Eni has entered into a production sharing contract (PSC) with state-owned PetroVietnam for the exploration of Block 122, off eastern Vietnam. The Italian firm’s CEO, Claudio Descalzi, met with PetroVietnam President and CEO, Do Van Hau, in the Vietnamese capital of Hanoi on 26 June to sign the agreement.
Financial terms of the PSC were not disclosed.
Block 122 encompasses an area of 6900sq km in the Phu Khanh basin, in water depths up to 2000m. Under the terms of the agreement, the 2-phase exploration effort will proceed for seven years.
Chevron successfully bid on the block in 2006, gaining the operatorship and a 30-year lease on Block 122 with a 20% interest. However, the supermajor announced in 2012 that it completed evaluations on the acreage and was exiting the block. Its partners were PETRONAS (50%), GS Caltex Corp., and MOECO, each with a 15% stake.
The new agreement confirms Eni’s interest to continue to consolidate its presence in a region that has greeted the company with notable difficulties. In January 2014, operator Eni, along with joint venture partner KrisEnergy, was forced to plug and abandon the Cua Lo-1 exploratory well in Block 105 due to lack of commercial hydrocarbon availability. In April, the company announced that joint venture partner Neon Energy had defaulted on a US$22.1 million payment for interests in Blocks 105-110/04 (Block 105) and 120, forcing the remaining partners, Eni and KrisEnergy, to assume greater responsibilities on the investments.
Block 122 marks the fourth major exploratory development that Eni operates offshore Vietnam. Despite the difficulties encountered, Eni has continued to increase its interests there. Since its return to the country in 2012, in addition to Block 122, Eni has acquired interests and operational responsibilities in Blocks 105, 120, 114 in Vietnam’s Song Hong basin.
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