Petrovietnam acquires $1 bln loan for Block B gas field, Block B-O Mon pipeline projects

State giant Petrovietnam has secured a $1 billion loan from Vietcombank to develop the Block B gas field and Block B-O Mon gas pipeline projects, under one of the largest credit contracts in Vietnam’s energy sector.

The credit agreement was signed on Tuesday. Accordingly, the state-controlled bank will provide medium- and long-term financing for the oil and gas group to implement these upstream and midstream projects within the Block B-O Mon power and gas chain.

Earlier in March 2024, the two sides had signed a master credit arrangement for the entire project chain, laying the groundwork for this latest agreement.

At the event, Deputy Prime Minister Ho Duc Phoc noted that the component projects in the Block B gas chain involve foreign partners. Thus, he ordered Petrovietnam and Vietcombank to coordinate closely to ensure disbursement progress and project quality.

According to State Bank of Vietnam Governor Nguyen Thi Hong, the $1 billion loan will meet about 70% of the capital requirements for the upstream and midstream projects. This is one of the largest credit contracts in Vietnam’s energy sector.

The Block B-O Mon gas and power complex comprises three components: the development of the Block B gas field (upstream), the Block B-O Mon gas pipeline (midstream), and four O Mon gas-fired power plants (O Mon 1, 2, 3, and 4) (downstream), with a total expected installed capacity of 3,800 MW. The total investment for the entire chain is nearly $12 billion.

The Block B gas field is a key upstream project supplying gas for power generation in southern Vietnam, with an estimated reserve of 107 billion cubic meters over 20 years.

The production sharing contracts for the field were signed in 1996 and 1999. In 2015, Petrovietnam acquired Chevron’s assets in the project after the latter withdrew.

The project is scheduled to produce its first gas in Q3/2027, supplying around 5 billion cubic meters of gas per year to the O Mon power plans 1, 2, 3, and 4.

The Block B-O Mon gas pipeline component has a total investment of over VND28.8 trillion (nearly $1.2 billion), with PV Gas holding a 51% stake.

This crucial midstream segment will transport gas from the offshore Block B field in the southwest to onshore facilities, supplying the O Mon Power Center and industrial consumers in the Mekong Delta region.

According to Petrovietnam’s leadership, the Block B gas project chain plays a vital role in ensuring stable gas supply for power plants in the Mekong Delta and reducing dependence on imported energy.

The projects also contribute to national energy security and support the strategy for developing Vietnam’s gas and clean energy industries, in line with the Adjusted Power Development Plan VIII and government commitments made at COP26.

In the first nine months of this year, Petrovietnam's total revenue was estimated at VND795 trillion ($30.16 billion), up 7% year-on-year. Consolidated revenue reached about VND484 trillion ($18.36 billion), up 10%.