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Prime Minister witnesses breakthrough milestone of US$12 billion gas to power value chain project

On 30th October morning in Hanoi, in the presence of Prime Minister Pham Minh Chinh, Vietnam National Oil and Gas Group (Petrovietnam) and partners signed related contracts and implemented the Block B gas to power value chain project, marking an important step of the key project that has lasted nearly 20 years.


The Prime Minister highly appreciated the efforts and determination of stakeholders in negotiating, developing projects, seeking suitable solutions... - Photo: VGP/Nhat Bac

Also attending the event were members of the Party Central Committee, leaders of ministries, branches, central and local agencies, the Ambassador of Japan, the Ambassador of Thailand to Vietnam, leaders of businesses and partner groups of Petrovietnam in the chain project including MOECO (Japan) and PTTEP (Thailand).

Accord to Petrovietnam President and CEO Le Manh Hung, the Block B gas to power value chain project is a series of domestic gas and power projects including Block B field development project (upstream), Block B – O Mon pipeline project (midstream) and four O Mon gas power plants I, II, III, IV downstream, with an investment of nearly 12 billion USD. 

Gas production output is expected to be about 5.06 billion m3 of gas/year, supplying a complex of 4 power plants at O Mon Power Center with a total installed capacity of up to 3,800 MW. 

The opinions expressed at the event were that Block B - O Mon gas to power value chain project with the characteristics of requiring synchronous progress has gone through a very long time (nearly 20 years), many difficult negotiations between domestic and foreign partners, the investment preparation process with many obstacles in mechanisms, policies, order and procedures; slow implementation for both objective and subjective reasons, but subjectivity is the main one. 

Facing the above fact, in the current term, the Prime Minister has inherited the results through many Government terms, conducted actual surveys, listened to the opinions of all partners, exchanged with the Prime Minister of Japan and the Prime Minister of Thailand, repeatedly reported, sought instructions from General Secretary Nguyen Phu Trong to solve all difficulties of the chain project under his authority, along with the participation of the Ministry of Industry and Trade, the Committee for State Capital Management at enterprises, ministries, agencies and localities, the determination of Petrovietnam and its partners, with the spirit of “One team – One goal”. 

President and CEO Le Manh Hung said that in June 2023, realizing difficulties at the O Mon III and IV gas power projects, the Prime Minister decided to let Petrovietnam officially be the investor to continue implementing these two projects. It was a very strategic decision. 

At the ceremony, Petrovietnam and its partners signed important documents: Heads of Agreement (HOA) for Block B Project; Minutes of agreement on the contents of the O Mon I Gas Sale Contract; EPCI#1 Package Award. The event creates a premise for Petrovietnam and its partners to continue implementing component projects in the coming time. 

According to Petrovietnam, with the mission of contributing to ensuring “energy for development”, the rich experience accumulated when successfully implementing such key gas and power chain project as Ba Ria - Vung Tau - Dong Nai, Ca Mau, Thai Binh… Petrovietnam is confident that with the support of the Party, State, Government, Prime Minister, ministries, departments and branches; unity and close coordination of partners; the solidarity, determination for “One team – One goal”, the spirit of not being afraid of difficulties of Petrovietnam, the whole Block B gas to power value chain project will be implemented synchronously and completed as soon as possible, meeting the energy source for the country’s socio-economic development, as well as bringing benefits to the parties involved. 

LNG flows from PV Gas Thi Vai LNG terminal will be transported by pipeline and by LNG ISO Container - Photo: VGP/Nhat Bac

Effective production and prevention of waste at the value chain project 

As said by Prime Minister Pham Minh Chinh at the signing ceremony, this is an important and meaningful event of the oil and gas industry, receiving the attention of all levels, sectors, localities and people where the project passes. 

The Block B - O Mon gas to power value chain project is a key project of the State on oil and gas, the largest gas to power value chain project of Vietnam today with an expected gas production output of 5.06 billion m3/year in the stable period, supplying four O Mon thermal power plants in Can Tho with a total installed capacity of nearly 4,000 MW,  plays a very important role in the strategy of balancing supply and demand, ensuring national energy security, green energy transition and socio-economic development.

The value chain project, when put into operation, will greatly contribute to the State budget, bring profits and investment efficiency to investors, promote socio-economic development in the Mekong Delta, especially in Ca Mau, Kien Giang and Can Tho, and create many jobs for the labor force in the oil and gas industry and in the Mekong Delta. 

The early implementation of the value chain project to have such works as “lighthouses” at sea will play an important role in national security and protection of Vietnam’s maritime and island sovereignty. 

The value chain project, when implemented, will also play an important role and create great resources in the roadmap to bring net emissions to zero by 2050 as committed by Vietnam at COP26. 

Petrovietnam and partners sign important documents - Photo: VGP/Nhat Bac

According to the Prime Minister, the key points to solve difficulties and problems are: Handing over the chain project to an investor (Petrovietnam); The Ministry of Industry and Trade amends the provisions of 3 relevant Circulars No. 25, 45 and 57; The Vietnamese side works seriously with partners in the spirit of friendship, win-win, harmonious benefits and shared risks, then today’s results achieved is the signing ceremony, deploying for effective production and prevention of waste at this value chain project. 

The Prime Minister acknowledged, praised and highly appreciated the efforts of Petrovietnam and investment partners, the timely support and settlement of the Ministry of Industry and Trade, the State Capital Management Committee at enterprises, ministries, branches, localities and Vietnam Electricity in promoting, organizing the implementation of the value chain project. 

The Prime Minister highly appreciated the efforts and determination of stakeholders in negotiating and developing projects, seeking appropriate solutions on the stages of realizing the development goals of Vietnam’s oil and gas industry and the National Energy Development Strategy to 2025, vision to 2050. 

The Prime Minister views and listens to the report on the production diagram of the Block B - O Mon gas to power project - Photo: VGP/Nhat Bac

Over the years, Vietnam has achieved significant economic achievements, including the great contribution of the oil and gas industry. The Prime Minister assessed that Petrovietnam has been well implementing production and business plans in 2023. 

For gas production and supply particularly, Petrovietnam has provided gas and gas products as a source of clean raw materials to produce 11% of electricity output, about 70% of fertilizer output, meeting nearly 70% of LPG market share nationwide and for many industrial production, transportation and other civil activities. For electricity production in the first 9 months of 2023, it has reached 17.63 billion kWh, equal to 73.5% of the year plan, meeting EVN’s maneuver. 

Petrovietnam, with the spirit of “One team – One goal”, has been contributing to ensuring national energy and food security, environmental protection, creating motivation to promote the development of many industries and localities. The Group has actively contributed to the State budget, social security, brought practical values to the social community and the people. 

The Prime Minister pointed out that, concretizing the Party’s policy, in the national energy development strategy and master plan, the Government of Vietnam has paid great attention to the sustainable development of Vietnam’s oil and gas industry, especially the development of the gas industry. In particular, they encouraged investment in oil and gas production on Vietnam’s continental shelf, especially in deep and offshore waters; prioritized bringing natural gas extracted from Vietnam’s continental shelf to electricity, industrial and civil production. 

The Prime Minister affirmed the Government of Vietnam has been creating favorable conditions, supporting and encouraging the activities of Petrovietnam, domestic and foreign investors, corporations and companies in the service sector on the basis of ensuring harmony of legitimate interests of the parties. 

The Party and State expects Petrovietnam, investors in the chain and localities to cooperate, support each other, and promote regional connectivity to promote the development of the Southwest economic region. 

The value chain project, in order to gain success, still has a long and difficult way ahead, with a huge workload, the Prime Minister wishes relevant ministries, branches and competent agencies to always pay attention, create favorable conditions and definitively solve difficulties and obstacles to support the value chain project, Petrovietnam, EVN and investors in the chain. 

For Japanese and Thai partners, Vietnamese and international oil and gas service providers, the Government of Vietnam expects all parties to support and coordinate with Petrovietnam to implement difficult and challenging works in the next period. 

The Prime Minister hopes and believes that with Petrovietnam’s tradition of solidarity, initiative, creativity, determination, not being afraid of difficulties, along with the trust and long-term cooperation with partners, the value chain project will be implemented according to the plan and expected to over-fulfill the plan, achieve the expected success to promote the development of Vietnam’s oil and gas industry, join forces to continue to contribute positively to the cause of national industrialization and modernization, comprehensive, fast and sustainable development of the Mekong Delta region, contribute to consolidating and strengthening Vietnam’s relations with Japan and Thailand.  

Block B - O Mon gas to power value chain project is a key project of the State on oil and gas, the largest gas and power chain project in Vietnam today - Photo: VGP/Nhat Bac

The main development pillar of Petrovietnam

Earlier, on 29th October afternoon, Thi Vai Liquefied Natural Gas (LNG) terminal in Ba Ria – Vung Tau with a capacity of 1 million tons/ year - the first and largest LNG terminal of Vietnam invested and built by Petrovietnam Gas Corporation (PV Gas), a member unit of Petrovietnam, was also inaugurated. The Prime Minister assessed it as an important milestone and directed the study to continue implementing phase 2 of the project. 

According to Petrovietnam, the gas industry is currently one of the main development pillars of the Group, in which PV GAS is the key enterprise leading the gas industry of the country, annually supplying about 5.7 million tons of gas as raw materials and input fuels for electricity, fertilizer and   industrial production. 

In addition, the gas – power – fertilizer industrial clusters that Petrovietnam developed in the Southeast and Southwest regions have contributed to solving the electricity supply for the national electricity system, self-reliant fertilizer supply for the country’s agricultural development.

Facing the current situation of energy supply depending on domestic reserves and production capacity as well as meeting the trend of energy transition and emission reduction in Vietnam, Petrovietnam has actively researched, developed and diversified new green and clean energy sources for many years, including imported LNG energy sources, realizing LNG targets in the country’s energy strategy as well as developing relevant policy mechanisms. 

The inauguration of this LNG terminal will meet the goal of ensuring energy security, shifting and greening national energy resources, officially putting Vietnam’s name on the global LNG map. 

This project is also a breakthrough mark for Petrovietnam to successfully diversify new products and energy, expand markets in the global energy transition trend, and contribute to ensuring energy security for development. 
According to PV Gas, LNG is a unique product and in order to operate and supply safely and efficiently, PV Gas needs the cooperation of experienced foreign partners, especially those from Japan – the country that has continuously used LNG for 50 years. 

LNG flows from PV Gas Thi Vai LNG terminal will be transported by pipeline and by LNG ISO container, meeting the requirements of multimodal transportation such as combining sea with road, throughout 63 provinces and cities nationwide. It is known that ISO LNG containers are supplied by NRS Corporation Japan, which has extensive operating experience in the field of LNG transportation and was established in 1946.