JOGMEC Provides $45.6M Funding for Idemitsu-Sumitomo's Vietnam Exploration

Japan Oil, Gas and Metals National Corporation (JOGMEC ) reported Wednesday that it will provide $45.6 million (JPY 5.7 billion) in equity financing to Special Purpose Companies (SPCs) established by Idemitsu Kosan Co., Ltd. and Sumitomo Corporation respectively for their participating interests in the exploration Blocks 39 and 40/02 offshore Vietnam.

Idemitsu and Sumitomo signed the Production Sharing Contract (PSC), with state-owned Vietnam Oil and Gas Group (PetroVietnam) for the two exploration blocks Aug. 11. JOGMEC will provide equity capital up to 50 percent, covering the exploration expenditures incurred by the subsidiaries of Idemitsu and Sumitomo for the project.

The funding falls within the framework of JOGMEC’s Cooperative Overseas Surveys and Studies Program. Under the Joint Study Agreement between JOGMEC and PetroVietnam, Idemitsu and JOGMEC carried out a 2D seismic survey and geochemical studies offshore southwest Vietnam from October 2011 to August 2013. Idemitsu then exercised its exclusive right to negotiate with PetroVietnam regarding the PSC and brought in Sumitomo as a partner.

"It is a significant achievement and outcome of JOGMEC activities that the Cooperative Program has immediately contributed to the acquisition of exploration acreage, where, furthermore, JOGMEC continues to be involved through its equity financing," JOGMEC said in the press release.

Offshore Blocks 39 and 40/02, covering an area of approximately 4,486 square miles (11,620 square kilometers), lies in water depths of 164 feet (50 meters) and 197 feet (60 meters).

Idemitsu will hold 75 percent operating interest in the two exploration blocks, while the remaining 25 percent will be held by Sumitomo. Both firms will establish SPCs for these two blocks.