PETROVIETNAM OIL AND GAS GROUP

SOUTHWEST PIPELINE OPERATING COMPANY

20th Floor, Vietcombank Tower, No. 5 Me Linh Square,
Ben Nghe Ward, District 1, Ho Chi Minh City
Tel: +84.8 35219081 Fax: +84.8 35219080

To: MOECO Fax No: (84-4)

39369097
Attn: Mr. Tomoaki Sato – BoC member
To: PTTEP Fax No: (66-2)
5374444
Attn: Mr. Monton Santivongskul – BoC Member

Our Ref. /SWPOC-

Number of page(s): 2
TM-KT
Date: December , 2016
Subject: Verification of CAPEX report and Updated Feasibility Study
Rev.01

Dear Sirs,

As requested by BCC Parties, Southwest Pipeline Operating Company

(SWPOC) carried out the verification of CAPEX for the Block B - O Mon
Pipeline project based on the Feasibility Study (FS) update Rev.00.
SWPOC would like to provide the results of the verification report as
follows:
- Third-party verification consultant: Institute of Construction Economics -
Ministry of Construction
- Contract duration: December 9th to 19th, 2016
- Verification results:
1. Impact on CAPEX:
Unit: USD

Value before Value after

No. Description Difference
verification verification

(1) (2) (3) (4) (5)=(4)-(3)

I CAPEX (before VAT) 1,164,938,481 1,163,447,482 -1,490,999

II CAPEX (after VAT) 1,279,411,141 1,277,771,043 -1,640,099

2. Reasons for increase/decrease:
Unit: USD
Differenc
No. Description e (before Note
VAT)
I Construction 2,023,333 Updating cost of the PLEM at
cost KP209 to connect with the 18 inch
1
 Differenc
No. Description e (before Note
VAT)
spurline to Ca Mau Gas-Power-
II Equipment cost 3,767,805
Fertilizer complex.
Project
Updating audit result and
III Management -20,890
overhead cost
cost
Recalculating based on the
Consulting
IV 217,193 updated construction & equipment
service costs
costs
- Updating to comply with current
V Other costs 12,994,70 law & regulation, with major
4 decrease in insurance cost
Updating to include the average
fluctuation of construction price
VI Contingency 5,516,265
index in calculating contingencies,
complying with current regulation
-
Total 1,490,99
9

3. Conclusion: based on the verification results, verification

consultant concluded that CAPEX in FS update Rev.00 satisfied
the requirements of construction project cost estimation.
CAPEX after verification is the basis for SWPOC to submit to
authorities for appraisal and approval per Vietnamese Law.

- PV Engineering agreed with the verification results and had updated the impacted
sections of the FS update (i.e Narrative and Economics, no impact on Technical
section). Consequently, tariff in Rev.01 was not materially affected in comparison
with Rev.00.

In conclusion, the verification of CAPEX by third party decreased CAPEX by 1.6 Million
USD after VAT, which is not a significant change and did not materially affect tariff
calculation. Therefore, SWPOC provide the verification results above for information and
kindly request that Foreign Partners approve the Feasibility Study Rev.01 so SWPOC can
proceed with next steps forward.

Yours sincerely,

Do Khang Ninh
General Director
Cc :

2
- Record, Commercial, Tech.
Attachment:
- Verification of CAPEX report
- Updated Feasibility Study Rev. 01