Eni Moves Into South East Asia's Unconventional Frontier
BMI View: Eni signed an agreement with PetroVietnam in late February under which the pair will jointly explore Vietnam's unconventional potential . South East Asia 's unconventional volumes remain uncertain and Eni could reap the rewards i f such potential was to be proven.
It has not take n Eni long to move beyond the January Memorandum of Understanding (MoU) it signed with PetroVietnam . The initial deal included an agreement that the two companies would work jointly on a variety of projects. Under the deal Eni was told it could intensify its exploration efforts in Vietnam across two additional blocks. In return , PetroVietnam was given the opportunity to join Eni in undertaking oil and gas exploration in several countries, including Venezuela and Mozambique.
On the last week of February 2013, Eni and PetroVietnam signed an agreement to collaborate in assess ing and explor ing Vietnam's unconventional potential. So far, no specific targets or details have been decided. T his agreement will creat e additional upside risk to our forecasts , but only i n the long - term. Interest in the country's unconventional plays is fuelled by t wo main factors:
Firstly , the p otential to extract Coal Bed Methane (CBM) exists in the region. This is particularly true of Indonesia , where C B M reserves are estimated at around 12.7trn cubic meters (tcm) (See our online service, 'Indonesia Oil & Gas Q2 2013 Report') .
Secondly, while there are no widely available estimates of unconventional potential in South East Asia, oil shows from tight reservoir sands in the Cuu Long Basin offshore southern Vietnam have stoked optimism that the region holds unconventional oil potential.
|In Need Of Upside|
|Vietnam Oil (LHC) & Gas (RHC), Production, Consumption & Net Exports|
Eni: The Asian Explorer
Eni seems to be gaining more exposure to the broader Asian market, although the company h as mostly focused on Indonesia thus far. According to a recent company statement, this moves shows that Eni is keen to take 'another step forward in its strategy of strengthening its presence in Asia, a region with very high growth potential that presents great opportunities in terms of upstream and the market'.
There are numerous examples of Eni's growing exposure to Asia. Among others, in early February, the Italian major announced a US$1.4bn development plan for the Indonesian offshore Muara Bakau block in the Jangkrik North East gas field. Furthermore, echoing similarities to the deal with PetroVietnam, Eni signed a MoU with PetroChina in January 2011, whereby the pair agreed to undertake joint operations to uncover conventional and unconventional potential in China. In addition to this agreement, in April 2012 Eni and China National Offshore Oil Corporation (CNC) signed a Production Sharing Contract (PSC) for the exploration of Block 30/27.