ExxonMobil Corporation (XOM) is likely to sign an agreement with Vietnam Oil & Gas, known as PetroVietnam on a $10 billion natural gas and power project, the country’s biggest of its kind, by 2015.
The proposed natural gas fields to be developed by PetroVietnam, is projected to be the fourth largest in East Asia. The development plans have got momentum from ExxonMobil’s huge gas discovery off the coast in 2012.
The first phase of the project involves transferring the gas from the field to a processing station from where it will be utilized to fuel a planned 2,500-megawatt power plant. The power plant will help to reduce electricity shortages that pose a major challenge to the $171-billion economy.
ExxonMobil is keen on investing in the field, the pipeline and processing plant. PetroVietnam, however, will remain the main investor in the power plant, estimated to cost around $10 billion.
At present, ExxonMobil is negotiating with PetroVietnam and the Vietnamese government to examine the feasibility of developing central Vietnam’s natural gas resources. A cost estimate for developing the field, pipelines, gas plant and power plant has not been developed yet.
The power plant project intends to capitalize on 6–8 trillion cubic feet of natural gas in the field off central Vietnam. This amount forms about two-thirds of the proven reserves in neighboring Thailand and Myanmar.
ExxonMobil’s talks with the Vietnamese government, at a time when other international oil companies have faced obstacles in exploring the gas reserves of the region, look encouraging. Notably, Chevron Corp. (CVX) was recently in search of a buyer for its stake in gas fields off southern Vietnam after years of talks failed to decide the price PetroVietnam would pay for the fuel.
Currently, ExxonMobil carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Weatherford International plc (WFT) and Sunoco Logistics Partners L.P (SXL). Both of these stocks sport a Zacks Rank #1 (Strong Buy).
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