JBIC loans $415 mln for Vietnam’s $12 bln Block B-O Mon gas-to-power project

Japan Bank for International Cooperation (JBIC) will loan $415 million to three subsidiaries of Mitsui Oil Exploration Co., Ltd. (MOECO) for developing the long delayed $12 billion Block B-O Mon gas-to-power project in Vietnam.

In a Monday announcement, JBIC said it said loan agreements of $167 million, $161 million and $87 million have been signed with MOECO Vietnam Petroleum Co., Ltd., MOECO Southwest Vietnam Petroleum Co., Ltd., and MOECO Southwest Vietnam Pipeline B.V., respectively.

The loans are co-financed with private financial institutions, bringing the total co-financing amounts to $335 million, $322 million, and $175 million, respectively, the bank added.

The loans are intended to provide the necessary funds for MOECO to develop the Block B gas field located off Vietnam’s southwest coast and build pipelines to transport gas to thermal power plants in the southwest area of the country.

The development will happen in cooperation with the Japanese firm’s business partners, Vietnam’s state-owned Petrovietnam, and Thailand’s PTT Exploration and Production Public Company Limited (PTTEP).

The project covers the entire process – from gas production to the establishment of pipelines connecting the gas field with power plants. The loans will not only support the resources development by a Japanese company, but also contribute to Vietnam’s energy transition, JBIC said.

In January 2022, the government of Japan proposed the Asia Zero Emissions Community (AZEC), a framework to provide support and cooperation for the efforts for energy transition by Asian countries by leveraging the strengths of Japanese companies, such as technology and other knowhow. Vietnam is an important partner country in the AZEC framework and the loans provided by JBIC are in line with the policy of the Japanese government, the bank said.

JBIC will continue to financially support overseas resources development by Japanese companies and the global energy transition, it added.

Petrovietnam was assigned project investor in June 2023, replacing state utility Vietnam Electricity (EVN). In October 2023, Petrovietnam signed implementation deals with Japanese and Thai partners for the $12 billion gas-to-power project at Block B-O Mon.

The $12-billion project includes sub-projects for developing Block B (upstream); Block B – O Mon pipeline (mainstream); and four gas-to-power plants – O Mon 1, 2, 3, 4 – (downstream). It is expected to exploit 5.06 billion cubic meters of gas a year, powering four power plants of the O Mon Power Complex with a total capacity of 3,800 MW.

In March 2024, Petrovietnam and its subsidiaries signed deals with Japanese and Thai partners to buy gas for the project. MOECO and PTTEP are parts of an alliance which will be the seller, including Petrovietnam, Petrovietnam’s technical arm PVEP, MOECO and PTTEP, the gasfield owners.

The exploited gas, 433 kilometers off the coast of southern Vietnam, will be transported to the Mekong Delta city of Can Tho, which hosts the 3,810-MW O Mon power complex. The project has a designed annual capacity of 22 billion kWh.