VIETNAM'S fledgling oil industry is a modern business success story. The country has an increase in funding of 11 times in six years and expects to treble last year's production figure to 20 million tonnes a year by the end of the century. From US$4 million of foreign investment (from the former Soviet Union) in 1988 and production of less than five million tonnes a year, the country will have received about $450 million in foreign investment this year. Although output is only up by about 50 per cent thus far, offshore oil finds suggest bigger increases over the next few years. Hanoi regards the oil industry as one of the pillars of its economic growth and has control of exploration, production, refining and distribution. In October, Petro Vietnam, the state-run company responsible for the industry, took over Petchim, the oil exporting arm, as part of its strategy for central control of an integrated system. However, it has a host of partners from different countries working on various projects. In November, Petro Vietnam announced long-term plans for acquiring its own tanker fleet and this month the company itemised its investment needs to meet a target announced earlier in the year, which many analysts said was desirable but far too ambitious. The company said it needed more than $12 billion in the next decade to meet its targets. Vu Van Mao, director of information at Petro Vietnam, said projects now under way - including the country's first refinery - would cost about $7.2 billion. Further development of current oil and gas production sites would cost $4.93 billion and exploration of the next production site - Thanh Long (Blue Dragon) - about $55 million. In March, Mobil signed an exploration agreement with Vietnamese, Japanese and Russian partners for Thanh Long, which is 300 km southeast of Ho Chi Minh City. However, a special joint committee is trying to reach agreement with China, which granted a concession to US company Crestone for the same area. Of the fields in operation, Bach Ho provides 100,000 barrels per day (bpd), Dai Hung 30,000 bpd and the Rong field is about to start production of 10,000 to 15,000 bpd, yeilding just under seven million tonnes annually. Hanoi is still negotiating foreign investment for the extra production but has been successful in securing funds for future exploration with about $535 million pledged. The figure may seem small compared with the $5 billion Petro Vietnam says will ultimately be needed, but the pledges only represent the tip of the iceberg: the queue of potential investors from Asia, the US and Europe is growing. In addition to the projects mentioned earlier, Petro Vietnam has identified the following areas as making up the required $12 billion of investment. The country's first refinery - expected to be completed by the turn of the century - is expected to cost $1.3 billion, while the second, in operation five years later, will cost $1.5 billion. Petrochemical and gas utilisation projects are expected to cost $1 billion each, and a pipeline to transport natural gas inland will cost $400 million. Only $500 million is expected to be invested next year, but most analysts feel that Hanoi will not have difficulty meeting the target. Oil majors and various consortiums are lining up to invest in the industry because world oil supplies are becoming increasingly tight. This situation is more acute in Asia because of the rapidly expanding economies in the region. Demand is growing by an average of five per cent annually, while supplies are increasing by less than two per cent. Most foreign investors have been more than pleased with the returns on their investments. Chief among these are Japanese companies which are keen to ensure stability of oil supplies and already take much of Vietnam's oil on a term contract basis. A consortium led by Mitsubishi found one of Asia's largest offshore oil deposits off Vietnam's coast, and the announcement of the find led to a rise in the company's share price last July at a time when stock markets around the world suffered a sudden slump. Malaysia's Petronas reported a significant find in a neighbouring block shortly afterwards. American companies, led by Mobil, returned to the country when US President Bill Clinton lifted the economic embargo against Hanoi in March, and are among the leaders in exploration projects. A consortium led by the French company Total is involved in the first planned refinery. Australian company BHP was the biggest partner in the consortium that brought Vietnam's second oilfield, Bach Ho, on stream in October.