Mitsui & Co., one of Japan’s leading trading houses, has announced a significant investment of approximately 84 billion yen ($560 million) into the development of a gas field in southern Vietnam, marking a strategic expansion of its energy portfolio. The Block B project, located in Kien Giang province, encompasses both the development of the gas field and the construction of a pipeline connecting the field to a gas-fired power plant. With total project costs soaring above $10 billion, including ancillary expenditures, this venture signifies a major commitment to energy development in the region.
The project, spearheaded by Vietnam’s state-owned Vietnam Oil and Gas Group (PetroVietnam), is poised to kickstart production in late 2026, aiming for a daily output capacity of 490 million cubic feet. Mitsui’s involvement dates back to 1996, underscoring the long-term nature of its commitment to exploring and developing energy resources in partnership with Vietnam.
Mitsui Oil Exploration, a subsidiary of Mitsui & Co., holds a 23% interest in the upstream gas field operation and a 15% stake in the midstream pipeline segment, operating through local entities. Financing considerations for the project include potential loans from international financial institutions such as the Japan Bank for International Cooperation, reflecting the project’s significance and the need for robust financial backing.
Despite the anticipation of a minor impact on Mitsui’s profit for the fiscal year ending March 2024, the investment underscores Mitsui’s strategic vision for energy development and its commitment to strengthening energy resources in Vietnam. However, the project has experienced delays, initially slated for a 2020 launch, now postponed by over six years due to prolonged negotiations with the Vietnamese government over gas purchase guarantees and pricing, alongside political upheavals within Vietnam.
This ambitious venture not only demonstrates Mitsui’s long-standing partnership with Vietnam but also highlights the complexities and challenges of international energy development projects, especially in politically sensitive regions. As Mitsui navigates these challenges, the Block B project stands as a testament to the company’s resolve to contribute significantly to Vietnam’s energy sector and broader economic development.
