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. Last Updated: 07/27/2016

Gazprom, RusAl Sign Vietnamese Deals

ReutersNguyen Minh Triet giving Gazprom CEO Alexei Miller a Vietnamese state order Monday as Dmitry Medvedev looks on.
Gazprom and United Company RusAl signed deals Monday to participate in natural resources projects in Vietnam as the Kremlin aims to triple annual trade between the countries to $3 billion.

President Dmitry Medvedev presided over the signing of the deals, which will involve Gazprom exploring for oil and gas off the Vietnamese coast, during the visit to Moscow of his Vietnamese counterpart, Nguyen Minh Triet.

"The negotiations confirmed the framework for strategic partnership between Russia and Vietnam," Medvedev said after the meeting.

Russia still enjoys close ties with Vietnam, formed during the Soviet era. Medvedev said talks had focused on increasing annual trade between the countries first to $3 billion, and subsequently $10 billion, from more than $1 billion in 2007.

He said the countries were prepared to conduct joint "geological exploration in Vietnam, Russia and third countries."

Gazprom signed a 30-year agreement with Vietnamese state oil monopoly group Petrovietnam to explore four blocks of Vietnam's continental shelf. Gazprom said in a statement that it would finance initial exploration work.

The companies' existing joint venture, Vietgazprom, will carry out the work. It is already exploring off Vietnam's coast.

Separately, the two sides created a new joint venture, Gazpromviet, to work in Russia and third countries. Gazprom subsidiary Gazprom Zarubezhneftegaz will own 51 percent and Petrovietnam 49 percent of the joint venture, which will work at the Nagumanosvkoye deposit in Russia's Orenburg region.

The blueprint for Russian-Vietnamese partnership in energy is Vietsovpetro, a joint venture between Petrovietnam and state-owned Zarubezhneft from the 1980s, which produces more than 150,000 barrels of oil per day on average from the Bach Ho field.

RusAl signed a memorandum of understanding with Vietnamese company An Vien to build an alumina refinery with a capacity of 1.5 million tons per year to run on bauxite mined from the Binh Phuoc deposit in southern Vietnam, which RusAl estimates to contain about 700 million tons of bauxite.

RusAl chief executive Alexander Bulygin said at the signing ceremony that investment in the bauxite and alumina project was estimated at $1.5 billion. RusAl would hold 51 percent of the joint venture and An Vien 49 percent, he said.

Construction is scheduled to begin in the first quarter of 2012 after a preliminary feasibility study is conducted next year and in 2010, RusAl said in a separate statement.

Vietnam has the world's third-largest explored reserves of bauxite, the raw material from which alumina and aluminum metal are made.

Vietnam is also prepared to invest at least $750 million in a $1.5 billion joint venture to build a fertilizer plant in the republic of Kalmykia, the republic's president, Kirsan Ilyumzhinov, said after the signing ceremony.

The plant would be built next year and would generate $1 billion in annual sales at current prices, he said.