Jadestone Energy announced that two of its wholly-owned subsidiaries have signed a heads of agreement (HOA) with Petrovietnam for gas sales from the Nam Du and U Minh gas fields.
Jadestone holds 70% working interest, and acts as operator for the gas fields Nam Du and U Minh, located in block 46/07 and block 51, respectively, offshore Southwest Vietnam.
The company’s subsidiaries have signed HOA that covers all discovered resources from the Nam Du and U Minh fields, and establishes a mutually agreeable framework for gas sales, priced at the wellhead, and delivered to a tie-in point at a nearby existing pipeline.
According to ERCE evaluation, the Nam Du and U Minh fields hold 2C resources of 171.3 bscf of gas and 1.6mm bbls of liquids, as of December 2017.
Jadestone Energy president and CEO Paul Blakeley commented: “Signing a Heads of Agreement with Petrovietnam marks a significant milestone in our commercial negotiations, as we look to develop the Nam Du and U Minh gas fields. With key terms now broadly agreed, we can now press forward with the project activities that should lead to a development decision being taken later this year.
“This will realise a significant portion of the long-term value of the Company’s Southwest Vietnam Assets, delivering growth towards our target of 30,000boepd by 2023, as well as significant cash flow and value, with first gas anticipated in late 2021.”
As mentioned in the outline development plan, approved in May 2018, Jadestone intends to commercialize the fields as a stand-alone development, utilizing existing infrastructure which offers feedstock for a 1.5GW onshore power complex, and an adjacent 800,000 ton/year fertilizer plant.
In addition to the daily contract quantity (DCQ) established as 80 mmcf/d, targeting a minimum plateau period of 55 months, the HOA specifies certain take-or-pay provisions, along with a pricing formula in principle, all of which are expected to be finalized in the ultimate gas sales and purchase agreement (GSPA).
The company said that the parties are planning to negotiate an initial wellhead price, in accordance with the agreed pricing formula, following the availability of updated cost data for the development, which is anticipated post summer 2019.