Industry Trend Analysis - Blue Whale To Fuel Gas Growth Beyond 2023 - JUNE 2017

BMI View: The anticipated start-up of production from PetroVietnam and ExxonMobil ' s Ca Voi Xanh natural gas project in 2023 will help to arrest the long-term decline in Vietnam ' s gas production, and increase gas supplies available to the domestic power, petrochemicals and CNG industries.

We have upwardly revised our long-term natural gas production forecast for Vietnam to account for the anticipated start-up of the Ca Voi Xanh (Blue Whale) gas project offshore Quang Nam province in 2023. We expect gas production in Vietnam to steadily decline through to 2022 due to the lack of new projects and natural declines at aging fields. However, start of production and subsequent ramp-up to peak production at Blue Whale will help to return overall output to an uptrend from 2023. We forecast gas production to grow at an average annual rate of 23.0% over 2023-2025, a stark contrast from our previous project for a 3.0% annual decline over this period. Gas output declines at other mature fields will moderate the pace of growth towards the tail-end of our 10-year forecast period.

On January 13 2016, national oil and gas champion PetroVietnam (PVN) and a subsidiary of US-based supermajor ExxonMobil signed a project framework heads of agreement (HOA) and a gas sales HOA for the Ca Voi Xanh (Blue Whale) gas project. Touted to be Vietnam's largest gas play, the project area straddles offshore blocks 117, 118 and 119 in the South China Sea and is estimated to carry 150.0bcm of reserves, nearly three times that of Vietnam's two largest producing gas fields, the Lan Tay and Lan Do fields in the Nam Con Son basin. The production sharing contract (PSC) for the blocks was signed back in 2009, and exploration drilling commenced in 2011, with two of the three exploration wells (118 Ca Voi Xanh-2X and 118 Ca Voi Xanh-3X) drilled returning gas shows. As noted above, first production is expected by 2023, and annual output could reach 10.0bcm at peak capacity, according to official estimates.

Blue Whale Improves Long-Term Gas Outlook
Vietnam - Natural Gas Production
e/f = BMI estimate/forecast. Source: EIA, BMI

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