Vietnam Now Willing to Share Oil Risks : Petroleum: Foreign companies drilling there formerly had to shoulder all costs of exploration.

Seeking to encourage offshore exploration for oil and gas, Vietnam is willing to form joint ventures and share risks with foreign investors, the country’s top energy executive said Thursday.

But reluctant banks and a shortage of capital could still deter all but the biggest foreign firms, observers say.

PetroVietnam, the state oil monopoly, may form partnerships with foreign companies when it invites them to bid for exploration rights to two promising areas off the southern Vietnamese coast, chairman Ho Si Thoang said.

Except for a joint venture formed in 1981 with the former Soviet Union, PetroVietnam has allowed foreign companies in only under production-sharing contracts.

A consortium led by Australia’s BHP Petroleum expects to become the first of those to produce commercial quantities of oil when it begins pumping at the Dai Hung field, 155 miles southeast of the port of Vung Tau. Production is scheduled to start in October, BHP says.

Vietnam has large offshore areas that have been barely explored, but the number of commercially viable discoveries in wells drilled so far is small, said Robert Mollah, a BHP general manager in Vietnam.

Vietnam has only one offshore field in production, at Bach Ho, which is 75 miles southeast of Vung Tau and is operated by the joint venture VietSovPetro.

Interest in two areas near Bach Ho picked up last month after Japan’s Mitsubishi Oil Co. discovered large quantities of crude in a block just to the north. Thoang called the find “the biggest well in Southeast Asia.”

PetroVietnam expects to auction off the two blocks as soon as the government gives final approval, Thoang said, adding that several companies have expressed interest. He declined to name the firms.

Oil is Vietnam’s leading export, contributing one-third of the nation’s revenue. PetroVietnam hopes to nearly triple its annual crude production to 20 million tons by working with foreign companies, Thoang said.

Foreign companies drilling for oil and gas in Vietnam have had to shoulder all the risks involved. But Do Van Ha, PetroVietnam’s director of international cooperation, said the company would now be willing to share the risks by taking a direct interest of up to 20% in joint ventures.

Inadequate credit for such ventures, however, could still block foreign companies from exploring here, said Ronald Issen, vice president at Carr Indosuez Asia, an investment banking subsidiary of France’s Banque Indosuez.

The value of energy projects approved by the government dwarfs the amount of money investors have actually put in, Issen said.

Vietnamese banks can’t fill the gap, and foreign banks operating in Vietnam are often restricted in the amount of money they can lend. Moreover, he said, international lenders like the World Bank have offered “peanuts” compared to the billion-dollar capital requirements of oil and gas projects.