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Oil & Gas sector – Block B – O Mon kick-off is imminent?

Sector note 31/05/2022    82


  • There are some signals that Block B field development project to be awarded FID (Final Investment Decision) in July 2022, setting a premise for this project chain to kick-off.
  • Block B – O Mon chain will be a great growth motivation for companies in Vietnam’s oil and gas value chain in coming years.
  • We prefer PVS, PVD, and GAS in “Block B-O Mon” investment story.

The time for kick-off is coming

In the meeting with Can Tho authorities in May, the representative of PVN said that Block B – O Mon chain could be awarded FID in July 2022, setting the stage for Block B – O Mon project to kick off in 2H22F. Besides, the operator of Block B gas field (Phu Quoc POC) has been in progress of EPCI tenders opening, targeting to award gas field development-related contracts (EPCI contract, FSO contract…) as soon as Block B chain receives FID. These signal that the time for Block B kick-off is coming and we expect first gas for this project is from late-2025F or early-2026F.

We believe the project to bode well for O&G companies in coming period

As we have mentioned in “Which O&G stocks to ride on Block B – O Mon kick off?” report published in Jan 2022, this super project will be a new growth engine for companies in Vietnam’s oil and gas value chain, strengthening industry’s fundamental and driving O&G companies’ earnings growth in coming years. With a total investment of roughly US$10bn, Block B – O Mon chain is likely to create many jobs opportunities for upstream services providers and EPC contractors in Vietnam. Block B with estimate gas reserve of 107 bcm (billion cubic meter) will also ensure gas supply for electricity generation, replacing some mature gas fields which are in their final stage. Furthermore, four gas-fired power plants in O Mon Power Center will bring the total capacity of 3,810MW, supplementing power supply for the South in the future.

We prefer PVS, PVD and GAS in “Block B-O Mon” investment story

In our views, the leading companies in the industry have more chances to trail Block B project footprint, including the upstream services providers and EPC contractors like PVS or PVD. Besides, as a major investor for Block B – O Mon pipeline (occupying 51% of total investment), we also believe GAS to be a key beneficiary from this project thanks to the Block B’s additional gas source and gas transportation tariff.

Investment risks

Upside risks include faster-than-expected project progress and higher-than-expected workload for local upstream service providers. The key downside risk is the further delay in this project’s investment approval and EPC award.

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