Petrovietnam, subsidiaries ink gas sales deal with Japanese, Thai partners for $12 bln power project

State-run Petrovietnam and its subsidiaries have signed deals with Japanese and Thai partners to buy gas for their long delayed $12 billion power project at Block B-O Mon.

The move followed the signing of implementation deals in October 2023 between Petrovietnam, Japan's Mitsui Oil Exploration Co., Ltd. (MOECO), and Thailand’s national petroleum exploration and production company PTT Exploration and Production (PTTEP).

The MOECO and PTTEP are parts of an alliance which will be the seller, including Petrovietnam, Petrovietnam’s technical arm PVEP, MOECO, and PTTEP. They are 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 for the 3,810-MW O Mon power complex, which comprises the O Mon 1, O Mon 2, O Mon 3, and O Mon 4 power plants.

The project has a designed annual capacity of 22 billion kWh.

Per the Gas Sales Purchase Agreement (GSPA), Petrovietnam will receive 5.06 billion cubic meters of gas annually from the Block B.

For the delivery of gas from Block B to the shore in the coastal province of Kien Giang and then to the O Mon power complex, Petrovietnam will hire several companies including PV Gas, MOECO, and PTTEP.

The transporters have signed a Transition, Operation, and Service Agreement (TOSA) with the gasfield owners for installation of equipment with Block B gas exploitation rigs.

Besides, Petrovietnam has signed a gas sales agreement with EVN Genco 2, the power generation company under state utility Vietnam Electricity (EVN).

Petrovietnam, as the seller, will deliver part of Block B gas, approximately 1.27 billion cubic meters a year, to EVN Genco 2, the buyer, to operate the O Mon 1 power plant.

Despite the latest move, there remain challenges for the mega Block B project, Petrovietnam has stressed. These include utilization of electricity generated by the project's power plants, capital mobilization for O Mon 3 power plant, approval of O Mon 4 power plant, and related power purchase agreements.

The project is scheduled to begin production by end-2026, Japanese firm MOECO has said, adding that its share of development costs for the project, which mainly consists of offshore installations and pipeline construction, is $740 million.