[Letter to the Editor] PSC for Blocks 01 & 02, offshore Vietnam: A recollection on partnership making

Letter to the editor. —DayakDaily.com file pic. // Photo by Free-Photos from Pixabay

Letter to the Editor

By Dato M Medan Abdullah

On Thursday, 27 July 2017, a headline in one of the local Malaysian papers said Petronas was going to hand over blocks 01 & 02 back to Petrovietnam. When I read this headline I was about five months into my job as the Group CEO of Bintulu Port Holdings Bhd, after being recently recalled by the State of Sarawak to return for what they describe to me, as discharging “national service”.

When the call came, I was then the Managing Director, Asia-Pacific for Gazprom Marketing & Trading (Singapore) Pte Ltd, a company based in Singapore. The company was a subsidiary of Gazprom Marketing & Trading Ltd, based in London and itself a wholly owned subsidiary of the largest gas company in the world, OAO Gazprom.

Two days later, on 29 July 2017, I decided to capture my recollections and thoughts on one of the first countries, after Myanmar, where Petronas undertook her forays into the highly competitive global oil exploration game.

The headline essentially announced that it was curtains down on one of the first overseas forays by Petronas. The PSC has reached its contract end and has therefore expired. I know this for a fact because I was on the team which negotiated, secured, and executed the Production Sharing Contract or PSC for short, for this particular offshore concession area in Vietnam.

I recall that we took more than 50 trips to Vietnam from early 1990 to 1991 in order to secure and sign this deal. It took that long because we had to engage with Petrovietnam and the relevant Vietnamese authorities from a “zero base”, literally trying to make first contact with Petrovietnam, getting them to engage with us, ensuring that they not only understood our hopes and expectations but more importantly to ensure that we establish the right foundation for a long term relationship by negotiating and signing a deal that will last. In other words, building the right foundation from the outset for a lasting partnership. Mutual trust is the real key to achieving success in any relationships.

I was the Petronas lawyer assigned to negotiate and draft the terms of the Blocks 01 and 02 PSC, the first exploration venture being operated by Petronas overseas. Previous to this, Petronas was in a joint venture with Idemitsu in Myanmar to explore for oil and gas onshore Myanmar, which marked Petronas’ maiden attempt to go for international exploration. The operator was Idemitsu.

I remember the signing date very well, as if it was only just yesterday. The signing date was the 9th of September 1991 and it was easy to remember this date because coincidentally, there were nine (9) of us in the delegation which came for the signing ceremony, namely: Tan Sri (later Tun) Azizan, Dato (later Tan Sri) Hassan Marican, Tan Sri Shamsul Azhar (then EA to TS Azizan) , Tony Lim, M Medan Abdullah, George Paul, Tai Say An, M Azhar Khairuddin and Tn Hj Zainal K Ahmed.

On that day, since Petrovietnam had set the timing for signing to be an hour or so after lunch time, the big question of the morning was: ‘To have lunch or not?’. Knowing that there was bound to be some food and drink being served after the ceremony after lunch time we had to decide whether we should have or skip our own lunch. After some discussion, the consensus was for us to have a ‘light lunch’ before we left the hotel for the venue of the signing ceremony.

So for lunch at Tang Loi hotel— a Cuban built and gifted hotel and where we put up, we decided to have just some noodles, and nothing heavy, just something light enough to carry us through till after the signing ceremony. But on seeing the item “prawn” being listed in the menu, someone suggested that maybe we should order some prawns to come along with the Vietnamese noodles that we would be having.

When we asked the waiter whether the prawns were “big or small?” he replied, and said, “bik bik!” Since the waiter said the prawns were rather big ones we decided that we’ll just have one prawn each then. The waiter was called back and told “OK, one prawn each! You understand, one prawn each of each one!” He nodded his head acknowledging that he understood, and off he went to the kitchen.

It was supposed to be a light lunch, remember? But the funny part was, due to the difficulty of communication (Vietnamese could not understand English that well then and we could not speak any Vietnamese or Russian, which most Vietnamese understood) a serious miscommunication happened regard our lunch order.

So that morning, we ended up with 9 plates for 9 people with 9 prawns on each plate of noodles! And coincidentally, the date on that particular day was 9 September 1991 (9/9/91)! When we realised the multiple coincidences we all had a good laugh. After the laughter quietened down, someone remarked jokingly that ” this looks like a good sign, we’ll bound to strike oil under this PSC!”

And sure enough, after some rather tense and anxious moments following the drilling of two dry wells, and spending a lot of money, we finally made a discovery on the third well and this discovery was named the “Ruby Field”! Well, that’s how exploration for oil and gas is— a bit of science and art, and plenty of guts and luck!

Vietnam proved to be a successful overseas venture for Petronas not just in terms of finding oil and gas there but more so in terms of creating a meaningful and mutually reinforcing partnership with Petrovietnam , the Vietnamese National Oil Company. It was a successful example of how two National Oil Companies gave true meaning and substance to the spirit of cooperation among ASEAN countries. A partnership which lasted a long time and was mutually beneficial.

This is the personal opinion of the author and does not necessarily represent the views of DayakDaily. Letters to the Editor may be lightly edited for clarity.

— DayakDaily