Eni invests in Vietnamese oil, gas exploration blocks
BY ROSS KELLY
SYDNEY--Italy's Eni SpA has bought 50% stakes in two exploration blocks offshore Vietnam, joining a host of global energy companies prospecting for oil and gas in the fast-growing southeast Asian nation.
Vietnam has become an exploration hotspot in Asia as the government gives investment incentives to foreign companies capable of drilling offshore, and which are willing to share technology that state-owned PetroVietnam doesn't have.
Commercial oil and gas discoveries would help Vietnam, whose economy grew 5.9% last year, to meet its future energy needs.
The Italian oil giant has agreed to carry out early technical work and bear the full cost of the first exploration well in each of the two blocks, its partner Australia's Neon Energy Ltd. said Monday.
Neon and Singapore-based KrisEnergy Ltd. have each sold 25% stakes in blocks 105 and 120 to Eni, giving the Italian company its 50% interest, while retaining 25% of each block themselves. Neon didn't provide an estimate for when drilling of the wells would begin, but said it would follow seismic tests and depend on the availability of rigs.
"Vietnam is attracting significant industry interest and Neon's early mover advantage in securing two high-quality, high-potential exploration blocks has culminated in this partnering arrangement with Eni," Neon's Chief Executive Ken Charsinsky said in the statement.
Spokepeople for Eni weren't immediately available for comment Monday.
ExxonMobil Corp. recently acquired blocks 117, 118 and 119 in the South China Sea, which are close to Eni, Neon and KrisEnergy's block 120. In October, the U.S. energy giant said it found oil and gas in block 119 from its second exploration well, after the first delivered nothing.
A number of other companies have also recently discovered oil in the region, including Malaysia's Petroliam Nasional Bhd., U.K.-based Premier Oil PLC (PMO.LN), Russia's Gazprom OAO, and France's Total SA (TOT).
Still, exploring offshore Vietnam has its challenges. Tensions between China and Vietnam over oil extraction in the South China Sea, for instance, have simmered for years amid competing claims to territorial waters.
Charsinsky said in September that Neon's southernmost asset--block 105--wasn't affected by the border dispute, and that while a small part of block 120 was, Neon's prospects were away from the disputed area.
The South China Sea is claimed in whole or part by China, Vietnam, the Philippines, Taiwan, Brunei and Malaysia.
Dow Jones Newswires