OVL eyes Chevron's gas block in Vietnam

Chevron holds 42.38% in Blocks B and 48/95 in Malay-Tho Chu Basin of Vietnam

ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), is looking to buy a stake in US supermajor Chevron's $4.3 billion Block B gas project in Vietnam.

Chevron, which holds 42.38% in Blocks B and 48/95 in Malay-Tho Chu Basin of Vietnam, has called for expression of interests from international firms willing to farm-in (or buy stake), sources said.

OVL is keen to take part or whole of the stake in the block which has 4 Trillion cubic feet of inplace reserves, of which 63% can be recovered or produced. It can produce up to 490 million cubic feet of gas and 6,000 to 7,000 barrel of condensate per day.

Others who may be interested in picking up the stake include Gazprom of Russia.

Hanoi is seeking to involve Russia and India to counter the influence of China with whom it has a territorial dispute.

It has offered OVL five offshore oil and gas exploration areas in South China Sea and its Kossor block in Uzbekistan without bidding.

Sources said OVL feels Vietnam will support its bid for Chevron stake by giving necessary approvals and waiving its first right of refusal.

OVL already has 45% stake in Block 06.1, which produces about 12.8 million standard cubic metres per day of gas and 1,896 barrels per day of condensate.

Being the experienced operator in the offshore Vietnam, OVL feels it can get the Chevron stake, they said.

Sources said Chevron has prepared a development plan to produce gas from the block but hasn't started work over a dispute with Vietnam's national oil firm PetroVietnam about the price of gas.

Chevron wants gas price of between $7 and $10 per million British thermal units while Vietnam is willing to pay no more than $6.

Gas produced from OVL's Block 06.1 is sold at $3.602 per mmBtu.

Chevron disbanded its Block B project team, while it tried to resolve commercial agreements with PetroVietnam.

Other partners in Blocks B and 48/95 are Mitsui Oil Exploration (25.62%), PetroVietnam E&P (PVEP) (23.5%) and Thailand's PTTEP with 8.5%. Chevron is the operator with 42.38% interest.

The same companies also own Block 52/97, with Chevron holding 43.4%, PVEP at 30%, Mitsui at 19.6% and PTTEP at 7%.

PetroVietnam has offered OVL Blocks 17, 41 and 43 while PetroVietnam Exploration Corporation has offered blocks 10&11-1 and 102&106/10 and the Kossor block it has in Uzbekistan.