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Petrovietnam sign commercial agreements for Block B project chain

On 28 March 2024, the Vietnam Oil and Gas Group (Petrovietnam) and its partners held a ceremony to sign commercial agreements for the Block B - O Mon gas-to-power project chain.

Attending the ceremony were Mr. Harada Hidenori - President & CEO of Mitsui Oil Exploration Co., Ltd. (MOECO), Mr. Piya Sukhumpanumet - Vice President of PTTEP (Thailand), Mr. Maruyama Yasuchika - Head of Global E&P and CCUS, Sustainable Energy Development Division, Mitsui & Co., Ltd., Mr. Ngo Son Hai - Vice President of Vietnam Electricity (EVN). Representing Petrovietnam at the ceremony were Mr. Le Manh Hung - Chairman of the Board of Directors, Mr. Le Ngoc Son - President & CEO, other members of the Board of Directors, Vice Presidents along with leaders from various subsidiaries, branches, and project management offices.

Mr. Le Ngoc Son – Petrovietnam’s President & CEO speaking at the signing ceremony

The Block B - O Mon gas-to-power project chain is a large-scale undertaking in Vietnam, encompassing various components from development in upstream, pipeline projects, to power plants in downstream. Domestic and international investors notably involved in this project include MOECO, PTTEP, Marubeni, Petrovietnam, PVEP, PV GAS, EVNGENCO2, and WTO. The total investment for the entire project chain amounts to nearly USD 12 billion.

Blocks B, 48/95 & 52/97 (Block B) is located offshore Southwest Vietnam in the Malay - Tho Chu basin of Vietnam’s continental shelf, 300 km off Ca Mau coastline and about 400 km from O Mon Electricity Center, with an average water depth of approximately 77 m. 

Gas from Block B is transported via pipeline to the O Mon district area (Can Tho City) to supply the power plants of O Mon I, II, III, and IV with a total capacity of around 3,180 MW, and also can supply for Ca Mau area. Once reaching the stable operation, Block B will supply approximately 5.06 billion cubic meters of gas annually to power plants to generate around 22 billion kWh of electricity, responding to the energy demand to develop the economy of the country in the near future.

Previously, on 30 October 2023, thanks to the resolute guidance of the Government and the Prime Minister, along with the determination of Petrovietnam and its partners, the framework agreements, memorandum of understanding were signed, and the stream EPC package No. 1 was awarded. Based on that, on 28 March 2024, after a negotiation process in the spirit of balanced interests, risk sharing, and collaborative development, Petrovietnam and its partners signed agreements for the Block B gas-to-power project chain. Simultaneously, the project chain will serve as a critical resource and a steppingstone to support the implementation of Vietnam Government’s commitments at COP26, aiming to reduce carbon emissions in response to climate change. Additionally, it aligns with the Power Development Master Plan VIII, which focuses on building a greener and cleaner energy system, in line with the ongoing global trend of energy transition.

The signed agreements include:

1. Gas Sales and Purchase Agreement (GSPA) for Block B: It specifies terms and conditions between the selling party of Petrovietnam, PVEP, MOECO (Japan), and PTTEP (Thailand) and the buying party of Petrovietnam. The annual gas supply from Block B is approximately 5.06 billion cubic meters during its stable stage.

 Signing the Gas Sales and Purchase Agreement (GSPA) for Block B

2. Gas Transportation Agreement (GTA) for Block B: By terms and conditions of the GTA, Petrovietnam leases services from the transporter of PV GAS, Petrovietnam, MOECO, PTTEP to ensures the transportation of the entire gas volume shared from Block B (around 5.06 billion cubic meters per year) from offshore to the terminal in Kien Giang and through the onshore pipeline from Kien Giang to O Mon (Can Tho).


 Signing the Gas Transportation Agreement (GTA) for Block B

3.Tie-in, Operation, and Service Agreement (TOSA) is signed between the gas owner of Petrovietnam, PVEP, MOECO, PTTEP and the transporter of PV GAS, Petrovietnam, MOECO, PTTEP. This service contract connects the transporter’s equipment to the production platform in Block B. The gas owner is responsible for providing related services to support the transporter throughout the contract’s duration.


 Signing the Tie-in, Operation, and Service Agreement (TOSA) between the gas owner and the transporter

4.After reaching the shore, gas from Block B will be allocated and supplied to power plants in the O Mon region. The gas sales contract between the seller (Petrovietnam) and the buyer (Power Generation Corporation 2 - EVNGENCO2) stipulates that a part of the Block B gas will be provided to the O Mon I Power Plant, with a volume of approximately 1.265 billion cubic meters per year during the stable stage.


 Signing the Gas Sales Contract between Petrovietnam and EVNGENCO2

To ensure the synchronized implementation of the project chain and achieve the predetermined objectives and plans, Petrovietnam and related parties still face significant challenges. These include the bottlenecks in policies and mechanisms to mobilize and operate the power system for Block B gas-consuming power plants; issues related to the ODA capital allocation for the O Mon III Power Plant project; streamlining and shortening approval procedures for the O Mon IV Power Plant project to meet the requirements of the project chain; and negotiating and signing electricity purchase agreements for power plants consuming Block B gas.

According to Mr. Le Ngoc Son, Petrovietnam’s President & CEO, as a participant in the project chain, Petrovietnam considers putting the Block B Project into operation as a crucial task that necessitates successful implementation. The development of the Block B Project will significantly contribute to the State budget and socio-economic development of provinces in the Southwest region. It also plays a role in ensuring national energy security.

On behalf of Petrovietnam’s leadership, as the investor for the O Mon III and IV Power Plants, Petrovietnam’s President & CEO Le Ngoc Son wished to continue receiving support from the Vietnam Electricity Group (EVN) in the process of negotiating, harmonizing electricity purchase contracts, and coordinating with relevant state agencies to amend necessary regulations for ensuring that the  power plants fulfill their Block B gas consumption as committed in related gas purchase contracts.

With the highest determination, Petrovietnam will continue to make efforts to execute project components in line with the Prime Minister’s directives, and at the same time, ensure synchronization of progress between stages and project components, to secure the economic efficiency of the project chain and strive to have the first gas flow of the project as soon as possible. 

Việt Hà