* On October 30, PetroVietnam Group (PVN) and foreign partners held a ceremony to sign heads of agreement (HOA) to extract the first gas from Block B project in 2027 (vs our forecast of 2028). This confirms our expectation that Block B will receive a final investment decision (FID) late 2023 or in H1 2024. We believe this development will help the Block B project to extract its first gas in 2027, which is slightly sooner compared with our forecast of 2028 as stated in our Sector Update “Domestic exploration & production to enter new cycle”, published July 24, 2023. Details of HOA have not yet been disclosed, but we understand that there are significant improvements regarding the remaining obstacles to Block B. These obstacles include 1) finalizing the gas price (recently, the Science Council proposed to reduce Block B’s gas price from USD13-14/MMBTU to USD12/MMBTU) and 2) signing the Power Purchase Agreement (PPA), the Gas Sales Agreement (GSA), the Gas Sales Purchase Agreement (GSPA), and the Gas Transportation Agreement (GTA) with contracted volume.

* PVS was awarded the first contract of Block B (EPCI#1) via receiving a Limited Letter of Agreement (LLOA). This LLOA, which is effective from October 31, 2023, allows immediate disbursement of USD140mn for the EPCI#1 contract (engineering, production, construction, & installation of one central production platform, one living quarter platform, and one flare tower) in November 2023 and construction to start in H1 2024. While PVS is carrying out the EPCI#1 contract (contract value of ~USD500mn for PVS, according to industry sources vs our estimate of USD400mn), PVN will continue to resolve the remaining obstacles of Block B to obtain an FID. PVS’s management is optimistic about an FID to come. In addition, according to foreign media, PVS may be awarded the EPCI#2 contract, which involves the construction of four wellhead platforms, within a few weeks.

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