The giant multi-billion dollar Block B integrated gas and power project in Vietnam has finally taken a final investment decision, as reported by joint venture partner Mitsui of Japan.
The long-delayed offshore Block B gas development is estimated to start producing hydrocarbons in 2026 and will eventually underpin four large gas-fired power plants in southern Vietnam.
A final investment decision (FID) for the integrated development project, which includes an upstream gas field and a pipeline linking it to the proposed gas-fired thermal power plant complex, was made on 28 March. The business partners include the Vietnam Oil and Gas Group ("PVN"), a Vietnamese national oil and gas company, PetroVietnam Exploration Production Corporation Limited ("PVEP"), PetroVietnam Gas Joint Stock Corporation ("PV Gas"), and PTT Exploration and Production Public Company Limited ("PTTEP"), a Thai national oil and gas company.
The Block B Project will be the "next-generation core business" for Mitsui subsidiary Mitsui Oil Exploration Co (MOECO). MOECO has said it has been participating in this "highly competitive project from the exploration phase and the project is expected to yield stable earnings in the long-term."
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Production capacity is estimated to be 490 million cubic feet per day, with production scheduled to begin by the end of 2026, added Mitsui. In addition to developing the upstream gas field, the Block B Project will also include a midstream development for gas transportation. MOECO subsidiaries' share of the development cost for the project, which mainly consists of offshore installations and pipeline construction, will be approximately US$ 740 million. Roughly US$560 million for the upstream portion and US$180 million for the midstream. The company has a 23% share in the upstream and 15% stake in the midstream.
Mitsui considers that natural gas and LNG will play an important role during the global energy transition and sees them as what they "call real solutions".
"The Block B Project will contribute to the sustainable transition to a decarbonised society through the development of gas fuel supply for power generation. Mitsui will continue to contribute to the stable supply of energy, the enhancement of quality of life, and sustainable social development through its promotion of global natural gas and LNG business," noted the company.
Delays
PetroVietnam's Block B development, one of the country's biggest upstream projects, was initially expected to be sanctioned by the end of 2017. The project was delayed by complex price negotiations and a challenging political environment that complicated internal decision-making at the national oil company.
McDermott wins $1 billion construction deal
A consortium comprised of McDermott and Petrovietnam Technical Services Corporation (PTSC) received a limited letter of award from Phu Quoc Petroleum Operating Company for engineering, procurement, construction, installation (EPCI), and hook-up and commissioning (HUC) services for Block B last October.
Under the full project scope, the consortium will provide EPCI and HUC services for a central production platform, living quarters platform, flare tower, and bridges for the Block B gas development project off the southwest coast of Vietnam.
The full project contract was expected to be executed between the parties in early 2024 with an award value of more than $1 billion, McDermott said previously.
