Vietnams largest oil producer is Vietsovpetro (VSP), a joint venture (JV) between PetroVietnam and Zarubezhneft of Russia. VSP operates Vietnams largest oil field, Bach Ho. Other foreign partners include ConocoPhillips, BP, Petronas, and Talisman Energy. Following the October 2003 commencement of drilling operations in the Su Tu Den (Black Lion) crude field, PetroVietnam reported increasing production volumes. PetroVietnams April 2003 discovery of an oil deposit in Dai Hung, estimated to have a capacity of 6,300 bbl/d, was expected to further increase Vietnamese production. The decline in production overall from 2004 to 2005 was primarily the result of declining production at the Bach Ho field. The planned development of several new oil fields in coming years is expected to increase Vietnamese production. A new well at Block 15-1s Su Tu Trang (White Lion) field flowed 8,682 bbl/d in early 2004 and is scheduled to be developed by 2008. In October 2004, Japanese oil companies Nippon Oil Exploration (35 percent interest), Idemitsu Kosan (35 percent), and Teikoku Oil (30 percent) announced plans to fund the development of Blocks 05.1b and 05.1c in the Nam Con Son Basin. Two months later, the Korean National Oil Corporation (KNOC), along with several Korean partners, finalized terms for the $300 million development of Block 11-2, which includes the Flying Orchid Field. PetroVietnam has a 25 percent interest in the joint venture.
Exploration in Vietnam continues to yield new discoveries. In 2002, large oil and gas deposits were discovered in the Ca Ngu Vang (Golden Tuna) and Voi Trang (White Elephant) fields. SOCO Vietnam estimates that its Ca Ngu Vang well may contain up to 250 million barrels of oil. In July 2004, VSP discovered new stocks of oil in its Dragon field. Three months later, a joint venture comprised of American Technologies, Petronas, Singapore Petroleum, and PetroVietnam announced a 100-million-barrel oil discovery off Vietnams northeast coast. In September 2004, the Vietnamese government offered nine exploration blocks in the Phu Khanh basin off its southern coast. In November 2004, Japanese oil companies Nippon Oil Exploration, Idemitsu Kosan, and Teikoku Oil signed an agreement to explore in two offshore blocks southeast of Ho Chi Minh City. They plan to drill a test well in 2006 and complete exploration by 2007. In December 2004, Talisman Energy was awarded the right to conduct exploration in the Cuu Long Basin, and received additional acreage in an adjacent area in April 2005. ONGC of India was awarded drilling rights in the deepwater Block 127 in the Phu Khanh Basinoff Vietnams central coast in October 2005. ChevronTexaco also received acreage in the Phu Khanh Basin in the most recent round of awards, with an award for Block 122 in October 2005. PetroVietnams storage and transportation division, Petrolimex, recently completed a new oil storage facility in the central Khanh Hoa province. The depot is largest in the country, with a total storage capacity of 3.68 million barrels.
Vietnam is in the process of building its first refinery. The $1.5 billion Dung Quat Refinery, located in Quang Ngai province, will have a crude distillation capacity of approximately 140,000 bbl/d. After several years of delays in financing the project, construction finally began in November 2005. Commercial operation of the refinery is expected to begin in early 2009. Vietnams distribution infrastructure is discontinuous, with the north and south of the country functioning largely as separate markets. Completion of the Dung Quat Refinery, located in the center of the country, should lead to greater interaction between the regions. A second refinery project is under consideration at Nghi Son, north of Hanoi in the Thanh Hoa province. The Vietnamese government has estimated the 150,000 bbl/d plant will cost $3 billion. In August 2004, Mitsubishi Corporation agreed to participate in building Nghi Son for completion in 2010. In December 2004, Vietnam contracted the International Business Company (IBC) of the British Virgin Islands to conduct a feasibility study for a third oil refinery, to be located at Vung Ro in the southern Phu Yen province. The Vietnamese government hopes to complete the refinery within 12 years.