The hunt for oil and gas resources is taking the exploration and production industry to all parts of the globe, as higher-risk exploration is needed to satisfy world demand for these resources. This need for newly discovered resources may become acute as the emerging economies industrialize and bring higher living standards to their citizens.
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Exploration In Vietnam
Vietnam currently only has 4.7 billion barrels of proved oil reserves, and it had 19.7 trillion cubic feet of gas at the end of 2008. Production is also fairly low at 317,000 barrels of oil per day. This is sure to move higher fairly quickly due to the pace of exploration in Vietnam.
Since this type of exploration is riskier and expensive, the majors are active here. ConocoPhillips (NYSE: COP) has interests in 2.7 million acres in six blocks offshore. The company currently has only 24,000 barrels of oil equivalent in production, but it is an important future area.
The infrastructure is mostly in place for future expansion, as its exploration blocks are located near the Nam Con Son Pipeline, which runs 244 miles from offshore into Southern Vietnam. Conoco Phillips and BP (NYSE: BP) jointly own just under 50% of the pipeline, with PetroVietnam, the Vietnamese national oil company, owning the balance.
Other Southeast Asian Countries
Chevron (NYSE: CVX) is another major active in Southeast Asia, but mostly in Thailand, Cambodia and next door in China. The company plans to ramp up its exploration in all these areas in future years.
While most independent exploration and production companies have focused on domestic shale plays, Plains Exploration & Production (NYSE: PXP) is exploring offshore Vietnam. The Purple Tiger exploration prospect, located on Block 124, started drilling in the third quarter of 2009. Plains Exploration & Production operates the well and has a 100% working interest. This is not a major area for Plains Exploration & Production as only 3% of its capital budget in 2009 was allocated here.
Talisman Energy (NYSE: TLM) currently has 21% of its production from Southeast Asia, including Vietnam. The company believes both the operating and the finding and development costs to be lower than average in this region. Talisman Energy is seeing production from an existing field at Song Doc that it helped develop, and it has several prospective areas to explore.
How Much Is Enough?
Vietnam is one of the frontier areas where the industry is exploring for future oil and gas resources, as it desperately tries to keep up with future demand. No one is certain if this will be enough. (Learn about factors that affect oil prices in our article,
What Determines Oil Prices?)
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