Petronas and Petrovietnam strengthen oil & gas ties

Malaysia’s state-owned energy player Petronas and the Vietnam National Industry – Energy Group (Petrovietnam) have joined forces to evaluate potential oil and gas blocks on Vietnam’s continental shelf.

The duo’s joint study agreement to advance oil and gas cooperation under Vietnam’s new legal framework is said to mark a strategic step forward in bilateral energy collaboration, allowing Petrovietnam to leverage Petronas’ global experience in geological research while aligning with the implementation of Vietnam’s 2022 Petroleum Law, designed to foster a more transparent and investor-friendly environment for upstream activities.

Commenting on the deal with Petronas, Petrovietnam underlined: “The agreement plays a vital role in assessing resource potential, attracting investment into sedimentary basins, and affirming Petrovietnam’s proactive position in expanding international cooperation for the sustainable development of Vietnam’s energy sector.”

The new partnership builds on the companies’ agreement from March 2025 for LNG shipments, which was interpreted to signify the start of LNG trade cooperation between the duo in the Vietnamese market.

The two companies recently signed a key principles agreement (KPA) to extend the production sharing contract (PSC) and upstream gas sales agreement (UGSA) for the PM3 commercial arrangement area (CAA) for another 20 years. This covers over 2,000 square kilometers of offshore fields straddling the maritime border of Malaysia and Vietnam.

The PM3 CAA is perceived to be a prime showcase of enduring cross-border collaboration, underscoring the strong bilateral bonds and shared commitment between both countries towards energy security and affordability. The KPA was inked in Hanoi by Datuk Ir. Bacho Pilong, Petronas’ Senior Vice President of MPM, and Le Manh Cuong, Petrovietnam’s Vice President.

Petronas’ Senior Vice President of MPM remarked: “With an estimated remaining reserve of up to 60 million barrels of oil equivalent (MMBoe), the abundant hydrocarbon resources in PM3 CAA plays a key role in contributing towards sustainable energy security in the region.

“The agreement underscores the unwavering commitment from both Petronas and Petrovietnam to further enhance their long-term collaboration which has been crucial to the progress of PM3, from exploration, development to eventual monetisation of the resources.”

Furthermore, the KPA, which sets the framework for the continuation of the PSC and UGSA until December 31, 2047, is seen as ensuring production continuity across seven fields and unlocking further potential of PM3 CAA facilities that are deemed to be positioned as a strategic hub to support tie-ins from nearby discoveries, optimizing asset utilization and reinforcing energy security in both countries.

Petronas emphasized: “The domestic market UGSA has been structured to maintain the economic viability of future gas field developments. Key terms for a new UGSA will ensure continued supply to Malaysia via Kertih and to Vietnam via Ca Mau, supporting national energy demands of both countries.

“The PM3 CAA is also expected to include plans for the reinjection of carbon dioxide (CO₂) produced from petroleum production activities – positioning the area as a potential hub for CO₂ sequestration. This approach supports the net-zero aspirations of both countries’ net-zero ambitions by 2050.”

In pursuit of sustainable energy initiatives and its target to achieve net-zero carbon emissions by 2050, Petronas became a part of a joint industry partnership (JIP) to step up carbon capture, utilization, and storage (CCUS) projects.

The firm took a final investment decision to develop the Kasawari CCS project, said to be Malaysia’s first offshore CCS project, at the end of 2022, followed by a contract award to Malaysia Marine and Heavy Engineering (MMHE).