Alexey Miller, Chairman of the Gazprom Management Committee and Do Van Hau, President and CEO of Petrovietnam National Oil and Gas Group signed today in Hanoi the Agreement on setting up a natural gas for vehicles joint venture.

The signing ceremony took place in the presence of Russian President Vladimir Putin and Vietnamese President Truong Tan Sang.

The creation of the Russian-Vietnamese joint company PVGAZPROM Natural Gas for Vehicles became a practical step in implementing the agreements previously achieved with the Vietnamese authorities on using natural gas as a vehicle fuel. The documents, among other things, provide for converting public transport of Ho Chi Minh City to NGV fuel.

A subsidiary company of Petrovietnam – PV Gas – will have a 50 per cent stake in the joint venture. Gazprom will be represented in the joint venture by Gazprom Gazomotornoye Toplivo and Gazprom International, each holding a 25 per cent stake.

The southern part of the Republic of Vietnam will be a starting point for the project. Natural gas from the Nam Con Son basin fields and associated petroleum gas from the Cuu Long basin fields will be conveyed to Nam Con Son Terminal and Dinh Co. gas processing plants near Vung Tau for treatment and subsequent liquefaction. Afterwards liquefied natural gas will be transported to Ho Chi Minh City by methane carriers. Once the regasification process is completed, CNG will be delivered to filling stations across Vietnam.

 “Setting up the third Russian-Vietnamese joint venture with Gazprom's participation is a clear evidence of the rapid evolution of our strategic partnership with Vietnam. We are already carrying out joint hydrocarbon exploration and production activities and cooperating in the LNG sector. The joint NGV initiative in Vietnam is Gazprom's first project of a kind in the promising Asia-Pacific market. The project will contribute to further boosting the economic efficiency of Gazprom's business, expanding its geography in Asia-Pacific as well as diversifying the Company's output,” said Alexey Miller.

Background

On October 4, 2013 Gazprom and Petrovietnam signed the Agreement on the basic principles of the joint venture activities under a project for natural gas use as a vehicle fuel in the Republic of Vietnam. The document stipulates promoting the cooperation between the companies in converting public transport in Ho Chi Minh City to natural gas.

Gazprom's strategy in the natural gas vehicles sector is implemented by a special-purpose company – Gazprom Gazomotornoye Toplivo.

The first joint operating company of Gazprom and Petrovietnam – Vietgazprom – was established in 2002 in compliance with the terms and conditions of the Oil and Gas Contract for block No. 112. At present, Vietgazprom is also carrying out exploration activities in blocks No. 129, 130, 131, 132 located in the continental shelf of Vietnam. Gazprom's interests in these projects are represented by Gazprom International – a unified specialized company dealing with hydrocarbon fields prospecting, exploration and development beyond the Russian Federation.

In October 2013 Gazprom and Petrovietnam launched commercial gas production from the Moc Tinh and Hai Thach fields of licensed blocks 05.2 and 05.3 offshore Vietnam with recoverable gas and gas condensate reserves amounting to 35.9 billion cubic meters and 15.2 million tons respectively.

The second joint venture – Gazpromviet – was set up in December 2009 under the Agreement on Strategic Partnership between Gazprom and Petrovietnam. The document provides for continuing joint operations in the Vietnamese offshore blocks as well as exploring future opportunities for cooperation between the companies in vacant licensed blocks of the Republic. In addition, the document envisages pro-active interaction between Gazprom and Petrovietnam in oil and gas projects across Russia, Vietnam and third countries.

In July 2012 Gazprom Marketing & Trading Singapore and Petrovietnam Gas Joint Stock Corporation signed the Memorandum of Understanding for cooperation in the LNG supply sector.