A subsidiary of the State-owned oil and gas group PetroVietnam and its foreign partners have secured a license to invest in a natural gas pipeline in the south of Vietnam, making it the largest foreign investment project approved this year.
Approval given to gas pipeline in and off the coast of the Mekong Delta’s Kien Giang province.
The license for the Block B – O Mon pipeline in the Mekong Delta’s Kien Giang province was granted on April 20 to a joint venture between the PetroVietnam Gas JSC (PV Gas), Vietnam’s largest listed energy firm, and “a Japanese investor”, the Foreign Investment Agency (FIA) at the Ministry of Planning and Investment wrote in a monthly report released on April 26, without naming the investor.
PetroVietnam has identified the foreign partner as Japan’s Mitsui Oil Exploration Co. but also said that Thailand’s PTT Exploration and Production (PTTEP) would be a partner in the project.
The registered capital for the pipeline is $1.27 billion, according to FIA, making it the biggest new investment in Vietnam to receive government approval this year, while Samsung’s injection of $2.5 billion into its Samsung Display Vietnam plant in March is the largest additional funding to an existing FDI project.
Vietnam received $15.8 billion in foreign direct investment inflows last year.
In March 2010, PV Gas signed a cooperation contract with US’s Chevron Corp., Japan’s Mitsui Oil Exploration Co., and Thailand’s PTTEP to build the 431-km pipeline, designed to funnel natural gas from Block B off the coast to two power complexes in Kien Giang and Can Tho city in the Mekong Delta.
The gas pipeline is expected to deliver 20.3 million cu m of natural gas per day to power plants in the two locations, with a total capacity of 3,660 MW.
In June 2015, PetroVietnam took over Chevron’s stake in the pipeline as well as in Block B, after the two failed to reach an agreement over gas prices.
In April 2016, PetroVietnam revived the giant gas project, planning to invest $6.8 billion by 2040 to construct a central processing platform, 46 wellhead and hub platforms, about 750 wells, and a floating storage and offloading vessel, the group said.
It said the natural gas supplied to power plants in the Mekong Delta will help reduce the country’s demand for foreign exchange to import oil products and liquefied petroleum gas.
2017 business plan
PV Gas has targeted net profit this year of VND5.26 trillion ($232 million), down 26 per cent from 2016 as revenue is projected at VND51.5 trillion ($2.26 billion), 15 per cent less than 2016’s result, with an assumption of world oil prices of $50 per barrel, the Ho Chi Minh City-based company told shareholders at its annual general meeting earlier this month.
During the first quarter of this year, PV Gas reported VND1.48 trillion ($65 million) in net profit, or 28 per cent of the annual target.
The global economy is forecast to grow at a low pace this year, it said, while global oil prices have been volatile. The company will focus its efforts and investment this year on putting more gas fields into operation.
Crude oil prices this year are forecast at $55 per barrel, up 29 per cent from 2016, the World Bank said in its January 2017 Commodity Markets Outlook.