Singapore-based upstream oil and gas company Jadestone Energy has entered the initial step in the commercialisation of the Nam Du and U Minh (NDUM) gas fields offshore Vietnam.

Jadestone has signed a Heads of Agreement (HoA) with PetroVietnam Gas Joint Stock (PV Gas) for the Gas Sales and Purchase Agreement (GSPA) relating to the NDUM fields.

The Singaporean company currently owns 100% working interests in the NDUM fields, which are in Block 46/07 and Block 51 in shallow water offshore southwest Vietnam.

HoA specifies a daily contract of 80mmscfd under a take-or-pay arrangement over a targeted minimum plateau period of 55 months, with the first gas expected in late 2026.

It demands an initial wellhead gas price that is comparable to the price of recent Vietnam pipeline gas imports, subject to annual escalation.

Jadestone president and CEO Paul Blakeley said: “Securing a signed Heads of Agreement is a crucial step which helps to restart the commercialisation of our Vietnam discoveries and regain momentum for the development of this very important asset within our portfolio.

“While there remains significant work ahead to deliver a GSPA and a detailed project plan and development schedule to first gas, this is a clear signal of intent from the Government to see this resource developed.

“The Nam Du and U Minh gas fields would deliver significant medium-term production growth for Jadestone, further diversifying our asset base and increasing our gas volumes while decreasing our GHG emissions intensity – all key elements of our strategic aim to be a leading Asia-Pacific upstream company.”

NDUM gas fields contain gross aggregate 2C resources of 171.3bscf of gas and 1.6mmbbls of liquids, as evaluated by ERCE as of December 2017.

Jadestone estimates a significant upside potential surrounding the existing discoveries, with any future resource additions to represent straightforward tiebacks to the NDUM core facilities.

The HoA serves as the basis for detailed negotiations over a fully-termed GSPA and is also the precursor to the submission of an updated Field Development Plan (FDP) for the NDUM fields.

The approval of the proposed FDP is important for the progress of the proposed oil field development project to a final investment decision (FID).

Jadestone is planning to submit an updated FDP soon, which will specify the development concept for the NDUM fields, related estimates to capital, operating cost and first gas.

Blakeley added: “The likely timing of FID at Nam Du/U Minh would result in capital expenditure occurring no earlier than mid-2025, thereby supporting an organic funding solution through Jadestone’s cash flow generation, available debt and the added potential of bringing in partners during the development phase.

“Nam Du/U Minh production will also help reduce Vietnam’s reliance on expensive gas imports, which have a higher GHG emissions intensity than domestic gas.

It would also contribute to the country’s energy transition and stated goal of Net Zero greenhouse gas emissions by 2050, as well as creating local jobs and economic benefits.”