Energy Sector - Full EPCI contract award to trigger Block B’s official start

Block B has made several milestones which ensure upstream & midstream execution. 1) On March 28, 2024, Mitsui Oil Exploration Co., Ltd. (“MOECO”) issued a final investment decision (FID). Its cash injection of USD740mn encompasses both the upstream and midstream of Block B’s phase 1 (we estimate total capex of USD3.4bn). 2) On April 2, the Government approved the execution plan of PDP VIII, which targets COD of O Mon II, III & IV power plants in 2027/2030/2028 to use Block B gas feedstock. 3) In addition, in VCB’s recent AGM, it announced plans to disburse ~USD1bn of funds for the Block B project from Q2 onwards. 4) According to PVS’s CEO, PetroVietnam Group might proceed with the project without issuing an FID (while information from Thai partner PTTEP is not yet available). 5) According to industry players, related parties agreed on Block B’s gas price of USD12-14/MMBTU. Gas contracted volume is ~90%. Meanwhile, power contracted volume will be solved via revisions to several circulars in 2025-2026, which allow O Mon power plants to be outside the competitive generation market.

We maintain our forecast for Block B’s official groundbreaking at the end of June 2024. On May 12, the Prime Minister visited Can Tho Province and stated that investment procedures of the Block B project have basically been completed and Block B is expected to meet its first gas deadline.

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