PetroVietnam set to buy Chevron gasfield stake

VIR, Feb 24, 2014

The Vietnamese government recently gave PetroVietnam the go-ahead to buy its US partner Chevron’s 42.38 per cent stake in the $4.3 billion Block B and 48/95 gas projects.

According to Phung Dinh Thuc, chairman of PetroVietnam, due to a disagreement over the price of gas between the partners, Chevron has halted its participation in the project and invited other partners to buy stakes. Existing partners of the project have the first right to buy stakes from others in the project.

Thuc claimed the reason for the slow pace of the project and Chevron’s withdrawal, was that the foreign partners had proposed a higher price of gas than the one that PetroVietnam was willing to pay.

Recently it was reported that India’s ONGC Videsh Ltd (OVL) and Russia’s Gazprom expressed an interest in buying a stake in Chevron, but to date no details have been revealed by the parties.

VIR’s attempts to contact the representatives of the companies went unanswered.

The Block B and 48/95 gas projects are a key part of Vietnam’s oil and gas industry. Construction started in November 2009 developed by a consortium of Chevron, Mitsui Oil Exploration (MOECO) (25.62 per cent) and PetroVietnam’s PVEP (23.5 per cent).

In a related move, at the beginning of 2014 PVGas, a gas development arm of PetroVietnam, expressed its plan to sell 20 per cent of the state’s stake in the company. If successful, PVGas expects to earn around $1 billion which it can use to purchase Chevron’s stake in Block B. The proposal is yet to be approved.

Due to the delayed implementation of Block B project, a range of under-construction power plants in the O Mon Power Complex in the Mekong Delta city of Can Tho which planned to use gas from Block B and 48/95 have been re-scheduled. These power plants will now come online at the same time as Block B. Previously their schedules were not fixed to each other.

Block B gas project is expected to produce 490 million cubic metres of gas and 7,000 barrels of natural gas condensate per day.

Hand in hand with Block B’s development, a $1 billion pipeline to bring the gas onshore is currently under construction.

PetroVietnam holds 51 per cent ownership of the pipeline, while Chevron holds 29 per cent, MOECO 15 per cent and PTTEP 5 per cent.

With the total length of 400 kilometres, about 246km of which is offshore, the pipeline system cuts through Can Tho and four Mekong Delta provinces of Hau Giang, Kien Giang, Bac Lieu and Ca Mau. The project will be capable of delivering 6.4 billion cubic metres of gas per year.

Chevron is the operator of both Block B and the pipeline.

By Bich Ngoc

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