Vietnam's PV Drilling eyes more rigs, more contracts

SINGAPORE, March 8 Thu Mar 8, 2007 9:10am GMT

Quotes

   

SINGAPORE, March 8 (Reuters) - Petrovietnam Drilling & Well Services PVD.HM, the services arm of state-run Petrovietnam, said it plans to build more offshore drilling rigs and hopes to win more contracts in Vietnamese waters in the next few years.

PV Drilling, which listed on the Ho Chi Minh City exchange on Dec. 5 and now has a market capitalisation of US$1.2 billion, took delivery of its first jack-up rig named PV Drilling I on Thursday at a Singapore shipyard owned by Keppel Corp (KPLM.SI).

The $115 million rig that can operate in depths of up to 350 feet in the sea has already won a two-year contract with Petrovietnam's joint venture firm Hoan Vu JOC for drilling at its Ca Ngu Vang field offshore southern Vietnam.

"We do want to build more (rigs). We have got our first and we'll show that we can operate it successfully and then we'll go for more," PV Drilling's General Director Do Van Khanh told reporters at Keppel's Pioneer Shipyard.

Khanh said that for the next few years the company would focus on Vietnamese waters where exploration activity was expected to pick up, with an estimated 55 to 60 wells to be drilled this year alone.

"We will be in Vietnamese waters for the next few years. At this moment we have about eight to ten rigs in Vietnam and most of them are being run by foreign contractors. So for us it's a big market and we will first target Vietnam and maybe in the future we will go beyond Vietnam."

PV Drilling, established five years ago, has scaled up its services from renting out drilling tools and responding to oil spills to drilling for oil and gas.

Tran Ngoc Canh, President of Vietnam Oil and Gas Group, said that oil and gas operators are expected to drill about 900 wells in Vietnam in the next 15 years, including around 300 wells by 2010.

"Vietnam has a big coast line, about 3,000 kilometres (1,864 miles) and is likely to become a huge market for drilling rigs," Cahn said.

He said crude production in Vietnam in the next few years was likely to be around 360,000 barrels to 400,000 barrels per day, making it Southeast Asia's third-largest crude producer after Indonesia and Malaysia.

RECOVERING COSTS

Khanh said the PV Drilling I has been contracted at a rate of US$215,000 per day.

With an operating cost of about 55 percent of the revenue, PV Drilling should be able to recover the cost of building the rig in about three-and-a-half years' time, he said.

Kanh said the operating cost was much higher than usual as nearly 40 percent of the 110 men working on the rig would be expatriates.

"This is our first experience with operating a rig and we want to make it a success, so that's why we have foreigners from all over the world working on almost all the key positions on this rig."

Shares of PV Drilling, which is 51-percent owned by Petrovietnam and 10 percent by foreign funds, have more than doubled in price since the company's listing.

On Thursday, PV Drilling stock closed at 277,000 dong ($17.31), off from its peak of 310,000 dong set on Feb 27.