Disputed oil field generates strong international interest

FOREIGN interest is heating up in Vietnam's disputed Tu Chinh oil field - claimed by China - and the country's oil monopoly is open to bids for rights, a senior state oil official says.

PetroVietnam's international co-operation director Do Van Ha said he wanted to make clear that the field was available, despite China awarding it to the obscure Denver oil company Crestone.

'We can say that it belongs to us and to us only,' Mr Ha said.

'Interest is definitely growing in the area and we should make it clear that rights to it are available.' Mr Ha refused to reveal the results of the drilling to date or whether international interest had produced specific negotiations on exploration or production contracts.

He did say, however, that an additional eight blocks running up the coast towards central Vietnam would become available in the middle of next year once seismic research had been completed.

The Tu Chinh field lies within Vietnam's 200 nautical mile economic zone just east of several blocks under active exploration by a string of international concerns.

The area lies at the heart of the unresolved stand-off between Beijing and Hanoi over the Spratly and Paracel Islands in the South China Sea.

Tu Chinh is part of an area Beijing calls Wan'an Bei that it awarded last year to Crestone and vowed to protect with force.

Vietnam has reportedly forced Chinese research vessels from the area while also operating two exploratory rigs of its own.

The ground-breaking visit to Hanoi last month by Chinese President Jiang Zemin ended with pledges to seek long-term solutions to territorial disputes, but with both sides swiftly reaffirming sovereignty.

Blocks to the north and south of Tu Chinh and a large area running west towards Cambodia remain open and largely unexplored.

Mr Ha said a new rights deal was expected shortly on one field while negotiations were under way over several others, but he refused to elaborate.

Less than a quarter of Vietnam's 160 offshore blocks are being explored.

The next field expected to be signed up is known as 15-1, a field close inshore to Vung Tau near Ho Chi Minh City in the south, and close to recent finds by Japanese and Malaysian firms.

A successful bidder is expected to be announced shortly by PetroVietnam, the state-owned monopoly which considers joint ventures and production sharing contracts.

The Bach Ho (White Tiger) field exploited by the first joint venture, VietSovPetro, is Vietnam's main producing area, helping to account for the seven million tonnes of oil Vietnam hopes to produce this year.

Crude is Vietnam's biggest export earner, producing one-third of its foreign exchange. But with a refinery not expected to be completed for four years, petroleum products are an increasing import drain.

Vietnam is aiming to produce 20 million tonnes of crude by 2000, to boost exports and salving surging domestic demand. Plans are already under way for a second refinery to be complete around the end of the decade.