Vietnamese waters a magnet for foreign operators

Bumi Armada and EOC have ordered FPSOs from Keppel for the region

BUMI Armada took delivery of floating production storage and offshore vessel Armada TGT earlier in 2011 from Keppel’s Singapore yard. The FPSO is set for deployment in Vietnam waters, which are increasingly becoming a magnet for foreign oil production, some of which is attracting local funding from Vietnamese banks.

Positioned in the Te Giac Trang field, in the Cuu Long Basin of the South China Sea, it will work for the Hoang Long consortium, whose partners include PetroVietnam, Thailand’s PTTET, and UK-listed SOCO.

The FSPO, on a seven-year time charter with further renewal options, will be operated by VietSovPetro, which is responsible for most of Vietnam’s oil production. The 55,000 barrel per day unit, also a conversion, has a 620,000 barrel storage capacity. Bumi Armada executive director and chief executive Hassan Basma said at the unit’s launch that its design overcomes a number of technological and weather-related challenges; the crude to be processed by the FPSO has a high wax content, and the shallow waters off southern Vietnam are prone to cyclones and tsunamis.

As offshore activity grows in Vietnam, a joint venture led by the Singapore-based and Oslo-listed EOC, described as the production and construction division of Ezra Holdings, the Singapore-listed offshore service provider, will be putting its FPSO Lewek Emas to work. An existing FPSO owned by EOC, Lewek Arunothai, a conversion from a Knutsen tanker, is working gas and condensate deposits for PTTEP in the Arthit Field offshore Thailand. Ezra Holdings maintains a 46% ownership stake in EOC, whose other holders are mainly financial investors, with a few strategic shareholders, including companies in the Fred. Olsen group, sprinkled in.

The soon-to-be-deployed Lewek Emas, a suezmax conversion completed at Keppel’s Singapore shipyard, will be going to work for a Vietnamese division of the London-listed exploration and production independent, Premier Oil, and its partners in the field. Fitted with a disconnectable turret system, it will be employed under a six-year charter, possibly followed by six optional one-year renewals, in the Chim Sao field, with a rating of 50,000 barrels per day production (and 680,000 barrels of storage). The owning consortium also includes an arm of Keppel Corporation, KSI Production, and a local partner PetroVietnam Transportation. First oil is expected later this month.

With local involvement comes the ability to tap new sources of finance at a time that debt markets have had little appetite for new projects. Two syndicators, Vietin Bank, and PetroVietnam Finance Corporation, have put together a $227m loan package for Lewek Emas repayable over seven years. Indicative of the bigger trend where a new roster of Asian financiers are reaching out into the traditional territory of established lenders, this was the first foreign project gaining Vietnamese funding, according to the energy lending specialist PVFC, which counts the investment behemoth Morgan Stanley as a 10% shareholder.

Source: Lloyd's list Intelligence