Unocal Declare Three Natural Gas Fields Offshore Southwest Vietnam

Unocal Corporation's Vietnam subsidiaries have filed a declaration of commercial discovery with PetroVietnam, the state oil company, for three natural gas fields offshore southwest Vietnam. The declaration comes after a string of 10 successful exploration wells drilled on blocks B and 52/97, including four wells drilled last year. "Our drilling results show that there are sufficient resources on the blocks to support major new power development projects in Vietnam with clean-burning natural gas," said Randy L. Howard, Unocal vice president for International Energy Operations. "This declaration is the first step toward signing a long-term gas sales agreement, which is required before any field development can begin." The declaration covers resources that have been discovered in the Kim Long, Ac Quy and Ca Voi natural gas fields. Based on the drilling to date, Unocal believes the fields have a combined gross discovery volume of 2.5 trillion cubic feet (tcf) of gas. This resource volume is in a core area that would allow the three fields to be developed in a single program using shared offshore facilities. Unocal estimates the gross unrisked resource potential, including predicted field extensions and yet undrilled prospective trends, for the combined contract areas (Blocks B, 52/97 and 48/95) at 5 to 8 tcf. More drilling is planned. "We will now look to a certification of the gas reserves by the government of Vietnam later this year," said John M. Parmigiano, president of Unocal Vietnam, Ltd. Parmigiano added that EVN (Vietnam's state electricity company) and Unocal will soon begin a pre-feasibility study for an electricity generating plant that would be built at O Mon in the central Mekong Delta. PetroVietnam and Unocal are also completing an initial study on a 236-mile-long pipeline from the offshore gas fields to O Mon. Unocal drilled four wells on the offshore prospects in latest exploration program. The B-KL-4X well on the Kim Long field encountered 300 feet (92m) of net gas pay, the highest among the four wells drilled on the field so far. The 52/97-CV-3X well extended the Ca Voi field. The well encountered 151 feet (46m) of net gas pay and was flow tested at 37 million cubic feet (mmcf) per day from four zones. Two discovery wells extended the Ac Quy field. The 52/97-AQ-4X well encountered 117 feet (35m) of net gas pay and flowed at 48 mmcf per day from four zones. The 52/97-AQ-5X well encountered 301 feet (92m) of gas pay. Unocal and its co-venturers have signed two production-sharing contracts (PSCs) with PetroVietnam covering Blocks B, 48/95 and 52/97 offshore southwestern Vietnam. Unocal subsidiaries serve as operator for all three PSC areas. Other co-venturers include subsidiaries of Mitsui Oil Exploration Company (MOECO) of Japan and PTT Exploration and Production Public Company Limited (PTTEP) of Thailand. PetroVietnam, through its subsidiary PetroVietnam Exploration and Production Company (PVEP), holds working interests in Blocks B and 48/95 and the rights to acquire additional interest in both PSCs. As a result of the declaration of commercial discovery, PetroVietnam may exercise its option to convert its carried participating interests into paying working interests. Should PetroVietnam opt to convert to normal working interests, Unocal Vietnam Exploration, Ltd., would hold a 42.38-percent working interest in Blocks B & 48/95 and Unocal's Southwest Vietnam Exploration & Production, Ltd., subsidiary would have a 43.4-percent working interest in Block 52/97. MOECO would hold 25.62 percent in Blocks B and 48/95 and 19.6 percent in Block 52/97. PTTEP would hold 8.5 percent in Blocks B and 48/95 and 7.0 percent in Block 52/97. PetroVietnam through its PVEP subsidiary would hold 23.5 percent in Blocks B and 48/95 and 30 percent in Block 52/97.

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