PETROLEUM, NATURAL GAS AND COAL IN VIETNAM

OIL AND PETROLEUM IN VIETNAM

Petroleum is the main source of commercial energy, followed by coal, which contributes about 25 percent of the country’s energy (excluding biomass). Vietnam’s oil reserves are in the range of 270–500 million tons. The World Bank cites the lower bound of the range. Oil production rose rapidly to 403,300 barrels per day in 2004, but output is believed to have peaked and is expected to decline gradually. Petroleum exports are in the form of crude petroleum because Vietnam has a very limited refining capacity. Vietnam’s only operational refinery, a facility at Cat Hai near Ho Chi Minh City, has a capacity of only 800 barrels per day. Several consortia have abandoned commitments to finance a 130,000-barrel-per-day facility at Dung Quat in central Vietnam. Refined petroleum accounted for 10.2 percent of total imports in 2002. [Source: Library of Congress *]

Successful exploration has recently led to a substantial increase in proved crude oil reserves, which grew to 4.4 billion barrels as of January 2013 from 0.6 billion barrels two years prior. Vietnam's efforts to intensify exploration and development of its offshore fields have contributed to the growth in reserves. Ongoing exploration activities could increase this figure in the future, as Vietnam's waters remain relatively underexplored. Vietnam is currently the third-largest holder of crude oil reserves in Asia, behind China and India. [Source: U.S. Energy Information Administration, August 2013]

Vietnam produced around 364,000 barrels per day (bbl/d) of oil in 2012, down from its peak of 403,000 bbl/d in 2004, with most coming from oil fields in the south of the country. Vietnam is a net exporter of crude oil, but is a net importer of oil products. With oil consumption doubling from 176,000 bbl/d in 2000 to 388,000 bbl/d in 2012, the country must import a majority of refined products to satisfy demand. [Source: U.S. Energy Information Administration, August 2013]

Oil production is declining in Vietnam. The fall has largely been the result of the drop in output from the Russian-Vietnamese Bach Ho field. Production there peaked in the early 2000s and field dropped 8 percent to 191,000 barrels a day in 2006.

Crude oil production: 336,100 bbl/day (2012 est.), country comparison to the world: 33. Crude oil exports: 188,000 bbl/day (2012 est.), country comparison to the world: 32. Crude oil imports: 0 bbl/day (2012 est.), country comparison to the world: 139. Crude oil proved reserves: 4.7 billion bbl (1 January 2013 es), country comparison to the world: 27. Refined petroleum products production: 112,000 bbl/day (2012 est.), country comparison to the world: 71. Refined petroleum products consumption: 259,900 bbl/day (2012 est.), country comparison to the world: 48. Refined petroleum products exports: 37,050 bbl/day (2012 est.), country comparison to the world: 65. Refined petroleum products imports: 184,900 bbl/day (2012 est.), country comparison to the world: 28. [Source: CIA World Factbook]

Oil is Vietnam’s largest exports in monetary terms. In 2004 crude oil represented 22 percent of all export earnings. Vietnam is currently Southeast Asia's third-largest oil producer, trailing only Malaysia and Indonesia. Yet oil production is some places has been declining, forcing the government to open new acreage to foreign exploration. The Vietnamese government has a broad energy strategy, with $6.7 billion budget for both new domestic and overseas energy exploration over 2006-10 and a further $9.7 billion for 2011-15. [Source: Andrew Symon, Asia Times, September 24, 2007]

Oil Fields in Vietnam

The Cuu Long Basin has been the primary area for oil production. The Bach Ho oil field (White Tiger oilfield) is a major oil field in the Cuu Long basin of the South China Sea located offshore due east of the Mekong Delta of Vietnam. The field contains major reserves hosted within highly fractured granitic basement rocks. The Cuu Long basin is a rift zone developed during the Oligocene to Early Miocene. The rift occurred in Jurassic to Late Cretaceous granite to granodiorite intrusions. The fractured granitic rocks occur as a horst overlain and surrounded by Upper Oligocene lacustrine shale source rocks. [Source: Wikipedia +]

Bach Ho is not the only oil field convincingly shown to be hosted in granite; however, inspection of the seismic profile of the area shows faulted basement passive margin which is sealed by an onlapping sedimentary sequence. It is plausible that the oil has migrated laterally from the lowermost, mature sediments into the fault systems within the granite. The seismic profile shows a definite basement horst with onlapping sedimentary source rocks, draped by a reservoir seal. This trap view would see the oil migrate up the horst bounding faults from the lower source units, into the trap unit draped over the top. +

Mobil struck oil in the Bach Ho field in February 1975, shortly before the Fall of Saigon. It was later developed by the joint Vietnamese-Russian entity Vietsovpetro in the 1980s and 1990s. Mobil mapped the seas round Vietnam during the war. In 1974, they found some promising areas in the Blue Dragon field in the South China Sea, 200 miles off the coast of South Vietnam. In 1975 after the fall of Saigon, Mobile was kicked out. In the 1990s, they were invited to return. Mobil has 38 percent stake to drill in Blue Dragon Filed 150 mile southeast +

In October 2004, Vietnam News Agency, “An offshore oil field was found for the first time in northern Vietnam about 70 kilometers east of Hai Phong, according to a press conference held by a partnership of oil companies. The partners, led by Petronas Carigali Overseas of Malaysia, American Technology Inc Petroleum (ATI), the Singapore Petroleum Company and the Petroleum Investment and Development Company of Vietnam began drilling a month before on the Yen Tu field. Many companies have been exploring in Yen Tu for oil and natural gas. Although natural gas has already been found, this latest discovery was the first time oil has been struck. It also marks the first oil strike in the waters of northern Vietnam, said ATI general director Dinh Duc Huu. An estimated US$20 million has been invested in exploration activities so far, according to the general director, and about $100 million more must be spent before the first barrel of crude is collected. It typically takes between two and three years to begin producing oil from a newly discovered site. For now, the partners will begin discussions on how to exploit the area most effectively. [Source: Vietnam News Agency, October 22, 2004]

In 2007, Reuters reported: A new oilfield off Vietnam's southern coast is expected to hold proven and probable reserves of around 4.98 million tonnes of crude oil (37 million barrels), a government report said. Appraisals at the Phuong Dong oilfield in a block coded 15.2 also showed condensate reserves of around 0.73 million tonnes and 3.16 billion cubic metre of naturas gas, the government report published on its Web. The government ordered JVPC, the operator of the field, which is 46.5 percent owned by Nippon Oil Corp. of Japan, to conduct further tests at the field to determine the exact oil potential. Other owners of the fields are ConocoPhillips' and Petrovietnam's exploration arm PVEP, which hold 36 percent and 17.5 percent interest, respectively.

In some places oil companies are doing costly oil explorations that involve drilling 13,000 feet below the seabed. The Big Bear field claimed by China in the South China Sea extends into seas also claimed by China. Vietnam, the Philippines, Malaysia, China, Taiwan, and Brunei all claim sovereignty over the Spratly Islands in the South China Sea, which remains a key territorial dispute for Vietnam. Vietnam and several of its neighbors have reached agreements in principle in the past to conduct joint exploration for oil and natural gas resources in the area, although continued territorial disagreements have hindered these efforts.

Oil Companies in Vietnam

PetroVietnam is the key company in the oil and natural gas sectors and serves as the primary operator and regulator of the industry. Oil and natural gas production is either undertaken by PetroVietnam's upstream subsidiary, PetroVietnam Exploration and Production (PVEP), or through PetroVietnam's joint venture with other companies. [Source: U.S. Energy Information Administration, August 2013]

International Oil Companies (IOCs) such as ExxonMobil, Chevron, and Zarubezhneft have formed partnerships with PetroVietnam. IOCs must receive approval from the Oil and Gas Department of the Prime Minister, and must negotiate upstream licenses with PVEP. British Petroleum, Total of France and Japanese companies such as Mitsubishi also have stakes in Vietnamese oil projects.

PetroVietnam

PetroVietnam is the trading name of Vietnam Oil and Gas Group (PVN). Founded in 1977 and headquartered in Hanoi, it is involved in oil, natural gas, coal, electricity and had revenues of $37 billion and an operating income of $5.4 billion in 2012. PetroVietnam has developed rapidly since it was established in 1977, and its activities, through its various companies and wholly owned subsidiaries, now cover all the operations from oil and gas exploration and production to storage, processing, transportation, distribution and services. Wholly owned by the Vietnamese central government, it is responsible for all oil and gas resources in the country and has become its country's largest oil producer and second-largest power producer. [Source: Wikipedia]

Petrovietnam produces around 350,000 barrels of crude oil per day, most of it from rigs off the central coast and exported to refineries and power plants in Japan, South Korea, China, Australia and Singapore. [Source: Reuters, March 31, 2007]

Andrew Symon wrote in the Asia Times, “In Vietnam's emerging gas-supply industry, PetroVietnam acts as both gas aggregator and pipeline operator. In downstream retail fuel distribution, there is a little more competition with other state-owned companies, some tied into ventures with foreign companies. PetroVietnam has recently extended to the country's embryonic petrochemical industry and is now producing fertilizer. With the group building Vietnam's first oil refinery at Dung Quat on its central coast, the potential to supply downstream refined fuels for regional markets as well as the domestic market is fast emerging. Dung Quat, a $2.5 billion, 130,000-barrels-per-day project, is due to come on stream by early 2009, while two other refineries where PetroVietnam has interests are also under development. [Source: Andrew Symon, Asia Times, September 24, 2007 \+\]

“Power generation is another area where PetroVietnam sees itself as not only a local player but an emerging force in the wider Mekong region. The company operates a new 700-megawatt gas-and-oil-fueled power plant at Cau Mau, at the country's southern tip, and it recently formed a partnership with the state utility Electricity Vietnam (EVN) for power-plant development in neighboring Cambodia and Laos. Its growing ventures into power production are a mark of its fully integrated ambitions, as most of the world's leading petroleum companies tend to view electricity as an only marginal business. \+\

“At the same time, the scale of Vietnam's power needs are huge, with the latest government master plan calling for a rapid and colossal increase in installed generation capacity, rising from the current 12,000MW to 51,000MW by 2015. If accomplished, that expansion will at today's prices mean about $60 billion in capital costs alone for the new power plants. The government is encouraging state-owned entities such as PetroVietnam and the coal and minerals group Vinacomin to take on the role of power producers to help EVN meet those goals. Foreign power producers are also being sought, but the government still prefers that wherever possible, local entities are at the core of development and operation and maintain majority control in perceived strategic economic sectors. \+\

“Like China, Vietnam aims to temper its reliance on foreign majority-controlled companies to drive its industrial development. As a result, the government is pushing reform and modernization of several large state-owned companies, including PetroVietnam. They are being encouraged - again similar to China - to secure foreign capital through stocks and bonds raised via the local and fast-growing stock market. Several of its subsidiary companies are listed on the local bourse, including its fertilizer and chemical arms, and overseas listings have been mooted. \+\

“Hanoi is now bidding to re-gear its various state enterprises into market-oriented, internationally competitive firms, and PetroVietnam is at the forefront of the government's plans. Its revenues are large by international standards because of Vietnam's large upstream production and high oil prices, and a strengthening international credit rating is supporting new investments. The group is looking to international bond markets to raise finance, possibly as early as next year. \+\

PetroVietnam’s International Ventures

Andrew Symon wrote in the Asia Times, “PetroVietnam, Vietnam's dominant state oil-and-gas group, is bidding to emerge as a new force in international energy markets. Following the proven model of China's successful state-owned petroleum companies, CNOOC, CNPC-PetroChina and Sinopec, and with an eye on Malaysia's highly profitable state-owned Petronas, PetroVietnam is leveraging off its strong domestic position to develop a growing international portfolio of energy interests and operations. [Source: Andrew Symon, Asia Times, September 24, 2007 \+\]

“In June and July 2007, PetroVietnam took up blocks in Cuba and Peru and is bidding to take positions this year in Nigeria and Kazakhstan. The state concern has already built up minority and operating upstream interests in Algeria, Iraq, Madagascar, Venezuela and Mongolia, as well as Indonesia and Malaysia, where it first ventured overseas in 1998. \+\

“Underpinning PetroVietnam's international and regional ambitions is a dominant, if not monopoly, position in all segments of Vietnam's petroleum industry - upstream, midstream and downstream gas and oil - along with its dual role as government regulator. Established in 1975 and now with more than 30 subsidiaries and association companies, PetroVietnam is by far Vietnam's most profitable state-owned company, with annual revenues of about $9 billion and serving as the country's largest taxpayer. \+\

“The group books its own production as well as the production share it gains from the operations of its various foreign contractors and joint-venture partners, some of which PetroVietnam has worked with for decades. These include Russia's Zarubezhneft in the long-standing Vietnasovpetro joint venture, which operates Vietnam's largest oilfield, known as Bach Ho, offshore of southern Vietnam. Other leading foreign upstream companies in Vietnam are ConocoPhillips, BP, Petronas, Chevron, the Korean National Oil Corp, and Talisman Energy, which operate as contractors to PetroVietnam under production-sharing arrangements. PetroVietnam's upstream arm usually takes a minority interest in foreign-led operating consortiums, arrangements that often entail substantial technology transfer. \+\

PetroVietnam appears to be taking its expansionist cues, at least partially, from other Southeast Asian state-owned oil-and-gas giants, particularly Malaysia's highly profitable Petronas. Established in 1974, Petronas is Malaysia's largest company, earning $44 billion in revenues last year from 60 ventures in 26 different countries. International operations, not including Malaysia's energy exports, now contribute about 35 percent of the group's total revenue. While benefiting in its role as regulator from production-sharing revenues, Petronas also worked hard from its early phases to develop internationally competitive operational capacities. PetroVietnam, likewise leveraging its domestic monopoly strength, is trying to follow suit by developing its operating capabilities through its partnerships with foreign companies. \+\

Vietnam’s Dung Quat Refinery

Vietnam has one operating refinery, the 140,000-bbl/d Dung Quat refinery, which came online in 2009 and was built with Russian, South Korean and French help. Vietnam's state-owned Vietnam Oil & Gas Corporation (PetroVietnam) is looking to boost crude distillation capacity to around 200,000 bbl/d by 2017 and to develop Dung Quat's ability to handle sweet and less expensive sour crude oil from Russia, the Middle East, and Venezuela. Vietnam plans to offer 49 percent of Dung Quat's equity to foreign investors in order to finance the expansion of Dung Quat. The Vietnamese government is looking to build two additional refineries, Nghi Son and Long Son, though there have been financial and land clearing issues that have prevented the completion of these refineries. [Source: U.S. Energy Information Administration, August 2013]

In June 2011, Reuters reported: “Dung Quat oil refinery, Vietnam's first such facility, will expand its capacity by about half to up to 200,800 barrels per day (bpd) by 2017 and import Middle Eastern and probably Venezuelan crude, a senior executive said. The refinery will require $1 billion to $2 billion for the capacity expansion, said Nguyen Hoai Giang, Chief Executive of Binh Son Refining and Petrochemical Co, which operates Dung Quat. The annual capacity of the plant, built at a cost of $2.2 billion, would be expanded to 9.5-10 million tonnes (190,800 to 200,800 bpd) by 2017, from 6.5 million tonnes (130,500 bpd) now, Giang told the Reuters Global Energy and Climate Summit via a telephone interview. [Source: Tran Le Thuy, Reuters, June 13, 2011 :::]

“The latest capacity expansion plan is bigger than the projection made in January, when Giang said the plant would be expanded to 9.2-9.3 million tonnes per year by end-2015 or early 2016. "It is important that Middle East sour crude oil could be used, making up 50 percent of the refinery's capacity, instead of 100 percent sweet crude oil produced domestically and in Southeast Asia now," he said. "Middle East sour crude oil is cheaper and will increase our refinery's efficiency." :::

Dung Quat is also seeking foreign partners to take a 49 percent stake to fund the upgrading project and Giang said it was still in negotiations with Japanese, South Korean, Russian and Venezuelan companies. PDVSA had said that the Venezuelan firm and Petrovietnam planned to work together on expanding the Dung Quat facility. Vietnam has traditionally exported crude oil and imported all of its refined products but Dung Quat, which came online in early 2009, and plans to build several other refineries are slowly reversing that trend. Output from Dung Quat, along with the 200,000-bpd Nghi Son refinery, which is expected to be operational in 2014, should be able to meet 60-70 percent of domestic demand by 2015. :::

The Dung Quat plant has been running at 105 percent of capacity since late 2010, meeting more than 30 percent of domestic demand. Between February 22, 2009 and December 31, 2010 it processed 8.3 million tonnes of crude oil into 7.2 million tonnes of products.

In January 2013, Idemitsu and Kuwait approved a $9 billion Vietnam refinery project. Bloomberg reported: Idemitsu Kosan Co., a Japanese refiner, and its partners approved a $9 billion oil refinery project in Vietnam to meet rising demand in the country. The companies expect to start construction in the second quarter of this year and commercial production in 2017, Tokyo- based Idemitsu said in a statement. They’ve awarded an engineering, procurement and construction contract to a consortium formed by Chiyoda Corp., JGC Corp., Technip SA, GS Engineering & Construction Corp. and SK Engineering & Construction Co., according to the statement. Idemitsu and its partners delayed deciding whether to build the Nghi Son plant, south of Hanoi, at least three times as they resolved issues including how to finance the project. The Nghi Son plant with capacity of 200,000 barrels a day will be Vietnam’s second after the Dung Quat refinery started commercial operations in 2009. Idemitsu and Kuwait Petroleum International Ltd. each have a 35.1 percent stake in the Nghi Son project, while Vietnam Oil & Gas Group holds 25.1 percent. Mitsui Chemicals Inc. (4183) has a 4.7 percent interest. [Source: Tsuyoshi Inajima & Yuji Okada, Bloomberg, January 15, 2013]

Oil Company Corruption in Vietnam

In 2003 and 2004, several senior PetroVietnam officials were dismissed or arrested for corruption or mismanagement, including the firing of PetroVietnam's chief executive officer and his deputy in May 2003. Associated Press reported: "Four top executives from subsidiaries of Vietnam's largest oil and gas company have been arrested for allegedly causing losses of US$8.5 million (euro 7 million) as the government continues its campaign on corruption, state-controlled media reported. Nguyen Trong Nhung, 59, director of Oil and Gas Design and Construction Company; Bi Van Tu, 58, deputy head of Petro-Vietnam's project management board; Dang Dinh Binh, 48, director of the Oil and Gas Projects' Repair Enterprise; and Dang Huu Quy, 51, director of the Oil and Gas Investment and Construction Consultant Company, were all taken into police custody, the People's Army newspaper said. [Source: Associated Press, August 26, 2004]

All companies are subsidiaries of the state-owned oil and gas monopoly, PetroVietnam. The four were accused of "lack of responsibility causing serious consequences" involving the construction of a gas pipeline, it said. Nhung, the project's contractor, hired subcontractors that used inferior equipment, causing a storage tank to sink, it said. The project also went over budget US$14 million (euro 11.5 million) and was completed two years behind schedule in 2001, the newspaper said. [Source: Associated Press, August 26, 2004]

Natural Gas in Vietnam

Vietnam currently holds 24.7 trillion cubic feet (Tcf) of proved natural gas reserves, up from 6.8 Tcf in 2011. Increased foreign investment since 2007 has led to greater exploration, significantly increasing Vietnam's proved natural gas reserves.Vietnam produced 272 billion cubic feet (Bcf) of dry natural gas in 2011, all of which was domestically consumed. The country is currently self-sufficient in natural gas, but PetroVietnam predicts that there will be a natural gas supply gap of 1.3 Bcf per day by 2025 as demand surpasses supply. The Vietnamese government has considered importing liquefied natural gas (LNG) in the future to meet growing natural gas demand. PetroVietnam (PV) Gas has signed a memorandum of understanding and a front-end engineering and development (FEED) contract with the Tokyo Gas Company to develop the Thi Vai LNG terminal in the Vung Tau province. [Source: U.S. Energy Information Administration, August 2013]

Natural gas production: 9.3 billion cubic meters (2012 est.), country comparison to the world: 45. Natural gas consumption: 10.2 billion cubic meters (2012 est.), country comparison to the world: 46. Natural gas exports: 0. Natural gas imports: 890 million cubic meters (2012 est.), country comparison to the world: 61. Natural gas proved reserves: 699.4 billion cubic meters ( January 2012 est, country comparison to the world: 31. [Source: CIA World Factbook]

Vietnam’s potential natural gas reserves were estimated at 1.3 trillion cubic meters in 2004. In 2002 Vietnam brought ashore 2.26 billion cubic meters of natural gas. nuclear power plant with Russian assistance. [Source: Library of Congress]

Coal in Vietnam

Vietnam produced about 49,079 thousand short tons of coal in 2011, of which almost half (23,739 thousand short tons) was domestically consumed. Vietnam exports a large portion of its coal and also imports a small amount. In 2013, the Vietnamese government increased the coal export tax to 13 percent from 10 percent to reduce exports and satisfy growing energy demand with domestic production, particularly in the power sector. Electricity consumption nearly quadrupled from 22 billion kilowatthours (KWh) in 2000 to 86 billion KWh in 2010 and was generated almost entirely by hydropower, natural gas, and coal. Vietnam anticipates power demand to more than triple to 330 billion KWh by 2020. [Source: U.S. Energy Information Administration, August 2013]

Coal is second main source of commercial energy, following oil. Vietnam’s anthracite coal reserves are estimated at 3.7 billion tons. Coal production was almost 19 million tons in 2003, compared with 9.6 million tons in 1999. [Source: Library of Congress]

Vietnam has traditionally relied on coal for much of its energy. Coal has been used to fire power plants, cement factories and the steel industry. Much of it is mined in the northern Vietnamese province of Quang Ninh. The mines are owned by the state-owned National Coal Corporation. As of 1999 it employed 74,000 people, including 40,000 miners and owns a hotel, explosives factory and a brewery and other enterprises.

Most of the mines are deep underground or large pits up to two kilometers deep. They are notoriously dangerous. In the 1990s they lacked even the most basic safety and rescue equipment. At that time miners were paid about $35 a month for a 48-hour work week. In the 1990s as the economy reformed thousands of coal workers lost their jobs. Many of them got by, at least for a while, selling stolen coal.

Vietnam exports coal to China and Japan. In 2007 Vietnam exported 32.5 million tons of its production of 41.2 million tons. In March 2008, Vietnam raised its tariffs on coal exports by a third with the aim of keeping coal at home for domestic needs. Coal exports earned Vietnam a record $658 million in 2005, year, with China and Japan the main destinations. Vietnam planned to raise the 2006 coal output by 7 percent to 36.5 million tonnes in 2007 year to meet soaring industrial and export demand. It mined 8.77 million tonnes of coal in the first three months of 2006, up 15.8 percent on a year earlier, government figures show. Coal exports in the period surged 54.7 percent to 5.72 million tonnes, mainly to China.

Vietnam’s Coal: the Future of for Producing Electricity

Under a government blueprint, coal is projected to cover over 56 percent of all electricity production capacities in Vietnam by 2030, making the country an important coal importer. Currently, oil and gas reserves deliver 31 percent of energy, but crude oil output has peaked. [Source: Than Nieh, November 11, 2013]

Future’s Asia Instablog reported: “The coal found there are mainly anthracite coal and is ideal for the production of electricity. Currently, the country faces an acute shortage of electricity. This will have to be addressed by building more hydro-power plants and coal fired power stations. Among these, coal fired power stations have the most potential. For Petrovietnam alone, the company has already 5 coal-run thermo-power plants under construction. Vinacomin, in addition, also have additional coal-fired power plants. Just this year alone, Vinacomin will put into operation 2 additional coal-fed thermo-power plants, namely the Mao Khe Thermo-Power Plant and Nong Son Thermo-Power plant. [Source: Future’s Asia Instablog, May 3, 2012]

All these will generate a tremendous demand for coal. In anticipation of this increased demand, the government had already raised the coal export tax to 20 percent from 15 percent as of last year and it is anticipated that further increases will be likely as the local demand for coal increases. In April 2012, the government approved a plan proposed by Vinacomin to raise the coal price. The magnitude of the raise is currently unclear but it is likely a significant increase.

Currently, most of the extra needs for coal is being met by importing coal from Indonesia and Australia. However, this avenue look increasingly difficult. Indonesia is considering imposing a heavy tax on coal exports which will likely drive up the price of coal significantly. In addition, Vietnam will have to compete with India, China and especially Japan for the import of coal from Indonesia and Australia. Japan’s Fukushima Nuclear Plant accident in March 2011 means that alternative sources of electricity generation would have to be found quickly and coal is one of these alternatives.

Currently, because Vinacomin purchases the coal from mines at a fixed price which is negotiated, this price increase will only trickle down to the coal mines gradually. Notwithstanding this, coal mines are likely to get more for the coal they sell to Vinacomin. With increased volumes and a higher price for coal, Vietnam’s coal miners will see better times ahead.

Vietnam Coal Reserves and Coal Mining Areas

The majority of Vietnam’s coal reserves lie beneath the Red River basin. It is estimated to have 20 times more coal than Quang Ninh, currently the largest coal mining area of Vietnam. However, according to preliminary geological survey results, this coal lies thousands of meters underground and covers a vast area of 3,500 square kilometers, stretching from Hanoi to Thai Binh via Hung Yen, Hai Duong and other localities. To exploit this vast coal reserves would require massive investment and foreign technological expertise. In addition, the environmental costs will be incalculable. Hence, I believe that for the present moment, it will not be feasible to exploit this reserve. [Source: Future’s Asia Instablog, May 3, 2012]

At present, the largest coal mining area remains that of Quang Ninh. The current listed coal mines are all based in this area. However, as the coal mines are generally open cast mines which generate a lot of air and water pollution, the coal is currently being mined at a huge environmental cost. In addition, the open cast mines are fast being depleted. As a result, Vinacomin will gradually shut down the open cast mines of Nui Beo, Coc Sau, Deo Nai etc and increase the exploitation of underground coal mines. The current listed underground coal mines are only Mong Duong and Ha Lam Coal.

Vietnam Coal Mines

Vietnam has about 52 active coal mines and all are majority owned and controlled by the state owned Vinacomin via the Coal and Mineral Corporation (TKV). TKV almost completely controls the coal mining companies in every aspect of their operation, from the amount of coal produced to the price they sell the coal for. [Source: Future’s Asia Instablog, May 3, 2012]

TKV gives every coal mine a quota on the amount of coal that they would produce evey year and the price they sell to TKV is also determined by TKV after a "negotiation". How TKV determines the price for the coal largely is from the production cost of the mine. Therefore, TKV pays a higher price to less efficient mines and mines which are more difficult mine. The profit of coal mining companies is fixed at 3 percent of the promised cost on paper.

If the mine experiences cost overruns (e.g. due to fuel cost increases etc.), TKV will usually compensate the mine for this extra cost. However, while TKV usually compensates mines quite promptly, delays are known to occur. A good example was what happened in September last year. Due to the tardiness by TKV in compensating for cost increases, many mines experienced losses. As a result of this control, TKV controls the revenues and profits of every coal mine.

Coal Mine Accidents in Vietnam

Vietnam worst mining accident, which killed 16 workers, also occurred in Quang Ninh, in January 1999. The explosion was triggered by a methane leak.

In April 2013, Thanh Nien reported: “Two people are still missing after an illegal coal mine collapsed in the northern province of Quang Ninh. Initial information showed that one of victims is a 57-year-old worker. The collapse occurred at a mine run by Nguyen Tien Sy, who one week before was fined VND12.5 million (US$600) for running the mine illegally. Vu Van Hop, vice chairman of Ha Long Town People’s Committee, said in Tuoi Tre that local agencies had already closed down the mine, but they still entered it. According to Hop, the accident happened partly because recent heavy rains caused landslides around the area. [Source: Thanh Nien News, April 12, 2013]

In November 2012, Vietnam News Service reported: “Two workers are missing, believed dead, after a Vinacomin-Uong Bi Coal Company mine collapsed yesterday morning in northern Quang Ninh Province. Rescue teams were still looking for the missing miners, Nguyen Quoc Huy, 27, and Pham Van Quy, 34, last night. Police of Dong Trieu District are investigating the cause of the collapse. Five accidents related to coal mines in Viet Nam have occurred so far this month, killing five workers. [Source: VNS, November, 21 2012]

Coal Mine Accidents in Vietnam in 2006

In February 2006, BNA reported: “Two miners were killed when a coal mine collapsed in northern Vietnam, company officials said. Miners Ngo Van Dong and Vu Huu Dau, both 25, were trapped and suffocated when the roof of a mining pit collapsed, in Quang Ninh province, 150 kilometers north of Hanoi. Three other workers survived the collapse Sunday at the Ha Long Coal mine, according to Duong Xuan Bai, head of the company's safety department. "The other workers were lucky because they were close to the surface when the roof collapsed," Bai said, adding that the two dead workers were 33 meters underground. The company is investigating the cause of the roof collapse. [Source: BNA, February 27, 2006]

In March 2006, BBC News, Eight miners have been killed in an explosion at a coal mine in northern Vietnam that was believed to have been caused by methane gas. Rescuers in Quang Ninh province, 190km (120 miles) east of Hanoi, recovered the bodies after conducting a five-hour search on Monday. A Thong Nhat Coal Mine Company official said the bodies were badly burned. The miners were only 15 minutes into their shift when the suspected explosion from a methane pocket occurred, company administrative head Le Xuan Nhuong said. [Source: BBC News, March 7, 2006]

In March 2006, Vietnam News Agency reported: a partial collapse of a coal mine in the northern province of Quang Ninh killed four of 21 miners, with the remaining 17 rescued safely. It was reported that a subterranean water deposit cracked when the miners were working underground. The reason was initially attributed to the illegal exploitation of coal. Rescue work was immediately carried out by Viet Nam National Coal and Mineral Industries Group and Mong Duong Coal Company. [Source: VNS, March 4, 2006 ***]

“Deputy Prime Minister Nguyen Tan Dung on Saturday night visited Mong Duong mine to observe the rescue efforts. Dung visited and sent his condolences to the victims’ family and required leaders of Viet Nam National Coal and Mineral Industries Group (Vinacomin) and Mong Duong mine to mobilise forces and gather the best equipment to rescue the rest of the miners as soon as possible. Dung was on the phone with rescue officials and workers who were on duty underground. At that time, it was reported that six miners had been found alive. ***

“Doan Van Kien, general director of the Vinacomin, said the successful rescue of the 17 miners was a big victory for the sector. The rescue work was completed yesterday at noon. The group and Mong Duong mine organized funerals for four miners and took care of the 17 survivors. President of the Viet Nam Fatherland Front Pham The Duyet, who is the former leader of Mong Duong Coal Company, sent gifts and messages to encourage the survivors. More than 40 organizations, units and enterprises donated over VND500 million to the victims. ***

In April 2006, “Rescuers digging with their hands saved 17 workers from a collapsed coal mine in northern Vietnam at the weekend, but four others died, a mine company official said on Monday. By late Sunday, rescuers had lifted all the survivors trapped 80 m (260 ft) underground in the Mong Duong mine after a working chamber was flooded by water on Friday, the Mong Duong Coal Company official in Quang Ninh province said. [Source: Reuters, April 3, 2006 +++]

"It's lucky that 17 people were rescued," the official told Reuters by telephone from Mong Duong, 200 kilometers (125 miles) northeast of the capital, Hanoi. Early last month, a methane explosion killed eight workers in a mine in the same province. The official said rescuers dug with their hands to reach the trapped workers because many tunnels had been mined in preparation for expansion. "We reckoned we were dead," worker Vu Van Duong, one of the survivors, was quoted by state-run Tuoi Tre (Youth) newspaper as saying. Duong, trapped with five other workers in one mine section, told the paper they lit their torches and wrote their last wills. +++

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Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Vietnamtourism. com, Vietnam National Administration of Tourism, CIA World Factbook, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Global Viewpoint (Christian Science Monitor), Foreign Policy, Wikipedia, BBC, CNN, Fox News and various websites, books and other publications identified in the text.

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© 2008 Jeffrey Hays

Last updated May 2014

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