Socialist Republic of Vietnam

BLOCK 09-1

The development of Block 09-1 is carried out as per the Intergovernmental agreement dated December 27, 2010. The White Tiger and Dragon fields, as well as White Rabbit and White Bear developed by JV “Vietsovpetro”, are located 150 km from the shore of southern Vietnam.

The depletion rate of the Block 09-1 reserves is 83% with the average water-cut of 60%. The active stock comprises of 337 producers and 61 injectors.

Ownership structure, %

Development and production

To maintain production levels in 2018, an extensive geotechnical jobs program was implemented, with additional production of 467.7 thousand tons of oil. The start-up increment as for well 7010 of White Tiger field has been a record during the entire history of hydraulic formation fracturing and is 141 tons/day. Measures for the development of the formation-pressure maintenance system have been developed and implemented. The integrated program includes both the transfer of wells to the injection well stock, and the use of non-stationary flooding.

In 2018, the commercial production of the Dragon field gas condensate reservoir continued. Natural gas production amounted to 179.8 million m3, with the planned value of 125.2 million m3. The overfulfillment of the natural gas extraction plan is due to the increase in production to maintain pressure in the gas-lift system of Dragon field.

In 2018, 9 new wells were drilled at Block 09-1 fields, 14 sidetrackings were performed. The accomplished production and exploratory drilling scope comply with the approved production program.

Hydrocarbons production, MTOE

Capital construction

In 2018, capital construction work was mainly related to piping of X-trees of new wells and installation of additional slots at WHP. A number of desired operations were performed: modernization of the oil and gas accounting system at WHP-5 and WHP-8/17, reconstruction of CPP-2 to get an offing to use WHP-TNG natural gas as fuel (for FPM-40000 (stage II)) and other works envisaged by the approved capital construction plan.

Volume of development drilling, thous. m
Volume of exploration drilling, thous. m
OPEX, MM USD

In the reporting period, the implementation of improving efficiency and cost optimization program did not fully restrain the increase in expenses due to the increase in fuel and lubricant materials costs owing to changes in the world oil price.

Most of capital expenses were presented by the expenditures for production and exploratory drilling.

According to the results of 2018, Zarubezhneft JSC profitability increased by 40% compared to the previous period and amounted to USD 197 million. The main factor of profitability increase is associated with an increase in oil prices in the reporting period compared with 2017 (+35% or USD 19.3 per barrel).

Prospects

The implementation of measures to reduce the production decline rate at Block’s fields and maintaining the annual oil and condensate production level within 3,000 thousand tons are the main tasks of the asset for the medium term. To compensate for the reduction in base production, 51 geological and technical measures are prearranged, including the drilling and commissioning of wells at the existing facilities of White Tiger field; drilling of sidetrackings to involve residual reserves of White Tiger, Dragon, White Bear, and White Rabbit fields. As part of the work with the base fund, it is planned to carry out hydraulic fracturing increasing the proppant load for enhancing oil recovery of low-productivity terrigenous reservoirs; to continue work on optimizing the formation-pressure maintenance system. It is planned to introduce electric centrifugal pumps (ESP) as part of Pilot Development Planning, which will allow reducing the gas-lift consumption and increasing the flow rate of existing wells in the future.

Block 09-3

The work at Block 09-3 is being carried out as per the petroleum contract for the operation and development of Block 09-3’s reserves offshore SRV dated January 19, 2002 and the Nam Rong- Doi Moi (NR-DM) field Joint Development Agreement dated June 26, 2009. As per the terms of JDA, the participation share and production allocation from Blocks 09-1 and 09-3 in the NR-DM field unitization area amounts to 50% and 50% in each case.

In 2017 Idemitsu (15%) and PVEP (35%) withdrawn from the Petroleum Contract and transferred their participating interests to Zarubezhneft JSC starting January 1, 2017. On September 6, 2018, the Government of Vietnam issues the investment certificate for the Block 09-3 authorizing the petroleum activities as per which Zarubezhneft JSC is the Contractor with 100% participating interest starting January 1, 012017.

Ownership Structure, %

Development and production

The main production at the Block is carried out from the crystalline basement fractured rocks. In June 2018, after a decrease in baseline oil production rate and testing of terrigenous sediments, well No. 423 was put into operation at the upper Oligocene. The total oil production since the operations commencement amounted to 1,078.09 thousand tons (in terms of VRJ). Reserves production is 56% with an average water cut of 59.6%. The producing stock - 17 production wells and 1 injection well.

Hydrocarbons production, MTOE

Financial indicators

In 2018, as a result of controlling the expenses for workovers, purchasing chemicals, administrative and management costs, as well as owing to the performed work on reducing the rates for tariff operations (operation and maintenance, oil treatment, gas-lift and reservoir pressure maintenance) there was a decrease in operating costs in absolute terms. The specific figure for the actual value of 2018 amounted to 106.5 dollars per ton with 109.5 dollars per ton in 2017 (-2.7%).

Taking into account the increase in the world oil price and the work being conducted on cost optimization, the profitability of Zarubezhneft JSC increased by 3.1 million USD compared to the previous year.

Prospects

For the purpose of production stabilization, work is planned for a year of 2019 on equipping ESP units of two wells (well No. 3X RCDM, No. 422 RC-4), candidates have been selected for carrying out squeeze cementing technology (well No. 25, No. 406, and No. 407). In addition, as part of terrigenous sediments commingling program, an option is provided for conducting hydraulic fracturing in well No. 423. In case of a positive result, it is planned to increase the category of reserves of terrigenous reservoirs and to start the program for their commercial development.

OPEX, MM USD

Block 04-3

Block 04-3 is located in the northern part of the South Con Son basin offshore SRV, 280 km southeast of Vung Tau. The Thien Ung-Mang Cau structure is located within the bounds of Block 04-3.

A petroleum contract for Block 04-3 offshore the Socialist Republic of Vietnam between PetroVietnam OGC and Zarubezhneft JSC was signed on June 26, 2009. JV “Vietsovpetro” is the operator of this project.

Thien Ung WHP was commissioned on December 20, 2016, after the completion of drilling and testing of the gas condensate well 6-TU.

Ownership Structure, %

Development and production

The total gas production from the date of operation amounted to 267.430 million m3, gas condensate – 77.317 thousand tons. The producing stock is 3 production wells.

As part of the work program implementation in 2018, oil and gas contract participants agreed on “Regulation on the procedure for collecting and distributing the expenses of Block 04-3 in provision of gas treatment services at Dai Hung field at WHP Thien Ung, which makes it possible to fully present the expenses incurred for reimbursement.

The selling price of gas and condensate from Thien Ung field is determined by the executed oil and gas contract and amounts to 6.8 USD/MM BTU (+ 2% annual indexation). Taking into account the increase in gas sales volumes, Zarubezhneft JSC profitability on the project in the reporting year amounted to 5.6 million USD (49% share), which is higher than the previous year level by 0.4 million USD.

Hydrocarbon production, MTOE

Prospects

In 2019, the new completion of well No. TU-8 and drilling the wells No. TU-10, TU-12 are planned to increase project efficiency and to obtain additional information for developing FDP of Thien Ung field, as well as to ensure the arranged levels of hydrocarbon production as per the Early Field Operation Project.

Block 12/11

Block 12/11 is located within the South Con Son oil and gas basin, 350 km south-east of Vung Tau, with an area of 6,534 km2. The sea depth is within a range of 70-120 m. A production sharing agreement between PetroVietnam OGC and Zarubezhneft JSC was signed on December 19, 2012; an investment certificate was issued on December 28.

Ownership Structure, %

Prospects

Drilling and testing of the fourth exploratory well at Block 12/11, interpretation of PSDM data of Thien Nga - Hai Au - E structure group, recalculation of hydrocarbon reserves after drilling is planned for 2019. The work is planned on drawing up a general development plan for ODP and pre-FEED fields for block arrangement to select cost-effective development scenarios and an optimal scheme for transporting the products of Block 12/11.

Exploration and development

Capital investment, MM USD
In 2018, as a result of testing the prospecting and exploratory well No. EF-1X with hydraulic fracturing at block 12/11, a commercial gas-condensate mixture inflow was obtained and the EF structure reserves were confirmed. As per PSA provisions for Block 12/11, all the work commitments of Phase I of prospecting and exploration stage have been fulfilled.