- Would you introduce “Zarubezhneft” to our new readers? What new measures do you take to improve cooperation with Vietnam in the financial, technological and administrative aspect?

Please, allow me to greet the readers of the “Vietnam Investment Review” and all our Vietnamese friends. First of all, I would like to say that it is a great honor for us to take part in this special information project, dedicated to the cooperation between Vietnam and Russia.

The Russian Foreign Economic Association “Zarubezhneft” started work in 1967. The main tasks of “Zarubezhneft” have been development and implementation of complex exploration and facilitation project for oil and gas bearing fields abroad on land and offshore, rendering technical assistance in the development of the oil industry in foreign countries, oil recovery enhancement, seismic surveys, construction of oil and gas infrastructure and organisation of training in Russia for foreign oil specialists. Since our foundation, we have also been supplying equipment and materials, produced in Russia and abroad, to oil and gas establishments.

I’d like to stress right away that judging by the effectiveness of the joint activities, Vietnam ranks first among others for “Zarubezhneft”. The first reason for that is our old and sincere friendship with the Vietnamese colleagues.

In the end of the 70s one could hardly expect that Vietnam, which just started serious exploration works and oil field development offshore together with the Soviet specialists, in the 90s would not only become an oil producing country, but would also start exporting hydrocarbon materials.

Large-scale cooperation with the Socialist Republic of Vietnam in the oil and gas sector started in 1981 after the USSR and Vietnam signed an Intergovernmental agreement. In order to explore and develop offshore oil and gas fields our countries established a joint venture “Vietsovpetro”. The parties to the JV were the State Petroleum and Gas Corporation “Petrovietnam” and the RFEA “Zarubezhneft”.

Since 1991, the activities of the joint venture turned to self-financing and self-accounting. The authorised fund of the joint venture is established in the amount of USD 1,5 billion, 50% coming from each party.

During the years of its work, “Vietsovpetro” has become a foundation of the whole Vietnamese oil and gas industry. Attracting more than 15 leading Russian oil and gas scientific organizations, the specialists of the joint venture managed to find successful pioneer solutions for a number of complex technical and technological issues of reserve exploration on the continental shelf of Vietnam.

Development plans of “Zarubezhneft” give priority to Vietnam, and we are projecting to perform a whole range of respective measures. In particular, “Zarubezhneft” will be strengthened by the assets of the public joint stock company «Russian Interbranch Scientific and Technical Complex “Nefteotdacha”, specializing in the development and application of oil recovery enhancement methods. We believe that applying these technologies suits long-term interests of the Vietnamese party as well. In the investment sector “Zarubezhneft” is one of the parties to the international consortium, exploring Block 09-3, which is financed from our own funds. As for the administration, we are making an accent on the personnel training for the joint venture and reaching the maximum effectiveness of its work. Besides, at all levels in Russia “Zarubezhneft” is trying to popularize the most serious approach to developing cooperation with Vietnam in all sectors and is proving its effectiveness by practical results.

- How do you estimate the results of your work with “Petrovietnam” in the last 10 years? What is the new basis of your cooperation with “Petrovietnam” in the future?

During the years of our activities JV “Vietsovpetro” discovered 7 oil and gas fields on the continental shelf of the South China Sea – “White Tiger”, “Dragon”, “Dai Hung”, “Wolf”, “Bavi”, “Baden”, “Tam Dao”.

The specialists established one of the best in South East Asia bases for construction on land and offshore of technological and satellite rigs for drilling wells and oil and gas production, repairs and maintenance of field and energy equipment. They do not only provide for the complete technological cycle of works within the joint venture, but also allow rendering services to foreign companies, that work in the region. A large petroleum port was facilitated in the City of Vung Tau. A specialized sea fleet was created. Two largest fields “White Tiger” and “Dragon” were facilitated with all the infrastructure.

The joint venture implements a whole range of R&D works, renders contractor services to other Vietnamese companies. Oil production has increased from 3.9 million tons in 1991 up to 13.12 million tons in 2003. The joint venture produces almost 75% of all the oil, produced in Vietnam.

I would like to stress here that preserving and increasing Vietnam’s recourse base is our priority goal. Block 04-3 was included into the activity area of “Vietsovpetro”. Reprocessing of field seismic materials was completed for this block; interpretation of the results is in process. Well location was determined on “Daibang” structure. We are continuing exploration at several other blocks in the South China Sea. In 2002 “Zarubezhneft”, “Petrovietnam” and a Japanese company “Idemitsu” signed a three-party contract for further exploration of oil and gas reserves at Block 09-3. “Zarubezhneft” owns a 50% -share in this project. One well has already been drilled and tested; we are preparing works under further stages of the project. Seismic prospecting works at Block 17 are under preparation as well.

We are also considering possibilities of cooperation in the third countries, Iraq in particular. Vietnam has its interests in this country, we are rich with work experience and knowledge of local conditions.

- How does “Zarubezhneft” view its work prospectives in Vietnam after the expiration of the Agreement in 2011? Do you expect to continue cooperation? If yes, under which organisation forms? Will you take into consideration the changing economic conditions?

Relationship between the FSU and our major economic partners were traditionally based on the intergovernmental agreements, and therefore, government’s guarantees. This served and still serves a pledge for reliable cooperation. I can affirm that Russia was successful is several projects only because it was represented by state-owned structures.

In this reference, our approach is no different. Russia wants to continue cooperation with Vietnam in the oil and gas sector at the governmental level especially, because it provides more complete and effective mobilization of resources.

Officials of the highest levels in both Russia and Vietnam realize the importance of preserving the joint venture and its unique potential. President of Russia Vladimir Putin stressed this importance for the interstate relationship of Russia and Vietnam during his official visit to Vietnam in 2001. President of the Socialist Republic of Vietnam Tran Duc Luong mentioned the same during his recent visit to Russia.

Of course, “Zarubezhneft” is ready to continue cooperation with “Petrovietnam” as within the framework of the joint venture, as in new projects. We believe, that considering the work results of the JV and its high efficiency, it would be appropriate to extend the term of work of the venture for at least 10 – 15 tears. As I already mentioned, there are interesting ideas about the joint venture entering the third countries’ markets, which could become a new impact on its development.

In this reference, we see the Russian – Vietnamese Intergovernmental Protocol dtd. December 25, 2002, as an important milestone. In particular, this document states that enlargement of “Vietsovpetro” activity area by including the offshore blocks is considered one of the major directions, providing stable oil and gas production volumes. The protocol also provides the opportunity for extending the Intergovernmental Agreement on the Joint Venture “Vietsovpetro” dtd. July 16, 1991.

- What are the life and work conditions of the Russian specialists in Vietnam?

The total number of workers of “Vietsovpetro” is about 6,000 people, about 650 of them are Russian.

For many “Zarubezhneft” specialists Vietnam has already become “a second home”. We have build tight business and warm friendly relationship with the Vietnamese representatives at all levels, and we value this relationship highly.

The best incentive for the Russian specialists is the responsibility toward the Vietnamese people, their memory and desire to be worthy of the results, achieved during the Russian – Vietnamese cooperation. In order to stimulate high work effectiveness the Russian specialists receive bonuses in addition to the base salary. The total bonus fund amounts to 2% of the Russian Party’s profit share.

We glad to thank all our Vietnamese colleagues for their warm feelings toward Russia and Russian specialists. Without good personal relationship between us, feeling of trust and understanding we would have been unable to solve such hard tasks, facing our countries.

Vietnam is an amazing country, with glorious history and traditions. Excellent professional and personal characteristics of the Vietnamese specialists, their selflessness, hospitality, kindness and sincerity towards the friends create unique attracting force and, believe me, bring a felling of love towards Vietnam and its people.

In this connection, I would like to express my hope that this information project of “Vietnam Investment Review” will serve the first step for the young people of Vietnam and Russia in getting the insight into the friendship and cooperation between our countries. We believe that it will help to preserve and extend glorious traditions and success, which were built together by Vietnam and Russia.

- Considering your rich practical experience of work Vietnam, how would you rate the prospectives for developing commercial and economic relationship between our countries? What measures should be taken to boost it?

As a manager of the company, which has been working in Vietnam long and productively, I’d say that the volumes are inadequate and do not meet our capabilities. We should work on developing cooperation in all aspects, not only in the oil and gas sector. As I’ve already mentioned, “Zarubezhneft” deals with export – import operations, and we estimate that the potential of trade with Vietnam and diversification of our bilateral commercial links is huge. And this is not to mention our innovation technologies, opportunities for using industrial zones in Vietnam, developing assembling and other kinds of enterprises.

Benefits of Russia as Vietnam’s trade and economic partner are obvious. Our country could become a very capacious market for the Vietnamese production. In spite of certain difficulties, Russian enterprises and institutes managed to preserve and develop its scientific potential, which can find successful application in Vietnam.

Russian organisations are reliable and trustworthy, which is so important in the conditions of the current market. Besides, after all the years Russia managed to gain experience of work in Vietnam and to a certain degree acquire the knowledge of the local peculiarities.

Modernization and high technological level development of the Vietnamese fuel and energy complex establishes a solid base for further fast economic development of the country as a whole. One can surely say that the progress, achieved by Vietnam in this aspect with the assistance of the Russian organisations, not only allows meeting increasing demand of the local industries in hydrocarbon raw materials and electricity. Growing hard currency revenues from oil exports help to strengthen the national currency, create the necessary opportunities for investment and various social programs. Besides, the results of the Russian – Vietnamese cooperation are a proof of the careful and thorough policy of the Vietnamese Communist Party Central Committee and the Government of the country.

Judging by our experience, we can certainly say that Vietnam is a reliable and profitable partner, which always performs its obligations. Oil and gas reserves, economic growth of the country, the adequate legislature as well as political and social stability, in our opinion, serve the best guarantees for the investors.

Russian – Vietnamese cooperation within the fuel and energy complex creates favorable conditions for faster and well-coordinated integration of both countries into the joint economy of the Asian Pacific Region, allows them to take a worthy place in the system of regional cooperation. ASEAN and Asian Pacific Region are a prospective energy resource market for Russia and Vietnam, therefore the countries should develop partnership in order to at least develop effective marketing policy and avoid competition among them. Besides, all raw material importing countries are interested in planning their own needs in the future, and it is in the interests of Russia and Vietnam to develop its own effective export strategy from the point of view of providing timely supplies of energy resources in the necessary amounts.

Taking advantage of this opportunity I would like to thank the Central Committee of the Vietnamese Communist Party, the Government of Vietnam, local and administrative authorities for their invaluable help, understanding and assistance that Russian companies’ projects always enjoy in Vietnam. We hope that the partnership with Vietnam, which has always been a priority for Russia, will be steadily advancing in the future. Russia is proud of the Vietnamese party’s confidence in us.