Socialist republic of vietnam

Block 09-1

Block 09-1 is developed as per the Inter-Governmental Agreement dated December 27, 2010. The White Tiger and the Dragon as well as the White Hare and the White Bear fields, developed by JV Vietsovpetro, are located 150 km from the shore on the southern Vietnam shelf.

Development and production

The actual production of hydrocarbons at Block 09-1 in 2019 was 4,138 K t.o.e., which is lower by 14.6% than that in the previous year. This reduction is related to decline of production in base wells due to the White Tiger and the Dragon fields entering the final stage of development.

To maintain the production levels in 2019, an extensive well intervention program was completed with an additional production of 214.0 thous. tons of oil. A new block site in the area of WHP-20 was commissioned. After re-entry of MTD-2X well, the oil flow rate at startup was 311 tons/day.

Measures were developed and implemented in 2019 to form the FPM system at the Block fields. The comprehensive program includes the conversion to injection and use of non-fixed waterflooding. Completion of the FPM program reduces the drop rates for Block 09-1 to 20.7%.

Development and approval of an algorithm for the search and selection of optimal designs and laboratory studies supported the development and consolidation of 2018 HFF campaign results. A specific startup growth for wells with HFF in 2019 exceeded 50 tons/day.

Block 09-1

The industrial exploitation of the Dragon field gas condensate reservoir continued in 2019. Natural gas production was 132.4 MM m3, with the planned level of 117.8 MM m3. The overproduction of natural gas was due to increased production in order to maintain the pressure in the Dragon field gas lift system.

5 new wells were drilled and 10 side tracks were completed in 2019 at Block 09-1 fields. The completed scope of development and exploration drilling complies with the approved production program.

Ownership structure
Ownership structure
Hydrocarbon production, thous. t.o.e.
Hydrocarbon production

Capital construction

Capital construction activities in 2019 were related to the commissioning of WHP-20, valving of the X-mas tree for new wells and the installation of additional cells on WHP-20. A number of necessary operations were completed: reconstruction and expansion of compressor capacities at Block 09-1, modernization of the gas lift system at RP-2, reconstruction of CPF-3 for reception of WHP-20 production, installation of an auxiliary power supply system at Tamdao-1 jack-up drilling rig to connect it to the common grid of Block 09-1, and other activities.

Financial indicators

Completion of the efficiency gain and cost optimization program in the reporting period failed to fully constrain the costs growth. The growing expenditures on fuels and lubricants were caused by increased scope of exploratory drilling and WIs. The increased expenditures on personnel were caused by the decision taken at the 51th Meeting of the Participants to re-adjust position salaries of employees by 4%, in order to increase the offshore facilities surcharge from 30 to 40 USD/day, totaling 7.2 MM USD. The workover upgrade was completed in 2019, and costs of Chí Lin single-point mooring unit were undertaken in the amount of 3 MM USD, and expenditures on overhaul of the offshore infrastructure increased due to the dismantling of equipment at the small compressor station.

OPEX, MM USD
OPEX
Capital investment, MM USD
Capital investment

Development prospects

Taking measures to compensate production rate drops at the Block fields is the main task for the asset. Therefore, it is planned to complete 69 well interventions, including drilling and commissioning of wells at the existing facilities of the White Tiger and the Dragon fields, and side-tracking to involve the remaining reserves of the White Tiger, the Dragon and the White Bear fields’ wells.

For the base wells, it is planned to implement electrical centrifugal pumps (ECP) under the pilot development program, which will reduce expenditures on gas lift and increase flow rate of the existing wells.

In 2019, the profitability of Zarubezhneft JSC reduced by 31% relative to the previous period and amounted to 135 MM USD. The primary factor of the profitability reduction is related to reduced production and sales of oil (-15%) and decline in oil prices to 67.3 USD/bbl in the reporting period as compared to 2018 (-10% or -7.2 USD/bbl).

Block 09-3

Works at Block 09-3 (VRJ) are carried out as per the Petroleum Contract for development and exploitation of Block 09-3 reserves at the shelf of the Socialist Republic of Vietnam dated January 19, 2002, and the Joint Development Agreement (JDA) on the Southern Dragon – Sea Turtle field (SD-ST) dated June 26, 2009. According to the JDA, the share participation and allocation of production of Block 09-1 and Block 09-3 in the development of the joint SD-ST block is 50% and 50%, respectively.

In 2017, Idemitsu (15%) and PVEP (35%) withdrawn from the Petroleum Contract and transferred their shares to Zarubezhneft JSC from January 1, 2017. The Government of the Socialist Republic of Vietnam issued an investment certificate on September 6, 2018 for Block 09-3 entitling oil and gas activities, in accordance with which Zarubezhneft JSC is the Contractor with 100% of participating interest starting from January 1, 2017.

Development and production

Primary production activities at the Block are carried out in fractured rocks of the crystalline basement.

In 2019, the asset production was 81.17 K t.o.e. (-13% as compared to 2018). Production decline for the Southern Dragon – Sea Turtle field is mainly related to the reduced formation pressure. Despite this, measures intended to optimize the development wells resulted in overachievement of the planned production (+10 K t.o.e.).

Block 09-3

Financial indicators

As the result of shifting the WIs program to 2020 in 2019, control over the expenditures on procurement of chemical reagents, and works intended to reduce prices of tariff operations (operation and maintenance, oil treatment, gas lift and formation pressure maintenance), we see a decline in the OPEX in absolute terms as compared to the previous year. The specific actual indicator for 2019 was 94.0 USD/ton as compared to 106.5 USD/ton in 2018 (-11.7%).

The primary factor of Zarubezhneft JSC profitability decline by 2 MM USD as compared to the previous year is a reduction of revenue by 8.8 MM USD (-18%) as the result of sales volume decrease by 10.8 thous. tons (-12%).

Ownership structure
Ownership structure
Vetnam

Development prospects

To stabilize the production in 2020, works are planned to install ECPs in two wells (No. 2Kh, No. 422); a candidate to remedial cementing has been defined (well No. 406).

OPEX, MM USD
OPEX
Block 04-3

Block 04-3 is located in the northern part of the Nam Con Son basin on the southern shelf of the Socialist Republic of Vietnam, 280 km south-east from Vũng Tàu. The Thien Ung - Mang Cau structure is located within Block 04-3.

A Petroleum Contract was signed on June 26, 2009, based on a commercial discovery between Petrovietnam Oil and Gas Corporation and Zarubezhneft JSC concerning Block 04-3 of the Socialist Republic of Vietnam shelf. JV Vietsovpetro is the project operator.

Thien Ung WHP was commissioned on December 20, 2016 after the completion of drilling and testing of the 6-TU gas condensate well.

Development and production

Total gas production after the operation start was 387.9 MM m3, gas condensate production was 104 thous. tons. There are 3 active production wells. Gas condensate mixture is produced in limited conditions of gas reception by the purchaser (PVGas) due to the quality of gas and condensate (high CO2 concentration) in the production. These limitations will be in force until the new pipeline Nam Con Son-2 is commissioned..

Financial indicators

Фактическая доходность АО «Зарубежнефть» 2019 году составила 3,8 MM USD, что ниже показателя предыдущего года на 1,9 MM USD. The primary factor of Zarubezhneft JSC profitability decline by 1.9 MM USD as compared to the previous year is a reduction in revenue by 8.7 MM USD (-18%) as the result of sales volume decrease by 36.2 K t.o.e. (-22%) and growth of the profit tax rate from 16% in 2018 to 32% in 2019.

Development prospects

Development of the Thien Ung field suggests development drilling during 2020–2022 and reaching the maximum design production.

Block 04-3
Total gas production after the operation start was
387.9 MM m3
Ownership structure
Ownership structure
Hydrocarbon production, thous. t.o.e.
Hydrocarbon production
The volume of HC production in 2019 was 135 K t.o.e., including natural gas of 108.5 K t.o.e. (120.5 MM m3) and gas condensate of 26.7 K t.o.e..
Block 12/11

Block 12/11 is located within the Nam Con Son gas condensate basin, 350 km south-east from Vũng Tàu.

Oil and gas occurrence perspectives are related with the Oligocene and Lower Miocene deposits within the identified Thien Nga-Hai Au structures and the group of E structures, whose hydrocarbon resources belong to category Р3.

The PSA on Block 12/11 was signed on December 19, 2012. The PSA term is 25 years for oil and 30 years for gas with a prolongation option for 5 years, including 5 years of exploration works with a prolongation option for 2 years. The minimal license obligations suggest drilling of 3 exploration wells.

Exploration and development

The following activities were completed at Block 12/11 in 2019:

Geological and geophysical works.

Interpretation of 3D PrSDM seismic data for TN-HA-E structures in the amount of 630 km2, reports: “the summary of drilling results for 3rd EF-1Х exploration well”, “the report on completion of exploration works, stage 1”, “the calculation of HC reserves and resources for the block structures”; design documentation was developed for the construction of a TN-4Х multilateral exploration well.

Drilling works.

Construction of a TN-4Х multilateral exploration well. Testing along the ST2 well bore (Thien Nga structure) showed commercial inflow of HCs from Oligocene deposits (gas, condensate) and of oil (Miocene). After a number of studies, on November 6, 2019, the ST1 pilot well bore (Hai Au structure) was abandoned as having served its purpose and giving no inflow of HCs.

Block 12/11

Design and facilities.

Works have been completed on PRE-FEED with the underwater production unit for Block 12/11 (the contractor is INTECSEA, WorleyParsons Group of Companies). The report has been approved by Zarubezhneft Council for Science and Engineering on May 16, 2019; works have been completed on the designing of ОDP and simulation model development for Thien Nga-Hai Au by VNIIneft JSC consortium (VPI). JV Vietsovpetro Council for Science and Engineering meeting adopted the document on December 24, 2019 and recommended it for approval by Petrovietnam Oil and Gas Corporation.

Other works.

Work is ongoing on approval of the layout and the transportation price of Block 12/11 production to the Rong Doi platform with KNOC, the owner of neighboring Block 11-2. Negotiations were undertaken in 2019 between representatives of Zarubezhneft JSC, JV Vietsovpetro, and Petrovietnam Oil and Gas Corporation on approval of the gas selling price sufficient for profitable development of Block 12/11 before infrastructure development and start of production. Negotiations were undertaken with KNOC as to the rates of preparation and transportation of Block 12/11 production and possible procurement of Block 11-2; key arrangements with KNOC were achieved. After trilateral negotiations with Petrovietnam Oil and Gas Corporation and KNOC on December 21, 2019, the agreement (HOA-Heads or Agreement) was signed as to the general principles and conditions of further negotiators on gas prices of Block 12/11 and conditions of Block 11-2 procurement..

Ownership structure
Ownership structure

Development prospects

As for 2020, it is planned to complete drilling and testing of the TN-4X well and recalculate HC reserves for Thien Nga-Hai Au structures after drilling (TN-HA commissioning is scheduled for the fourth quarter of 2022).

The work program for a mid-term period suggests preparation for infrastructure development of TN-HA structures, as well as development and approval of FDP, FEED for TN-HA structures. The decision taken on the commercial discovery on the TN-HA structure is followed by engineering and survey activities for the construction of WHP and pipelines from Thien Nga – Hai Au structure to Rong Doi. Development and exploration of other structures of the Block are planned.

Block 09-3/12

Block 09-3/12 is located 160 km south-east from Vũng Tàu. The Block borders with Block 09-1 on the north-west. The PSA on Block 09-3/12 was signed on September 12, 2012 between Petrovietnam Oil and Gas Corporation, PVEP, JV Vietsovpetro and Bitexco Group. JV Vietsovpetro is the project operator. The PSA term is 25 years with a prolongation option for 5 years. The minimum work obligations in respect of geological exploration activities under the project include two phases. The minimum work obligations of two PSA stages were fulfilled in full.

The Ca Tam (Beluga) oil field was discovered within the Block. The discovery took place in 2014 after drilling СТ-2Х and СТ-3Х exploration wells. The commercial discovery was announced in 2017. In 2018, CTC-1 WHP support unit was installed and all pipelines were routed.

Development and production

The Beluga field was commissioned in January 2019. Production for 2019 was 452.85 K t.o.e. The field is being developed in natural conditions.

The extensive WI program has been completed for the field: 4 exploration wells have been re-entered into production, 7 production wells have been drilled and commissioned, 3 HFFs have been made, bottom hole treatment (BHT) has been performed in one well.

First income from taking part in Block 09-3/12 was received in 2019 in the amount of 6.5 MM USD.

Development prospects

One of the primary tasks for the Beluga field is updating design solutions, taking into account the obtained actual data and implementation of measures to stabilize the production and reduce production decline rates. Perspective measures include the construction and optimal placement of the second WHP, development drilling, HF program, FPM system arrangement, optimization of gas lift well operating conditions.

Block 09-3/12
Production for 2019 was
452.85 K t.o.e.
Ownership structure
Ownership structure
Block 09-2/09

Block 09-2/09 belongs to the so-called small blocks of the Vietnamese shelf. The Block is located near Blocks 09-1 and 09-3/12 (adjoins them). Several structures have been explored at the Block site, with two best of them (KNT, KTN) having potential geological resources of 30 MM m3.

The PSA between Petrovietnam Oil and Gas Corporation (as the State Representative) and PVEP was signed on August 6, 2009.

The FoA agreement was signed in 2019 for assignment of the share owned by PVEP (on May 17, 2019, between PVEP and JV Vietsovpetro; and on May 22, 2019, between PVEP and Zarubezhneft JSC). Investments of the project partners are made in accordance with their participating interest. Current distribution (allocation) of shares is shown in the diagram. The efficient share of Zarubezhneft JSC is 49.6%.

Exploration and development

Two best structures of the Block (KNT, KTN) have potential geological resources of 30 MM m3. Inflows up to 600 m3/day were obtained from the primary horizon at the fields (E70). Extensive exploration works have been completed at the Block: 11 exploration wells have been drilled.

According to the G&G data and exploration drilling, there are 3 prospective structures (COD, KND, SON) with high prospective resources at Block 09-2/09 beyond two oil and gas discoveries. In case of commercial oil discoveries, exploration works are advantageous to develop these discoveries because they adjoin the existing oil fields near Block 09-2/09: the Rang Dong - Phuong Dong (JVPC) field, and the White Tiger (JV Vietsovpetro). The Block is located in the area with existing producing and transport infrastructure with intense oil and gas activity.

Block 09-2/09
Potential geological resources
30 MM m3
Ownership structure
Ownership structure

Development prospects

The mid-term budget for Block 09-2/09 suggests the installation of a manned wellhead platform (WHP) at the KNT structure and an unmanned wellhead platform at the KTN. ODP, FEED, FDP are planned to be developed in 2020. The planned field commissioning date is 2022. The maximum level of production is planned to be achieved in 2023.

Block 16-1/15

Block 16-1/15 with an area of 3,117 km2 is located in the western part of the Cuu Long basin of the Vietnamese continental shelf, 80 km south-east from Vũng Tàu. The Block’s eastern border adjoins Block 09-1. The PSA was signed on May 16, 2016 under the Vietnamese Shelf Block 16-1/15 Exploration and Development project between Petrovietnam Oil and Gas Corporation, JV Vietsovpetro, PVEP, BITEXCO and SOVICO. JV Vietsovpetro was selected to be the project operator, and the investment certificate was received. The PSA term is 25 years with a prolongation option for 5 years, including 5 years of exploration works with a prolongation option for 2 years. The minimum work obligations in respect of geological exploration activities under the project include two phases. Currently, Phase I of the exploration works stage is being implemented, that suggests seismic surveys and drilling of two prospecting and exploration wells. The Ministry of Industry and Trade of the Socialist Republic of Vietnam and Petrovietnam Oil and Gas Corporation approved the extension of the exploration works Phase I from June 11, 2019 for one calendar year. The project funding in the share of JV Vietsovpetro is carried out from the JV Production Development Fund.

Exploration and development

Works were completed in 2019 related to the testing of the first exploration well CV-1X; no commercial inflows were obtained within the Oligocene and Miocene horizons, the well was abandoned. Works were completed on evaluation of increment of oil and dissolved gas reserves upon the results of CV-1X well drilling and studies of the fracture screen of Block 16-1/15. Works have been continued on the special processing of 3D seismic data by the inversion method (300 km2): primary interpretation of the data has been obtained. Works have been completed on geological justification of selection and evaluation of geological drilling conditions of the second well, the site of the 2nd exploration well on the SV structure was preliminary defined along with the well structure (the main bore and side tracks)..

Block 16-1/15
Area of block
3,117 km2
Ownership structure
Ownership structure

Development prospects

The work program for 2020 provides for design, geological and engineering exploration, drilling and testing of the 2nd exploration well in the Soi Vang structure. It is planned to complete the exploration works in a mid-term period, to develop and produce hydrocarbons using the unmanned WHP, to drill 10 development wells, and re-enter 2 exploration wells. It is planned to start the development in 2023.

Block 42

Block 42 is located on the continental shelf of Vietnam, 350 km south-west from Vũng Tàu and 60 south from Phu Quoc Island. The seabed depth is 25–30 m. 8 perspective structures have been identified at the Block with an area of 4,659 km2. The PSA was signed on March 29, 2013 between PVEP (51%) and JV Vietsovpetro (49%), the project operator is PVEP. The PSA term is 30 years with a prolongation option for 5 years, including 7 years of prospecting and exploration.

Exploration and development

In 2019, the 1st exploration well PQ-1X was drilled (3,060 m) on the PHU Quoc structure. During construction of the well, a geological rock section was identified differing from the predicted section, with the rocks strongly compacted and subject to volcanic activities in the adjacent area. Irrespective of the attraction of this structure since it accumulates migrating oil flows, and proximity of hydrocarbons generation areas, no reservoirs in prospective horizons and no significant seals prevented from the HC field to form. Taking into account the signs of hydrocarbons absence and the identified geological section, the decision was made to abandon the well without string RIH due to geological reasons. All minimal obligations of the exploration works Phase I have been fulfilled.

On March 15, 2019, the Block operator PVEP ROS proposed suspending main activities under the project due to negative results while drilling the 1st exploration well. JV Vietsovpetro, as Block 42 PSA contractor party, agreed to complete all procedures to quit the project as per the PSA Provisions for Block 42 and Joint Operating Agreement. The resolution was approved by the Minutes of the 51st Meeting of the JV Participants dated July 11, 2019. PVEP ROS Block operator prepared a report on the results of drilling of the 1st exploration well and completion of the exploration works Phase 1.

Block 42
Area of block
4,659 km2
Ownership structure
Ownership structure

Development prospects

In 2020, JV Vietsovpetro plans to complete all procedures to quit the PSA on Block 42; the contractor is expected to return the original investment certificate to the Ministry of Industry and Trade of the Socialist Republic of Vietnam as per Clause 2 (d), Article 43 of Decree of the Government of the Socialist Republic of Vietnam No. 95 dated October 16, 2015.