UPDATE 3-Su Tu Vang to boost Vietnam oil output by 25 pct

(Adds Cuu Long JOC comments)

By Nguyen Nhat Lam

HANOI, Nov 19 (Reuters) - Output at Su Tu Vang, Vietnam's biggest oilfield to come onstream in the past five years, is expected to double to 65,000 barrels per day (bpd) by year-end, boosting national crude production by 25 percent to 325,000 bpd.

The new production from Su Tu Vang, marketed as the existing Su Tu Den crude, would bring Vietnam's total Su Tu Den exports to more than 100,000 bpd, the field's operator, Cuu Long JOC said in a statement on Wednesday.

Su Tu Vang (Golden Lion) and Su Tu Den (Black Lion), which has been in production since October 2003, are expected to have a life span of about 20 years, Cuu Long JOC General Director Vu Ngoc An told Reuters on the sidelines of Su Tu Den's first oil ceremony in Hanoi.

An said Su Tu Vang's output rose to about 60,000 bpd after four of a total of six wells were put into operation earlier this week.

"The oil flow at the wells was very impressive and we had to limit production because the new FSO installation would only be completed later this week," An said.

Before Su Tu Vang's commercial production in October, Vietnam's total crude oil production averaged about 260,000 bpd, officials from Petrovietnam have said.

Su Tu Vang's floating storage vessel M/V Queensway has a storage capacity of 1.1 million barrels. The additional output has already started to weigh on the price of medium-light sweet Su Tu Den crude.

Last week, several companies agreed with Vietnam to buy term volumes of Su Tu Den for the first half of 2009 at a deep discount of $2.20 a barrel to Minas quotes, likely the deepest discount ever fetched in term discussions for the grade.

In contrast, for the current July-December term supplies, lifters had agreed a record-high premium of $7.00 a barrel.

Adding pressure to the rising output, weakening oil demand in Asia has pushed most Vietnamese crude to record-deep discounts to their benchmarks over the past two months.

Cuu Long JOC, led by U.S. oil firm ConocoPhilips (COP.N) and Petrovietnam, said in a statement it planned to put into operation all six wells in the Su Tu Vang oilfield by the end of 2008 to reach the output target of at least 65,000 bpd.

FLAGSHIP CRUDE

At a production of 100,000 bpd, the Su Tu Den grade crude is expected to overtake Bach Ho next year as Vietnam's flagship crude export since most of the Bach Ho output, which now stands at 150,000 bpd, would be used for the country's first refinery, the 140,000-bpd Dung Quat plant.

"Even when Dung Quat is at full capacity by the end of 2009, crude exports should still be maintained at nearly 200,000 bpd, thanks to the oil from block 15.1," a Petrovietnam official said, referring to the block housing Su Tu Den and Su Tu Vang.