PVEP DAI HUNG: Perseverance Brings Results

Dai Hung (Great Bear) is a small, deepwater oil field, 265 km southeast off Vung Tau City. The depth at the field is about 110 metres. Complex underwater technology, large investment and production costs, fractured ground structure and small output led to high costs – among the highest in the region. Additionally, Dai Hung is located near international maritime routes where the frequent presence of merchant ships, navy warships and air forces of neighbouring countries can negatively impact production activities.

 

Facing these difficulties, most foreign contractors like BHPP of Australia and Total of France abandoned their bids for the project due to economic and technical challenges. Following the retreat of international partners, the Vietnam National Oil and Gas Group (PetroVietnam) assigned the project to the PetroVietnam Exploration Production Corporation (PVEP). Initially, the company faced numerous challenges like labour shortage, production equipment breakdown and spare parts scarcity. Meanwhile, Dai Hung Enterprise - established specifically to undertake this project - was only a dependent unit of PVEP and it had no legal status. Located 120 km from the PVEP office, the sealing of documents was a headache for the company. It took six hours to complete each sealing.

 

To manage and maintain the oil and gas activities of the Dai Hung project, the Party Committee of PVEP decided to strengthen the Party leadership and the board of directors at Dai Hung Enterprise and give more power to the enterprise in organisational operation and management. In November 2007, Dai Hung Enterprise transformed into PVEP Dai Hung Petroleum Operating Company Limited, with full legal status as an oil production and trading company. The company was assigned to continue operating, developing and exploiting oil, and kicked off the second phase of the oil field development with total investment capital of over US$730 million. On June 25, 2009, PVN and PVEP signed a production sharing contract and PVEP Dai Hung was assigned to operate the Dai Hung oil field according to conditions and terms specified in the production sharing contract.

 

By June 2009, the Dai Hung oil field had turned out over 4.17 million tonnes of crude oil. At the time of transferring operating rights to PVEP in June 2003, the field had produced over 700,000 tonnes of crude oil and paid about US$63 million. Following the takeover, State Budget revenues were increased and national energy security was further ensured. Especially, in three straight years, PVEP Dai Hung beat production and sales targets and remarkably paid all of its profit to the State Budget. With these proud achievements, PVEP Dai Hung was bestowed the third-class Labour Medal from the State President and the Certificate of Merit from the Prime Minister.

 

This success is partly due to the importance of this project, which has the close direction and timely support from the Government, PetroVietnam and PVEP. As a pioneer in Vietnam, we are proud to have opened a new chapter in developing oil and gas projects. This is the result of the experience, qualification and enthusiasm of all the staff.

 

Apart from high-quality human resources, our advantage also comes from sound management. Devoted leaders are committed to give more autonomy to staff to show more initiative in quickening work progress, saving time while enhancing performance. The scientific style of organisation is also a plus and a reason for the success of the company. After we adopted a new operating mechanism, we have brought all advantages of this mechanism into play by assigning our units to evaluate and adjust their own operating approaches. So, in a very short time, our Vietnamese staff could undertake all positions in the company. We are proud to be the only unit in Vietnam not having to employ foreign experts to fabricate the heaviest platforms in Vietnam.

 

We will continue to producing oil in the Dai Hung field until the reserves run out, expected in 2025. At the same time, we will spare no effort to complete the second-phase oil field development plan to tap oil from the WHPDH-02 South platform in the fourth quarter in 2011. In addition, the company will prepare and implement research activities and train human resources for oil and gas exploration and production projects in assigned deepwater areas on the basis of resources, experience and underwater equipment used in the Dai Hung oil field. Furthermore, the company will continue to complete and develop PVEP Dai Hung in accordance to international standards applied to oil and gas companies.

 

Oil and gas exploration and production are a super profitable but risky business which requires serious investment and broad cooperation in all economic, technical and commercial aspects. The discovery of large oil reserves has become increasingly rare, while exploration conditions are more difficult, particularly in offshore deepwater areas which require much larger expenses. So, I personally think that partners and investors should be cautious and flexible with their business policies. The following are some key matters:

 

- Suppliers of materials, equipment and services need to get rid of monopolistic thinking and comply fully with the regulations of fair bidding competition in service supply.

-Investors, in addition to their independent investment in private projects, should join hands with other partners to share risks, optimise expenses and maximise the use of invested services, materials and equipment

- Off-shore deepwater projects which require complex construction should have the presence of foreign investors. To execute such projects, the Government should have preferential policies to strengthen the interest of domestic and international investors.

- Particularly, foreign partners must observe the regulations on natural resources protection and exploit oil at highest recovery factor, in addition to increasing revenues and capital recovery from oil and gas projects.