PetroVietnam acquires Chevron’s assets in Vietnam

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These companies include Chevron Vietnam (Block B) Ltd, which holds a 42.4 per cent operating interest in the Product Sharing Contract (PSC) covering blocks B and 48/95; Chevron Vietnam (Block 52) Ltd, holding a 43.4 per cent operating interest in the PSC covering Block 52/97; and Chevron Southwest Vietnam Pipeline Co. Ltd, holding a 28.7 per cent working interest in a $1 billion pipeline construction project that will deliver natural gas from offshore to onshore power and fertiliser plants. Industry insiders said that Chevron’s pull-out of its gas developments in Vietnam was mainly due to the firm’s failure to negotiate with PetroVietnam on the selling price of natural gas exploited from the three blocks. However, neither PetroVietnam nor Chevron has confirmed this as the reason.

Previously, PetroVietnam held 23.5 per cent in the first PSC while Japan’s Mitsui Oil Exploration held 25.6 per cent, and Thailand’s PTTEP Kim Long Vietnam held the remainder. In the second PSC, the ownership stake for PetroVietnam, Mitsui Oil Exploration, and PTTEP Southeast Vietnam was 30, 19.6, and 7 per cent respectively. In the pipeline project, PetroVietnam held 51 per cent, while Mitsui Oil Exploration and PTTEP owned the remaining stake. With PetroVietnam’s acquisition of Chevron’s assets, the other partners retain their stakes in the three developments. PetroVietnam declined to disclose the value of the acquisition, and Chevron’s representative was not available for comment. “These gas blocks are of major significance, ensuring national energy security and promoting the socio-economic development of the region,” said Nguyen Xuan Son, PetroVietnam chairman, adding that the completion of this acquisition would help advance the long-delayed construction of the projected gas pipelines so as to supply natural gas to power and fertiliser plants onshore. These plants are namely, the under-construction 2,910 megawatt O Mon power complex in the Mekong Delta city of Can Tho, the under-construction 1,500MW Kien Giang power complex in Kien Giang province, and the operating Ca Mau gas-to-fertiliser complex also invested by PetroVietnam, which began operating in 2006.

Since 1996, exploration in Blocks B, 48/95, and 52/97 off Vietnam’s coast has been intensive and wide-ranging within the area covered by the PSCs. Important gas discoveries have been made here, and the stakeholders declared separate commercial operations in 2002 and 2008. Estimates reviewed and approved by Vietnamese authorities of three blocks include in-place gross gas at 170 billion cubic metres, with four million cubic metres of condensates. The first natural gas is expected to be brought onshore by 2020.