Thirty-three years after the fall of Saigon, Vietnam is never far from the American psyche, as witnessed during the presidential campaign. In a frisson of nostalgia for what might have been, U.S. oil companies can only note with regret the announcement last week by the Kremlin that in the wake of talks between the Russian and Vietnamese presidents, their governments have concluded an agreement on further cooperation on geological exploration and hydrocarbon production by their Vietsovpetro joint venture.

For those with a sense of history and irony, in 1975, several months before the fall of Saigon, U.S. Ambassador Graham Martin, commenting on Mobil's and Pecten's recent Dua-1X and BH-1X oil well discoveries in the South China Sea off Vietnam, opined that if the South Vietnamese government could hang on, oil revenues from the new finds could benefit from the surge in oil prices in the wake of the 1973 Arab oil embargo to finance the war.

Western geological exploration of South Vietnam's offshore South Continental Shelf began in the late 1960s. Mobil and Shell subsidiary Pecten drilled offshore in the Nam Con Son and Cuu Long basins and found the largest oil fields in the South China Sea. The prize that they uncovered was significant, with Nam Con Son estimated to contain 20 percent and Cuu Long 30 percent of Vietnam's total hydrocarbon resources. But the course of the war meant that changing military and political realities would shortly overwhelm both the South Vietnamese government and the dreams of the Western energy concerns.

Saigon fell on April 30, and Martin evacuated on the last helicopter to leave the embassy. Vietnam's new government immediately canceled all foreign concessions granted by the now defunct South Vietnamese government, leaving Mobil with lost millions in investment and a bunch of now useless geological data.

Martin was correct that Vietnam's government would be interested in developing its offshore resources -- he was only wrong about which companies and nations would be involved.

Like the United States, the Soviet Union also had been interested in (North) Vietnam's oil potential, beginning in 1960 with surveys of the Hanoi Trough. Nine years later the Vietnam General Department of Geology drilled its first well there, followed in 1975 by a series of deep wells in Tien Hai C field in Thai Binh province, which discovered deposits of natural gas.

If the victorious Vietnamese thought their Soviet comrades would continue to provide heavily subsidized fraternal assistance in the wake of their victory, much less help them develop their indigenous energy reserves heroically defended from the depredations of evil Western capitalism, they soon were stripped of their illusions on that score. While throughout the war the North Vietnamese had received free oil from the Soviet Union, on Oct. 31, 1976, Moscow abandoned its Vietnam oil policy and informed Hanoi that it henceforth would have to pay for its oil imports.

As things stood, the Soviet Union increasingly viewed Vietnam as a pawn in its own ideological "Cold War" with China and in 1979 signed a 25-year lease with Vietnam to use its naval port of Cam Ranh Bay, previously the major staging base of the U.S. Navy. Hanoi quickly came to resent the Kremlin's seemingly imperialist attitudes and cynically referred to its Soviet comrades as "Yankees without dollars."

Removed from viewing Soviet energy assistance through the prism of Vietnamese nationalism, the reality was that in the 1970s the Soviet Union was singularly unequipped to assist Vietnam in developing its offshore energy assets, as deepwater drilling was a Western specialty and Western governments heavily embargoed exports of the technology to the Soviet Union and its allies. During this period the Soviet Union was heavily investing in developing its onshore western Siberian fields, and less than 2 percent of the Soviet Union's oil output came from offshore sites, virtually all in the shallow Caspian waters off Azerbaijan.

Fast-forward 30 years. Vietnam's oil and gas industry has produced almost 1 billion barrels of crude oil and 300 billion cubic feet of natural gas and attracted more than $5 billion in foreign capital for exploration and production. In contrast, Kazakhstan, which in 1991 essentially had no significant hydrocarbon infrastructure, has absorbed more than $40 billion in investment.

The reasons for the relative paucity of foreign investment are numerous -- besides Vietnamese nationalism and an unwillingness to cede majority control to foreign investors, other factors include the dead hand of the communist bureaucracy, corruption and unresolved territorial conflicts over Vietnam's offshore waters with Cambodia, China, Taiwan, Malaysia, the Philippines and Brunei.

While such considerations have induced caution in Western companies, the Kremlin sees opportunity. The agreement signed Oct. 27 by Russian President Dmitry Medvedev and Vietnamese President Nguyen Minh Triet encompasses prolonging the activity of the Vietsovpetro joint venture between Russia's Zarubezhneft and Petrovietnam after 2010. Analysts speculate that beginning on Jan. 1, 2011, Vietsovpetro will be reorganized into a company in which Zarubezhneft and Petrovietnam will hold, respectively, 49 percent and 51 percent stakes in its charter capital.

Elaborating on the benefits of energy cooperation with Vietnam, Medvedev told assembled journalists that Vietsovpetro "has yielded 175 million tons of crude and over $7 billion in profits for the Russian budget. That is a good result, and we hope to continue cooperation with our Vietnamese colleagues," before adding that bilateral trade between Russia and Vietnam eventually may reach $10 billion.

While Houston oilmen bemoan their lost revenues, Vietnamese apparatchiks are doubtlessly quietly pleased that this time around, given the fiscal turmoil, their joint venture buddies are no longer "Yankees without dollars" but "capitalists with rubles." Best of all for Hanoi, they retain 51 percent ownership in their joint oil venture.

And Vietnam's relationship with its former adversary? Vietnam is far ahead in its bilateral balance of trade with the United States, as the State Department reports that in 2007 the United States exported $1.9 billion of goods to Vietnam and took in $10.6 billion of imports. Vietnam's exports to the United States increased 900 percent from 2001 to 2007, and last month U.S. Deputy Chief of Mission in Vietnam Virginia Palmer stated that bilateral trade will exceed $12.5 billion by the end of the year.

Uncle Ho must be suppressing a wry smile in his mausoleum on Hanoi's Ba Dinh Square.