HANOI -Norway's state-owned oil concern, Statoil, confirmed reports by its

partner British Petroleum (BP) that they had found natural gas off southeastern

Vietnam but said it remained to be seen if the find was commercially

viable.

Exploration in the consortium's three blocks last year had

brought some potential for gas development, Statoil's president and chief

executive officer, Harold Norvik, told a reception ahead of talks with Vietnam

state oil enterprise, PetroVietnam.

"We are hopeful and we look forward

to commercialization of the gas finds we have made," he said.

Norvik,

touring Asia with Statoil board members, referred to BP's and Statoil's long

experience of building and operating gas pipelines. "I really hope that we need

this experience in the months and years to come," he said.

Norvik said he

hoped for successful offshore development, especially of the gas fields. His

comments confirmed recent remarks by BP executives.

BP holds two-thirds

and Statoil one-third of the consortium, for which BP operates three exploration

blocks in the far southeast of Vietnamese offshore concessions adjoining areas

disputed between Vietnam and China.

Industry sources said the consortium

was expected to decide late this year whether or not the gas was worth

exploiting - a decision that would be influenced by further geological tests and

how Vietnam chose to use its natural gas.

Using it to generate power

rather than to produce fertilizer could make the finds more commercial, the

industry sources told Reuters.

Vietnam has no gas industry apart from a

small field in the Hanoi basin in the north.

But it has announced plans

to bring ashore gas currently flared off during oil production from its Bach Ho

(White Tiger) oil field, lying 300 km northeast of the BP/Statoil gas

finds.

South Korea's Hyundai Heavy Industries was awarded a contact last

December to build Vietnam's first, 125-km, gas pipeline to take the gas from

Bach Ho to Ba Ria, near the coastal oil center of Vung Tau.

Decisions are

expected in the next few months on a $400 million second-phase of the gas

project involving a compression station, a liquefaction plant and a pipeline

from Vung Tau to Ho Chi Min City. - Reuters