This article first appeared in The Edge Financial Daily on July 28, 2017 - August 3, 2017

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is set to exit from two blocks off Vietnam after having been involved in the production sharing contract (PSC) for 26 years.

Its subsidiary, PC Vietnam Ltd, will hand over Blocks 01 and 02 located at the Cuu Long Basin to the host authority when the PSC expires on Sept 9.

In a statement yesterday, Petronas said that following the natural expiry of the PSC, PC Vietnam will cease its operations as stipulated by the contract terms.

The PSC for the blocks took effect on Sept 9, 1991, and was Petronas’ first successful international venture.

Petronas president and group chief executive officer Datuk Wan Zulkiflee Wan Ariffin said that the national oil company’s entry into Vietnam was an “important step at the beginning of Petronas’ globalisation journey”.

“As a pioneer investor in the oil and gas industry of Vietnam, we are proud to have been given the opportunity by the host government to play a significant role in the development of the country’s oil and gas and petrochemical industries.

“We are also privileged to have participated in Vietnam’s human capital development through structured capability building and localisation programmes for our employees as well as various educational initiatives and sponsorship for deserving and talented young Vietnamese,” he said.

The expiration of the PSC does not signal Petronas’ total exit from Vietnam. The company will still run its upstream production activities for Blocks 102 and 106 located at the Song Hong Basin in north Vietnam operated by Petronas Carigali Overseas Sdn Bhd.

Petronas said it is also “actively committed to pursuing further opportunities in its downstream businesses in the country, particularly in the lubricant and petrochemical sectors”.

On Wednesday, Petronas and its partners announced their decision to halt the C$36 billion (RM123.3 billion) Pacific Northwest LNG Project in Canada’s west coast. The decision was made after a “careful and total review of the project amid changes in market conditions”.