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State-run oil and gas giant PetroVietnam has received the go-ahead from government to explore oil off coastal Venezuela by forming a joint venture with a Venezuelan company.
The joint venture between PetroVietnam and PDVSA of Venezuela was approved in principle by Prime Minister Nguyen Tan Dung late last week.
Venezuelan President Hugo Chavez expressed his approval of the cooperative project on his visit to Vietnam in late August.
The JV will explore for oil in Junin-2 block in the Orinoco oil belt in Venezuela waters and further across the country.
As planned, the venture will develop two oil refineries, a port and depot system and several large tankers.
Vietnam is the third-largest crude oil producer in Southeast Asia after Indonesia and Malaysia, with daily output averaging 350,000 barrels.
But the Southeast Asian country lacks oil refining capacity, forcing it to import petroleum products.
The first oil refinery worth US$2.5 billion in the central Vietnam is under construction, scheduled to come on line by late 2008 or early 2009.
PetroVietnam has also recently entered a partnership with Cubapetroleo to cooperate in the oil and gas sector.
It has so far evaluated more than 40 projects in Southeast Asia, the Middle East, North Africa, Russia, and Central America, but signed only five contracts.
Recently, the corporation invested $208 million to buy a stake in two blocks in Touggourt, Algeria.
PetroVietnam is in the process of seeking out six or seven new oil contracts by 2010, including asset-purchase contracts, to produce 1-2 million tons of oil.
It hopes to increase output to 5-6 million tons after 2020.
Additionally, the oil monopoly plans to spend $6 billion on oil and gas exploration through 2010 as demand for energy grows in the expanding economy.
It hoped to increase oil output to as much as 22 million tons a year and natural gas production to 8 billion cu.m a year by 2010.
Venezuela is 5th among world oil producers, with exports making up 82 percent of export revenue.
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