"We've worked a long time to come up with solutions for utilising these proven gas resources and for making the project profitable. We're concerned to advance as fast as possible in implementing the development."

Vietnam is currently not one of Statoil's international core assets. However, Mr Larsen notes that the group will continue its efforts to bring the project to fruition and to create value from its eight-year involvement in the south-east Asian country.