Jadestone delays Nam Du and U Minh gas developments

Jadestone Energy Inc., Singapore, will delay development of Nam Du and U Minh gas fields offshore Vietnam.

All capital spending which had been planned for the project in 2020 has been cancelled, resulting in a 50% (US$90 million) reduction to the company’s capex guidance for the year to US$80-95 million.

Jadestone said the decision is not only a recognition of the new measures to conserve the company’s capital resources but that it focuses on the largest and longest element of the company’s 2020 program and one that would not have contributed to cash flow before fourth-quarter 2021.

The company had been expecting Vietnamese government approvals for the project during this year’s first quarter, but they have not eventuated. The fields are now unlikely to be brought on stream until late 2022 at the earliest.

The remaining capital program for the year will mostly comprise infill drilling at Montara oil field in the Australian Timor Sea and at Stag oil field in the Carnarvon basin offshore Western Australia.

Paul Blakeley, Jadestone president and chief executive officer, said Nam Du and U Minh remained important domestic gas resources for Vietnam that will ultimately contribute to generating clean power and fertilizer for the ongoing development of the southwest Vietnamese economy.

“But, with ongoing Vietnamese Government delays to the FDP approval process, there is a short-term option for us to defer our spending commitments on the project, which we have decided to take,” he said.

He said the country has the potential to take temporarily cheap competitor piped gas, which is oil price linked and benefiting from the current market dislocation, and that Nam Du and U Minh fields can be developed when investment conditions improve.