AMERICANS eager to do business in Vietnam may find their best prospects buried near a balmy resort that once welcomed combat-weary United States GIs. In Vung Tau, where tourists from Ho Chi Minh City pack the beaches each Sunday, Vietnam's underdeveloped oil industry is ready to boom.
But for now, Washington's economic embargo blocks US firms from exploring one of the world's last promising frontiers for offshore petroleum. "Vietnam is, in a sense, unique in Asia," says a Western oil executive who asked not to be identified. "You're looking at a very large continental shelf that is unexplored."
With an estimated 1 billion to 1.5 billion barrels of proven oil reserves, Vietnam ranks fourth in Southeast Asia - behind Indonesia, Malaysia, and Brunei - in potential production. Oil provided one-third of Vietnam's hard currency revenues in 1992, making it the country's leading export. The National Assembly made foreign investment easier July 6 when it approved Vietnam's first comprehensive oil and gas law.
The US holds a technological edge over foreign competitors in petroleum industry products ranging from drill bits to computer software. "As technical men, we know that American oil equipment is the best in the world," said Pham Nhu Khanh, a petroleum engineer for Vietnam's state-owned oil company Petrovietnam. "All Vietnamese want it."
Oil industry experts say the continuing embargo could hurt US firms. "We're getting aced out on all the opportunities commercially here," says an American geologist. "There are still some areas where you can make money, but these probably won't last another six months."
Economists and oil executives here say that until 1991, Vietnam was reserving space in its oil industry for US companies. Thomas Duerst, who manages Royal Dutch Shell Group's operations in Vietnam, says Washington's refusal to normalize relations "frustrated the Vietnamese to such an extent" that they finally dropped efforts to include US firms.
At least 24 foreign companies have signed production-sharing contracts to explore for oil. Mobil Oil drilled the first commercially viable well in these waters in 1975. Mobil and other US firms withdrew after the fall of South Vietnam later that year. Foreign competitors, led by Shell, started to trickle in five years ago. Many are now exploring offshore from the town of Vung Tau, where the country's three largest known oil fields - Bach Ho (White Tiger), Dai Hung (Big Bear), and Rong (Dragon) - are loca ted. "This will become the oil capital of Vietnam, without a doubt," said a Canadian oil service company executive.
A consortium of four foreign firms, led by Australia's BHP Petroleum, signed an agreement in April to explore Dai Hung. The contract, worth $600 million, ranks as Vietnam's largest foreign investment so far. The only enterprise actually producing oil is Vietsovpetro, a joint-venture that Vietnam formed with the Soviet Union in 1981. Last year, Vietsovpetro produced 5.5 million tons of oil worth $750 million. Vietsovpetro continues to use cheap but outdated methods and materials. "They're so far behind th ey think they're first," the Canadian says.
But Vietnam's oil industry is modernizing rapidly. Symbolic of this change is the closure of Vung Tau's former Soviet consulate, which Shell is refurbishing to house its expatriate staff.
Petrovietnam reportedly plans to accept bids soon for the unexplored Thanh Long oilfield. The Vietnam Investment Review reports that Petrovietnam wants US participation. Mobil, Amoco, and Exxon, have shown interest.