The Brisbane-headquartered CSM producer told the market today it had signed a major production sharing contract with state-owned PetroVietnam in Hanoi yesterday, concerning the 2743 square kilometre area known as the Hanoi Trough.

The tenement, at its nearest point, is only 100km from the City of Hanoi and is adjacent to the Thai Binh industrial area.

Under the PSC terms, Arrow will receive a 70% interest in the block, while a PetroVietnam subsidiary will take the remaining 30%.

Arrow said it was considering bringing an additional local partner into the block.

The PSC requires Arrow to spend $US1.5 million ($A1.6 million) drilling eight wells on the block, after which it can proceed with an appraisal program.

Exploration drilling is due to begin later this year.

Arrow said it considered the PSC to be a technically and commercially attractive proposition.

“Thick coal occurs in the Miocene age Tien Hung Formation [and] there are multiple coal seams with combined thickness of over 20 metres, which occur at depths between 450 metres and 800 metres over anticlinal structures within the PSC,” the company said.

“The Vietnamese Department of Mines and Geology has estimated very large resources of coal within the Hanoi Basin.”

A conventional gas field already developed in this area has gas supply infrastructure in place that could be used by a future CSM development.

This is the second Asian country, after India, in which Arrow now holds firm title to exploration tenements.

Negotiations are progressing on multiple fronts, in both Indonesia and China, to also bring the various memorandum of understandings (MOUs) and letter of intents (LOIs) in those countries to a firm title.