Chevron, ExxonMobil Pursue Crude Supply Agreements with Vietnam
The international deals highlight growing Asian demand, a potential long-term outlet for Bakken production.
Chevron and ExxonMobil have separately agreed to potential crude oil supply deals with Vietnam, according to reports from Rigzone. The agreements, announced September 28, involve the state-owned Vietnam Oil and Gas Group (PVN).
For Bakken operators, these international agreements underscore the importance of global export markets for North Dakota crude. While the deals are not specific to Bakken oil, increased demand from Asian refiners creates a broader, more stable market for the light, sweet crude produced in the Williston Basin.
Chevron’s agreement with PVN could also secure supplies of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) for Vietnam, Rigzone reported. This highlights the integrated energy companies' strategy to market a full suite of products, including natural gas, which is a significant associated product from Bakken oil wells.
ExxonMobil, a major leaseholder and operator in the Bakken through its subsidiary XTO Energy, is also pursuing a separate crude supply arrangement with Vietnam. Such international offtake agreements are typically negotiated well in advance and provide a destination for future production.
The pursuit of new demand centers in Southeast Asia is a positive signal for the Bakken industry. Sustained international demand helps support commodity prices and provides a counterbalance to domestic market fluctuations, directly impacting operator revenues and the economics of drilling new wells in North Dakota.
Source
Rigzone
