VIETNAM'S SEARCH FOR OFFSHORE OIL

Document Type: 
Collection: 
Document Number (FOIA) /ESDN (CREST): 
CIA-RDP03T02547R000101100001-9
Release Decision: 
RIPPUB
Original Classification: 
S
Document Page Count: 
8
Document Creation Date: 
December 20, 2016
Document Release Date: 
May 8, 2007
Sequence Number: 
1
Case Number: 
Publication Date: 
December 1, 1982
Content Type: 
REPORT
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PDF icon CIA-RDP03T02547R000101100001-9.pdf333.54 KB
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Approved For Release 2007/05/08: CIA-RDP03TO2547R000101100001-9 Directorate of Intelligence Vietnam's Search for Offshore Oil An Intelligence Assessment Secret Secret EA 82-10141 December 1982 Copy 16 9 Approved For Release 2007/05/08: CIA-RDP03TO2547R000101100001-9 Approved For Release 2007/05/08: CIA-RDP03T02547R000101100001-9 Approved For Release 2007/05/08: CIA-RDP03TO2547R000101100001-9 Directorate of qiPert-t 25X1 Vietnam's Search for Offshore Oil This assessment was prepared by Office of East Asian Analysis. It was coordinated with the National Intelligence Council. Comments and queries are welcome and may be directed to the Chief, Southeast Asia Division, OEA Secret EA 82-10141 December 1982 Approved For Release 2007/05/08: CIA-RDP03TO2547R000101100001-9 Secret Vietnam's Search for Offshore Oil Key Judgments Hanoi, which is almost totally dependent on increasingly costly oil from the Information available USSR, is moving to develop offshore oil resources. Vietnamese officials as of 3 December 1982 claim that the country will begin producing oil next year, with the stated was used in this report. goal of producing 20,000 to 40,000 b/d by 1985. Vietnam currently needs 32,000 b/d of oil, much of it for the military. Moscow has set up a joint stock partnership with Hanoi and will provide most of the expertise and equipment to develop the offshore fields 2X1 In our view, Hanoi's plans for self-sufficiency are unrealistic. The Soviets are only beginning to drill, and Western oilmen point out that Soviet equipment and expertise are inadequate for the job. 25X1 also question Moscow's resolve. Furthermore, Vietnam is pinning its hopes on three discoveries made by Western firms during 1974-81. While these finds were promising, much more exploration needs to be done before the fields are demonstrated to be viable by Western commercial standards. The Soviets, moreover, are experiencing difficulties working with the Vietnamese bureaucracy-the same problems that discouraged Western oil firms and will make them reluctant to return. 25X1 iii Secret EA 82-10141 December 1982 Approved For Release 2007/05/08: CIA-RDP03TO2547R000101100001-9 25X1 Vietnam's Search for The Need for Oil Oil shorta es constrain the growth of the Vietnamese economy. the country imports about 32,000 b/d in petroleum products, nearly all from the Soviet Union. Although no sec- toral breakdown is available, it is clear from the size of the military establishment that the military is the primary user, preempting other sectors. The domestic economy, particularly transportation and agriculture, suffers from chronic shortages. The official media provide numerous reports and commentary concern- ing train delays caused by diesel fuel shortages, transport units that resort to illegal means to acquire fuel to operate, and large-scale theft of government gasoline and diesel fuel for sale on the free market. In the agricultural sector, oil supply problems are com- pounded by shortages of coal and competing demands for electric power. For example, many irrigation systems are run by internal combustion pumps or electricity from diesel-fired generators. Cost is also a problem. In 1981 Moscow tripled the price of oil to $18 per barrel without increasing total economic aid, in effect squeezing other items out of the aid package. Furthermore, because Moscow's price is still only slightly more than half that of world levels, we believe Hanoi can expect further increases in the future. ? The Red River Delta and Gulf of Tonkin B- which has thin but promising sedimentary aepoosits. ... But Uncertain Prospects 25X1 Despite the promise of Vietnam's offshore areas, Hanoi is unlikely to come anywhere near its produc- tion goals by 1985. Before deciding which areas to develop, Western oil companies would do mLT8 re work to delineate oilfields. Normally after an initial discovery, "step out" wells are drilled to delineate the limits of a field and to allow for reserve estir 3(1 This process usually takes several years to com lete. In Vietnam none of this work has been done More important, Hanoi cannot expect participation by Western firms, given its track record of h26M handed dealings. In 1978, Hanoi brought in three Western firms-AGIP of Italy, Deminex of West Germany, and Bow Valley of Canada-to resume exploration south of Vung Tau. Vietnam's relations with the companies were disastrous Promising Preliminary Results ... Faced with continuing oil shortages and the growing financial squeeze, Hanoi is striving to develop its offshore reserves. Its publicly stated goal is to produce 20,000 to 40,000 b/d by 1985. Work done by Western oil companies in the 1970s showed promising results in offshore areas. Seismic surveys done in the early to mid-1970s indicated three promising areas: ? The Saigon-Brunei Offshore Basin, which has for- mations that may hold oil and gas up to 4 kilometers deep. ? The Mekong Delta and Offshore Basin, which shows formations that are promising for oil and gas 5 to 8 kilometers deep. Approved For Release 2007/05/08: CIA-RDP03T02547R000101100001-9 Vietnam: Offshore Basins and Maritime Claims Paracel Islands Macau (Port.) ong Kong (U.K.) South China S Fy a Spratly Islands Brunei (U.Ky Kepulauan Natuna Indonesia Pratas Reef aohesia Babuyan Islands Batan Islands Approved For Release 2007/05/08: CIA-RDP03TO2547R000101100001-9 Secret 25X1 through 1985. Soviet activity as of early 1982, how- Hanoi's mismanagement carried over into the domes- tic side as well. he Vietnamese in 1978 created a National Oil Reserve to save the most promising exploration areas for Petro- Vietnam, the state oil company. But areas placed under the reserve system were left undeveloped. A wholesale reorganization of PetroVietnam in 1980 appears to have had no impact on domestic develop- Soviet exploration ship Poisk returned home41y, probably after adding to seismic data on the southern ment uestion Moscow's re-so Soviet oil specialists 1Q&C1 visite Vietnam an are processing Vietnam's re- quests for equipment and trained personnel. The ever, appeared to be just getting under way. Given the USSR's performance to date, continental shelf. ing Vietnam. Furthermore they doubt the Soviets' ability to supply the equipment and skilled manpower for development on a large scale. The main stum- bling-block in the short run is offshore platfofa[ t could be rhl years before the Soviets and Vietnamese together can construct even the relatively simple fixed structures they would need to use over Bach Ho. 25X1 25X1 Outlook At best, we believe the Soviets will be able tot ljit one or two of the existing finds south of Vung Tau. ssuming t at part o the oil pro uc(? accrue to the Soviets for their efforts, these finds are unlikely even under favorable conditions to provide more than 5 to 10 percent of Vietnam's consumption. 25X1 opment. A year later the two countries set up a joint It is possible, of course, that Hanoi will develop an stock company for exploration and development on area that has far more oil than preliminary testing the continental shelf. The slow buildup of the Soviet indicates. Given the nature of the oil structures effort and complaints about the Vietnamese by Soviet offshore, however, and flow rates of wells already officials, however, suggest that the Vietnamese-Soviet drilled, the chances of a big hit are extremely slim. In oil relationship is also experiencing difficulties any case, the Vietnamese themselves have nc2 yf,> More Moscow to the Rescue As relations with the three Western companies deteri- orated, Hanoi began laying the groundwork for Soviet involvement. In July 1980 the Soviets agreed to aid in offshore geological prospecting and oil and gas devel- he Soviets will drill 12 exploration and 20 experimental-development wells 3 oil capability and will have to rely on outsidW94 es far echnical help, material a i , d fi n nc ng an Secret Approved For Release 2007/05/08: CIA-RDP03TO2547R000101100001-9 Secret