Japan Bankrolls Mitsui-Backed Gas Project in Vietnam

The Japan Bank for International Cooperation (JBIC) has agreed to contribute $415 million in co-financing for a gas project in Vietnam co-owned by Mitsui Oil Exploration Co. Ltd. (MOECO).

The state-owned lender signed agreements with MOECO Vietnam Petroleum Co. Ltd. (MVP), MOECO Southwest Vietnam Petroleum Co. Ltd. (MSVP) and MOECO Southwest Vietnam Pipeline BV (MSPL) for loans of about $167 million, about $161 million, and about $87 million respectively. JBIC said in a statement, “The loans are co-financed with private financial institutions, bringing the total co-financing amounts to $335 million, $322 million, and $175 million, respectively”, totaling $832 million.

MVP and MSVP are joint ventures of MOECO and the state-owned Japan Organization for Metals and Energy Security (JOGMEC). MSPL is a wholly owned subsidiary of MOECO, which itself is a wholly owned subsidiary of Japanese diversified group Mitsui & Co. Ltd.

Expected to start production 2026, the Block B project consists of a gas field off the southwest coast of the Southeast Asian country and a pipeline network linking it to a gas-run thermal power plant complex. The development has a production capacity of 490 million cubic feet per day.

MOECO announced the final investment decision March 28, pegging the share of investment of its subsidiaries at $740 million.

State-owned Vietnam Oil and Gas Group (Petrovietnam) operates the upstream component with a 42 percent stake. Petrovietnam subsidiary Petrovietnam Exploration Production Corp. Ltd. holds 27 percent. MVP and MSVP, the MOECO-JOGMEC joint ventures, own a joint interest of 23 percent. PTTEP Kim Long Vietnam Co. Ltd. and PTTEP Southwest Vietnam Co. Ltd., both subsidiaries of Thailand’s state-owned PTT Exploration and Production Public Co. Ltd. (PTTEP), jointly own the remaining eight percent.

The midstream component is also operated by Petrovietnam with a 29 percent stake, while its subsidiary Petrovietnam Gas JSC has 51 percent. MOECO’s MSPL holds 15 percent. PTTEP subsidiary PTTEP Southwest Vietnam Pipeline Co. Ltd. owns the remaining five percent.

“The project, with the participation of MOECO, which has achievements in and knowledge of gas field development, covers the whole development process from the development of domestic gas production to the establishment of pipelines that connect the gas field and the power plants”, JBIC said.

“The loans will not only support the resources development by a Japanese company, but it will also contribute toward the energy transition in Vietnam”, it added.

Under the Socialist Republic’s latest power development plan, passed May 2023, domestic gas and liquefied natural gas are to expand during the transition to a no-coal electricity mix by 2050.

JBIC added that the loans support the Japanese government’s Asia Zero Emissions Community, a platform launched 2023 in 11 partner countries to facilitate Japanese companies’ investments in energy transition across the region.

To contact the author, email jov.onsat@rigzone.com