Gazprom / LUKoil in JV's in Russia / Caspian / Kyrgystan and Vietnam - whose oil business is booming

Gazprom Neft President Alexander Dyukov and LUKoil President Vagit Alekperov have set up a joint venture called Regional Development Oil and Gas Company.

State owned Gazprom Neft will hold a 51% of State owned and LUKoil the remaining 49%.

"The joint venture will focus on acquiring rights for subsurface use, geological survey of subsurface areas, exploration and production of hydrocarbons, field development, implementation of infrastructure-related projects, transportation and marketing of produced hydrocarbon materials."

The joint Gazprom Neft and LUKoil press release was silent on what services and what assets Regional Development would be most interested in or who would head the new company.

It was reported earlier, however, that the joint venture would only be working at undeveloped fields in the Timan-Pechora oil and gas province in Eastern Siberia and the Caspian.

Meanwhile, Gazprom is considering acquiring licenses for subsurface resources in the Russian Far East and in Kyrgyzstan.

Also discussed at the meeting were the results of the geological exploration of Vietnam's continental shelf and the company's future plans in this region.

As yet, the company has not announced a final decision on the Far East and Kyrgyzstan licenses, although it generally makes such announcements only before the auctions for specific resource rights.

In May 2003, Gazprom signed a 25-year agreement with the Kyrgyz government on cooperation in the gas sector. In May 2007 the two sides signed an agreement under which Gazprom will conduct geological exploration at several locations on Kyrgyz territory.

In September 2000, Gazprom signed a contract with the Vietnamese oil and gas corporation Petrovietnam for exploration and extraction rights to block N112 of Vietnam's continental shelf. In August 2007, Vietgazprom, the operating company of Gazprom and Petrovietnam, struck a commercially viable flow of natural gas during testing of its first exploration well at the block.

State owned Petrovietnam reported VND143 Trn. (US$8.8 Bn.) in revenue for the first 9 months of 2007 up 4% over the same period in 2006.

The company generated US $6 Bn. from exporting 11.6 Mn. tonnes of crude oil over the period.

So far this year, Vietnam's leading oil producer inked six contracts with overseas partners to explore for off-shore oil and natural gas in the Gulf of Tonkin, and six other deals in Peru, Cuba, Indonesia and Tunisia.

PetroVietnam has also discovered new oil and gas reserves in the Dong Do and Bao Vang fields.

The company also aimed to offer shares for public owebershipin several subsidiaries this quarter, including: PV Gas North, PV Gas South, DMC, PVE, PVC, PVTrans, PVFCCo and PV Nghe An Construction JSC.

PetroVietnam’s has also set up a deal this year with the Indonesian state-run oil and gas Pertamina and the Petroliam Nasional Bhd of Malaysia (Petronas) to form a Joint Venture to extract resources from Randu Gunting in the East Java province, which is estimated to contain a reserve of 600 million oil barrels and 1.7 trillion cubic meters of gas.

In October PetroVietnam also allocated US$6 billion to the construction of a second refinery and petrochemical complex in Tinh Gia District of Thanh Hoa Province - construction should start in 2008.

"PetroVietnam will contribute between US$1.8 - 2 billion or 30 per cent of the combined capital needed to build the complex," Dinh La Thang, Chairman of PetroVietnam’s Board announced.

"To further satisfy the domestic markets’ needs for crude oil for the next 30 -years and into the long-term, a deal was signed with Netherlands’ Trafigura, as well as Swiss-based oil trader Glencore," Thang added.