JBIC pens $415mn loan agreement for Vietnam's Block B gas-to-power project
The Japan Bank for International Cooperation (JBIC) has signed a $415mn loan agreement with three subsidiaries of Mitsui Oil Exploration Co. (Moeco), a unit of Mitsui & Co., for the development of the Block B gas-to-power project in Vietnam, it announced on July 8.
JBIC has extended loans of $167mn to Moeco Vietnam Petroleum Co., $161mn to Moeco Southwest Vietnam Petroleum Co., and $87mn to Moeco Southwest Vietnam Pipeline. These loans are co-financed with private financial institutions, bringing the total co-financing amounts to $335mn, $322mn, and $175mn, respectively.
The loan will fund the development of the Block B gas field off the southwest coast of Vietnam and the construction of pipelines to transport gas to thermal power plants in the region.
In March this year, Mitsui reached a final investment decision and signed contracts with its partners for the offshore Block B project. The project includes an upstream gas field and a pipeline to connect it to a gas-fired thermal power plant complex. The estimated production capacity is 490mn ft3/day, with production scheduled to begin by the end of 2026.
The project's partners include the Vietnam Oil and Gas Group (PVN), PetroVietnam Exploration Production Corporation (PVEP), PetroVietnam Gas (PV Gas), and PTT Exploration and Production Public Company. Moeco will be responsible for the project.
The Block B project will also include a midstream development for gas transportation. Moeco subsidiaries' share of development costs, primarily consisting of offshore installations and pipeline construction, will be approximately $740mn.
In May 2023, the Vietnamese government announced its goal of achieving carbon neutrality by 2050 and formulated the Power Development Plan 8 (PDP8). The PDP8 aims to reduce coal use for power generation and to use domestic gas and LNG during the transition period.
Last year, a consortium formed by McDermott and Petrovietnam Technical Services Corporation secured a contract for the Block B project. The consortium will be responsible for engineering, procurement, construction, installation, as well as hook-up and commissioning services.
In January 2022, the Japanese government proposed the Asia Zero Emissions Community (AZEC) concept, a framework to support energy transition efforts in Asian countries by leveraging Japanese technology and expertise. According to JBIC, Vietnam is a key partner in the AZEC framework, and the loans provided align with Japanese government policy.