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Block B - O Mon Project and the prospects of the petroleum industry from the B - O Mon Project

Updated: Oct 20, 2023

With the current tension in the electricity supply and the goal of "clean energy" and reducing carbon emissions according to the Power Development Plan VIII, along with the urgent need for the national power grid, the Prime Minister has directed corporations to focus and expedite energy projects to ensure national energy security. One of these projects is the B - O Mon Project (a key project of the state in the petroleum industry).

The B - O Mon Gas Pipeline Project is a natural gas pipeline project in Vietnam. The B - O Mon Pipeline Operating Company (BPOC), a subsidiary of Petro Vietnam Gas Joint Stock Corporation (PVGAS), is responsible for implementing the project. The B/52 - O Mon gas pipeline transports natural gas from the central processing platform located at B&52 Block to the Ca Mau Power Plant, O Mon, and adjacent industrial areas within the province along the pipeline route. The investment objective of this project is to contribute to the economic development of the provinces in the Southwest region and ensure the gas/electricity supply in Vietnam.

According to PVN, the B - O Mon gas and power project chain includes projects for gas development, exploration, and transportation from the upstream gas fields in Blocks B 48/95 and 52/97 to the downstream gas-fired power plants in O Mon District, Can Tho City. The project is expected to provide a total of about 102 billion cubic meters of gas and 12.65 million barrels of condensate over a lifespan of 23 years. The estimated total investment value for the upstream portion (including basic investment costs, operation costs, and decommissioning costs) is around 17 billion USD.

Benefits of the B - O Mon Project:

Due to the large scale of investment and nature of the work involved in the B - O Mon Project, oil-related businesses involved in the construction and operation of upstream and downstream projects will benefit greatly from this project. According to Virtus, the three companies that will benefit the most are PVD, PVS, and GAS.

For PVS: This will be the company that benefits the most when the FID (Final Investment Decision) of the B - O Mon project chain is approved. In the initial phase of the project, PVS is estimated to receive a backlog of work worth over 1 billion USD. In the long term, PVS can benefit from other stages of the project until its lifecycle ends (in 2049).

For PVD: If the FID for Block B is approved in the second half of 2023, PVD can participate in the drilling campaign of the project starting from the end of 2025. In the first phase of the project, it requires drilling 5 appraisal wells and nearly 80 production wells with an estimated drilling cost of nearly 350 million USD. In subsequent phases (in the long term), additional production wells (a total of 911 wells) will need to be drilled from FG until the project's lifecycle ends.

For GAS: In the case that the B - O Mon Project starts operation by the end of 2026 as planned, the gas fields in Block B are expected to provide an annual gas volume of 5 billion cubic meters, equivalent to 65% of GAS's dry gas consumption for 2022. It is estimated that this pipeline project can generate total transportation revenue of over 7 billion USD throughout its lifecycle.

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