20 Jun 2024 11:12

Russia's Zarubezhneft receives investment license to develop Block 11-2 offshore Vietnam, Novatek signs memorandum with PetroVietnam

HANOI. June 20 (Interfax) - Russia's Zarubezhneft has received an investment license to develop Block 11-2 on the Vietnamese continental shelf, an Interfax correspondent reports.

A number of agreements were signed during Russian President Vladimir Putin's visit to Vietnam. As part of the document exchange ceremony, Vietnam's Minister of Industry and Trade handed an investment license for the development of Block 11-2 on the Vietnamese continental shelf to General Director of JSC Zarubezhneft Sergei Kudryashov.

Zarubezhneft said its subsidiary, ZN EP Vietnam, had been named as project operator.

In addition, a memorandum of understanding on cooperation in Vietnam was signed between PJSC Novatek and PetroVietnam Oil and Gas Corporation during the visit.

Novatek CEO,Leonid Mikhelson told reporters in October 2022 that he did "not know when" a project that the company planned to implement in Vietnam in partnership with Siemens and TotalEnergies would begin.

"There is another [project] there. And in principle the consumer there, a power plant, is being built, launched in 2024. And there is an existing one in the same region. I just spoke with the minister, it uses about 1 billion cubic meters of gas, while PetroVietnam's own production is falling, so we could actually add [gas] there. The whole question is the cost," Mikhelson said, adding that the company was also considering building a regasification terminal in Vietnam.

President Putin stated during the signing of the documents that energy is a strategic direction of bilateral cooperation between the countries. Companies from Russia are ready to join large-scale projects using liquefied natural gas (LNG) as co-investors and suppliers, he said.

"The VietSovPetro joint venture has produced about 250 million tonnes of oil over decades of development of oil and gas fields in Vietnam. In turn, the PetroVietnam Corporation, which has been implementing projects in the Nenets Autonomous District in Russia since 2008, has already extracted about 35 million tonnes of oil in the extremely difficult conditions of the north. There is also a Russian-Vietnamese enterprise producing motor gas in Vietnam," Putin said.

Cooperation under existing and new projects in the oil and gas sector between Russian and Vietnamese companies, including the supply of oil and liquefied natural gas to Vietnam and its processing, are in line with the two countries' strategic interests, according to a joint statement following the Russian-Vietnamese summit, posted on the Kremlin's website.

"The sides support creating favorable conditions for expanding the work of Russian oil and gas companies on the continental shelf of Vietnam and Vietnamese oil and gas companies on Russian territory in accordance with Russian and Vietnamese national legislation and international law, including the 1982 UN Convention on the Law of the Sea," the statement said.

Another promising area of cooperation is the joint implementation of projects to create new and modernize existing power generating facilities, it said.

Zarubezhneft has been forming a gas cluster in Vietnam and Indonesia since the summer of 2021. Currently, it has five assets: the operator's Block 06-1 (35% owned by Zarubezhneft EP Vietnam B.V, 45% by India's ONGC, and 20% by PetroVietnam), the pipeline consortium Nam Con Son Pipeline (32.7% owned by Zarubezhneft EP Vietnam B.V., 16,3% by the Anglo-French firm Perenco, 51% by Vietnam's PV Gas), the operator's Block 12/11, the prospective Block 11-2 and the Tuna block (Indonesia, 50% owned by ZN-Asia and 50% by the British firm Premier Oil).

Zarubezhneft was going to include Block 11-2 in its cluster by buying a 75% stake from South Korea's KNOC (the rest is held by PetroVietnam), but the closure of the deal has not been reported.