A jack-up rig of PV Drilling. — Photo pvdrilling.com.vn
Although average prices of crude oil are forecast to decrease this year from 2023, business activities of Vietnamese upstream oil and gas enterprises are expected to continue to record positive results.
Many major global organisations, including the World Bank (WB), the US Energy Information Administration (EIA) and S&P Global, have lowered their crude price forecasts to around US$81-85 a barrel due to less positive macroeconomic data globally and rising crude supplies, especially from countries outside the Organisation of Petroleum Exporting Countries (OPEC).
This year's expected oil prices are much lower than the peak of $96.6 a barrel at the end of last September, but they are still at relatively stable support levels for the entire value chain of Việt Nam's oil and gas industry.
According to MB Securities (MBS), 2024 is expected to see many positive signs for the country's oil and gas upstream businesses.
In recent years, oil and gas exploration and exploitation activities in Việt Nam have been relatively subdued, even though oil prices remain higher than the breakeven points of $55 a barrel. Domestic oil production has consistently been lower than in previous years, while the gas shortage has become increasingly severe in the last two years.
“The exploration and extraction activities in new oil and gas fields are deemed essential because the existing fields are late in the production phase, with high water flooding and a natural decline in production of approximately 15-25 per cent a year,” said MBS.
“In the latter half of 2024, we expect a revival in the exploration and extraction operations as several significant projects are forecasted to be implemented. This will present substantial employment opportunities for domestic oil and gas businesses, with potential in drilling operations, construction, installation, maintenance and other related services.”
Among the upcoming upstream oil and gas projects, the Block B - Ô Môn gas-to-power project chain has the largest total investment and is receiving the most attention from the market.
Although the Final Investment Decision (FID) for this project was not approved in 2023 as expected and has been postponed to the first half of 2024, moves to award limited agreements to carry out parts of the work before getting the FID have shown some of the negotiation efforts of the parties involved.
Work related to a series of upstream projects is currently being actively implemented with the most recent information coming from the Lạc Đà Vàng field with FID (November 2023) and the EPCI#3 package of Block B - O Mon, promising to provide a source of work for businesses in the upstream oil and gas sector, especially PetroVietnam Technical Services Corporation (PVS).
Currently, the company has been awarded limited contracts for packages EPCI#1 ($1.1 billion) and EPCI#2 ($400 million), and the tasks within these two contracts will be implemented this year. Additionally, the sustained crude oil price at above $80 per barrel will ensure profitable operations for the company's FSO/FPSO floating storage and offloading rental business.
Meanwhile, PetroVietnam Drilling & Well Services Corporation (PV Drilling) plans to lease jack-up rigs abroad until the end of 2024, but it is expected to still benefit from the above projects by undertaking the workload related to oil and gas drilling services in the period after 2024.
In the domestic market, there are currently about 13 rig tenders but most of these drilling campaigns are relatively short.
In 2024, the drilling market is expected to become more active with larger-scale drilling campaigns as several major upstream projects are implemented, such as Lạc Đà Vàng, Sư Tử Trắng 2B, and Block B - Ô Môn. — VNS