Vietnam's oil business - still just a drop in the bucket

Nothing keeps Vietnam more dependent on Soviet support than border tension with China and a thirst for oil. In the past year, Hanoi has sped up a decade-long quest for offshore oil, hoping to shrink the oil subsidy pipeline from Moscow.

The Soviets provide over 70 percent of Vietnam's oil, strategic supplies, and minerals, a situation that a recent Vietnamese Communist Party journal calls ``no longer appropriate.'' Vietnam's oil imports now exceed the value of all its exports.

Starting this year, oil drilling investments were given a big boost - some reports say quadrupled - channeled through Vietsovpetro, a joint oil exploration venture between Moscow and Hanoi. That venture has three ocean platforms 100 miles southeast of Ho Chi Minh City (formerly Saigon) in an oil field known as White Tiger on the continental shelf in the South China Sea.

Those new Soviet wells yielded Vietnam's first oil ``export'' last March: 40,000 metric tons of crude were shipped to Japan for refining. Vietnam has no refinery yet, but plans to build one in the early 1990s.

Western oil firms based in Singapore are also trying to get into the action by bidding to buy up future cargos and offering to build the proposed refinery (although Soviet technology is preferred).

But for a new party leadership installed last December, the flow of crude has not come fast enough, either to reduce the oil subsidy quickly or justify a decision to construct a refinery.

The new wells, although operating, have yet to be highly efficient, perhaps due to geological structures.

``The wells are still at the experimental stage,'' says Le Van Cu, deputy director of Vietnam's general bureau for petroleum and natural gas. Just the same, Vietnam plans to erect two new platforms every year, hoping to be self-sufficient in oil by the early 1990s.

``Their current production would only bring them about $47 million a year,'' says one Western oil executive. ``It's a drop in the bucket. And the Soviets may be taking a cut of that for the loan on equipment and experts.''

Even though Vietnam is one of the lowest consumers of oil per capita in the world, it must import 2 million metric tons a year in oil products, about 10 times this year's expected output in crude oil.

``The Vietnamese want to eventually manage the project, so we have treated the work like a big classroom,'' Mr. Cu says. Vietnam hopes to replace almost all the Soviets by 1990.

Vietnam will have a more difficult time replacing Soviet aid. From 1980 to 1985, Soviet aid doubled. And in the current five-year plan, Moscow is doubling it once again, amounting to about $2 billion.