Monday, July 11, 2011

PetroVietnam Eyes Conoco's Vietnam Assets

HANOI—Vietnam Oil and Gas Group and its partners are considering buying ConocoPhillips's stakes in three oil and gas projects off the coast of Vietnam, according to the country's state-run oil company, also known as PetroVietnam.

ConocoPhillips, the third-largest U.S. oil company by market value after Exxon Mobil Corp. and Chevron Corp., has stakes in oil fields located 180 kilometers southeast of Ho Chi Minh City.

"The reason why the firm [ConocoPhillips] is selling the stakes might be it is restructuring itself," PetroVietnam Director General Phung Dinh Thuc said in a statement on the website of PV Oil, a unit of PetroVietnam. He didn't identify the partners. ConocoPhillips's assets in Vietnam are valued at up to $1.5 billion, PV Oil said in the statement.

ConocoPhillips spokesman John McLemore declined to comment.

PV Oil's remarks come at a time when ConocoPhillips is expected to give investors an update on its three-year restructuring plan presented in late 2009 and expanded this year. The plan includes selling up to $17 billion in assets.

Conoco Senior Vice President of Planning and Strategy Alan Hirshberg has said in a May the company was looking at leaving countries where it has a small presence.

ConocoPhillips has a 23.3% stake in a group of five fields in Block 15-1, where oil production started in 2003, a 36% stake in Rang Dong Field in Block 15-2 in the Cuu Long basin and a 16.3% stake in the Nam Con Son Gas Pipeline project.

As host country, Vietnam has priority rights for any such purchase, Mr. Thuc said. Mr. Thuc was quoted in the statement as saying oil production at the fields might have entered a "complicated stage," in an apparent reference to technical—rather than political—complexities.

Mr. Thuc referred to an increasingly bitter dispute between Vietnam and China over sovereignty of the South China Sea—or East Sea as it is known in Vietnam—but didn't directly link the dispute to the possible acquisition.

"PetroVietnam reiterates that Vietnam's sovereignty has been acknowledged by the international community, and therefore, it will not change its exploration and production plan in the East Sea," Mr. Thuc was quoted as saying.

The Vietnam-China sovereignty row heated up sharply recently when Hanoi accused Chinese vessels of harassing fishermen and cutting the cables of a vessel doing seismic oil exploration work in late May.

"Our current conduct in the East Sea is being calm, to both contribute to the country's economy and to actively protect the nation's sovereignty in the sea," Mr. Thuc said.

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