Gasping gushers

PUBLISHED : Tuesday, 26 September, 1995, 12:00am
UPDATED : Tuesday, 26 September, 1995, 12:00am

THESE are testing times indeed for Vietnam's emerging oil industry, the country's most valuable export sector.

Total of France has pulled out of the project to build the country's first oil refinery and now, according to company sources, Australia's industrial giant BHP is looking at shutting down production at one of only three fields now in production.

Both moves mark the first signs of a stark commercial realism creeping into all manner of foreign business deals across Vietnam as the hype and blather that followed the lifting of the US economic embargo last year has cleared.

Sober financial decisions are being made at the possible expense of vital relationships and contacts within Vietnam's extensive and exhaustive bureaucracy - still firmly Hanoi-based with the Communist Party strong at its centre.

Vietnam's leaders have never pretended its administration doesn't need cleaning up or its laws re-written, but now foreign investors are starting to insist their words count.

The case of BHP is going to test flexibility with its thinly-veiled ultimatum.

It is trying to do what noone has tried before - change the contract governing the proportion of oil given to the state oil monopoly PetroVietnam or it will shut production down.

BHP is saying it cannot spend more money to get more oil unless there is change.

'We are not saying we want to give the state of Vietnam less actual oil,' one source said.

'We are saying we want them to have a smaller slice of what still can be a bigger pie. We still want to grow with Vietnam, which has always been our slogan.' The tone is in marked contrast from optimism-lined days when the contract was signed in April 1993 or the heady time, 18 months later, when the field set a world record by getting oil moving so quickly after signing.

The company went ahead without three-dimensional seismic data provided later by PetroVietnam that they insist has drastically reduced the size of the field's estimates.