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Russia committed to Vietnamese
oil
By Sergei Blagov
MOSCOW
- Having abandoned its sweetheart lease on the Cam Ranh
Bay naval base, Russia remains nevertheless committed to
helping its former Cold War ally sustain its crude oil
output through the US$1.5 billion joint venture
Vietsovpetro.
"Vietsovpetro will pump at least
13.5 million tons of crude a year till 2006," Russian
deputy Prime Minister Viktor Khristenko announced in
Moscow following talks with his Vietnamese counterpart,
Deputy Premier Nguyen Manh Cam, on July 9.
Vietsovpetro, or VSP, remains by far Vietnam's
biggest oil producer, accounting for some four-fifths of
the country's total oil output. Vietsovpetro pumps crude
oil and natural gas in waters off the southern port of
Vung Tau.
Moreover, the official Russian RIA
news agency quoted Khristenko as saying that VSP's
geologists reassessed reserves of Vietsovpetro's main
oil field, Bach Ho (White Tiger). According to previous
estimates, the off-shore oil field contained 430 million
tons of oil, while recently the figure was raised up to
498 million tons.
Initially discovered by Mobil
in the closing months of Vietnam War drama in late 1974,
basement reservoirs off the South Vietnam shores proved
to be viable sources of oil and gas. According to
Russian experts, output rates are likely to increase at
White Tiger (Bach Ho) and Dragon (Rong) fields, both
producing from basement reservoirs.
The White
Tiger oil field has a depth of 5,000 meters, of which
4,000 meters consists of fractured basement granite. The
White Tiger area is divided into three fault-bounded
blocks: northern, central and southern. Traces of oil
were also found in the basements of the Big Bear (South
Con Son basin), and Bavi oil fields.
Apart from
oil and gas, Russia is also eyeing Vietnam's hydropower
sector. By September 2002, Russia and Vietnam are to
complete talks of $100 million hydropower loan, which is
due to be disbursed by the end of this year, Khristenko
stated on July 9.
Last March, Prime Minister
Mikhail Kasyanov traveled to Vietnam and hailed
bilateral oil and gas cooperation and announced a $100
million line of Russian credit to finance two hydropower
projects, the Pleykrong and Sesan-3, in Vietnam's Tay
Nguyen region. Some 80 percent of Vietnam's electricity
is being generated by Russian-built facilities,
according to the Russian estimates. Kasyanov also said
he had high hopes for the commissioning of the Dung Quat
oil refinery, a project that has fallen behind schedule.
He described Vietsovpetro and Dung Quat as Russia's most
important projects in Vietnam.
The $1.3 billion
Dung Quat plant had been due to be completed in two
years as Vietnam's first major refinery, but Russia has
said it could be delayed due to tendering difficulties.
In August 1998 Russia and Vietnam agreed to build Dung
Quat oil refinery in central Vietnam. PetroVietnam, and
its Russian partner, state-run Zarubezhneft, each holds
50 percent equity in the 35-year project. The refinery
is expected to cost a total of $1.3 billion. Russian
oilmen expect up to $2.3 billion profit from Dung Quat
expected 35 years of operation.
Russian
officials also hailed positive developments in bilateral
trade. "Through the first five months of this year,
trade turnover between Russia and Vietnam reached $272
million or 32 percent up as compared to the same period
of 2001," Khristenko was quoted by RIA on July 9. He
claimed that bilateral trade turnover could reach
$650-700 by the end of 2002. In 2001, Russia exported
$360 million worth of goods to Vietnam, mainly machinery
and steel, while Vietnam sold $190 million of
merchandise to Russia, largely textiles and rice.
Moreover, on July 9 Russia's deputy Central Bank
chairman Viktor Melnikov announced that Russia's Moscow
International Bank had secured a $20 million credit
facility from the state-owned Vietcombank. The facility,
an unprecedented development in bilateral economic ties,
is aimed at supporting Vietnamese exports to Russia.
First tenders to repay Vietnam's debt to Russia
in kind will be held next September, Khristenko
announced. He conceded that debt repayment schemes had
turned out to be "somewhat slow." Kasyanov also said
that in 2002 some $8 million from the debt repayment
funds are to be used to train Vietnamese students at
Russian Universities.
In September 2000, Russia
and Vietnam agreed to cut the Soviet-era debt,
previously estimated at $11 billion, by 85 percent and
allowing for repayment of the rest over 23 years.
Vietnam is to repay nearly $100 million in cash every
year, while the remainder will be repaid in kind or
re-invested in joint ventures in Vietnam.
In the
meantime, military co operation seemingly becomes less
important in the relations between Russia and Vietnam.
Notably, on July 4 the Vietnamese Foreign Ministry
announced that the agreement with Russia on Cam Ranh
lease had been terminated from July 1 onward. Last
October Russia announced shut down its strategic naval
base in Cam Ranh even before expiration of its free
lease.
According to a 1979 agreement signed by
the former Cold War era allies, Moscow was not required
to make payments for the lease which extended to 2004.
Throughout the early 1980s the former USSR invested
millions of dollars to repair and upgrade the base's
infrastructure so it could receive nuclear submarines
and host a regiment of the Soviet strategic bombers.
However, in recent years the base was hardly used by the
Russian navy.
Therefore, former Cold War era
allies pledge to have their "traditional" partnership
based on a pragmatic basis of vibrant economic
cooperation. Subsequently, energy sector is set to
remain a cornerstone of bilateral ties.
(©2002
Asia Times Online Co, Ltd. All rights reserved. Please
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