Oil and gas to Vietnam
Trends and opportunities
Oil and gas is the top priority sector for economic growth and energy
security for Vietnam and the country has great potential in oil and gas
reserves. Vietnam is ranked 25th of the countries that have proven oil and
gas reserves (Source:
BP Statistical Review of World Energy, 2017).
At the end of 2016:
- The total proven oil reserve of Vietnam was 4,400 million barrels,
amongst the highest in Southeast Asia
- Vietnam’s natural gas reserves was 704 billion cubic meters, ranked third
in Southeast Asia after Indonesia and Malaysia (Source: BMI Research, Vietnam Oil and Gas Report Q4 2017)
- In terms of oil production capability, Vietnam was ranked fourth in
Southeast Asia with 313 thousand barrels/day after Indonesia, Malaysia, and
- The country is ranked 5th in Southeast Asia in terms of gas production
capability with 10.6 billion cubic meters per day, after Indonesia,
Malaysia, Thailand, and Myanmar (Source: BP Statistical Review of World Energy, 2017).
The majority of Vietnam's oil and gas reserves are located offshore in the
Cuu Long and Nam Con Son basins, in the south of Vietnam. The government
has been trying to attract investment into exploration and production in
new deep-water blocks as oil and gas consumption growth continues to run
ahead of production. Onshore, the investment focuses on thermal power
plants including gas-fired.
Vietnam’s crude oil production capability is forecast to decline
significantly from 2019 as this is the natural decline at aging fields such
as White Tiger, and will subsequently impact the Vietnam crude oil export
revenue. The White Tiger field has been explored for more than thirty
years, and since 2005 it reached a declining stage. Although PetroVietnam
(PVN) has explored and exploited fourteen small and marginal fields during
2006 to 2010, these new fields cannot offset the declining output from White
Tiger. Crude oil export will steadily decrease over 2016 to 2017 and swing
into deficit from 2018. The country will be a net crude oil importer for
the first time by 2019. Over the first half of 2017, Vietnam produced more
than 8 million tonnes of crude oil, decreased by 6.4 per cent compared
to last year (Source: BMI Research, Vietnam Oil and Gas Report Q4 2017).
In 2016 Vietnam’s natural gas production rose by 8 per cent in terms of
volume, reaching a new peak of 10.6 million cubic meters. In spite of the
growth in production output, the country will see considerable shortage of
gas supply over the coming years due to under investment in new projects.
The country has been producing as much natural gas as it consumes (Source: BMI Research, Vietnam Oil and Gas Report Q4 2017).
PetroVietnam Gas estimates gas shortage will reach 6 billion cubic meters
in 2020. The long-term prospect sees a brighter outlook with a number of
gas projects in discussion. Among which the Blue Whale operated by the US
Exxon Mobil is a highly promising project for the country. Blue Whale has
discovered gas and condensate. PVN and Exxon Mobil will develop and produce
under a Product Sharing Contract (PSC). The field’s reserve is estimated to
be approximately 150 billion m3, the largest one of its kind in
Vietnam. Total annual gas production to be exploited is approximately 9 to 10 billion m3. Four gas-fired power plants with a total capacity of
3,000 mega-watt will be built using gas from the field. The first phase
output could reach up to 7.2 billion cubic meters. The start-up of Blue
Whale will enable increased production of natural gas. Other notable
developments include Phase III of Lan Do gas field, ramp-up production at
Su Tu Den field, and production kick-off of Thien Ung and Mang Cau field. A
number of projects in the appraisal phrase, which would also add up the
aggregate supply of natural gas, include Block B (block 48/95), Phase II of
Su Tu Trang field.
Over the past few years, the government has planned to import Liquefied
Natural Gas (LNG) to meet the increasing energy demand of the country. Due
to its cleaner attributes, LNG holds a bright prospect when Vietnam is
committed to cutting down on greenhouse emission. Importation of LNG also
requires development of LNG receiving terminals, pipeline distribution
network, and associated facilities. However, the LNG import plan is likely
to be disrupted by the above mentioned project pipeline.
The Government of Vietnam controls the upstream segment and the downstream
has been opened to foreign companies. In the upstream segment,
international oil companies (IOCs) are allowed to independently explore for
oil and gas. While the presence of PVN is required in all producing
projects, IOCs are allowed to hold majority stakes and receive a share of
output. The downstream segment is also dominated by PVN’s subsidiaries such
as PV Oil, PV Gas, and Binh Son Refinery and Petrochemical as the first
refinery under operation and has now been opened to private sector and
foreign companies for equity participation.
Fuel wholesaling is carried out by government run companies, besides PV
Oil, all of which have been licensed to import petroleum products, such as:
- Petrolimex, the country's largest fuel importer and distributor, under
the Ministry of Industry and Trade
- PetroVietnam Trading Company (Petechim) and PETEC, PV Oil’s subsidiaries
- Military Petroleum Company under the Ministry of Defence
- Saigon Petro covering the South Central Vietnam and Mekong Delta market.
The refinery and petrochemical industry is a growing sector in Vietnam. The
government ambitiously aims to develop Vietnam into a refinery hub of
choice in the region, and sets the refinery capacity to treble over the
next five years with Vung Ro and Nghi Son refinery projects coming online.
The second refinery - Nghi Son project, a joint venture between PVN, Kuwait
Petroleum International, Idemitsu and Mitsui Chemicals, has total capacity
of 200,000 barrels of crude oil per day. The plant completed the
construction stage and is in commissioning run. The commercial run is
scheduled in the first quarter of 2018. The plant includes a petrochemical
complex, energy facilities, pipeline and storage systems. In addition to
LPG, unleaded gasoline, kerosene, jet fuel, diesel and fuel oil, the
refinery will produce bitumen, propylene and BTX as a raw material for the
Gas fired power generation is also becoming an important contribution to
Vietnam energy market. PVN and Electricity Group of Vietnam are the two
main investors. All of the coming gas-fired power plants are to be located
in the central and south of Vietnam, using gas output from nearly all gas
fields (Blue Whale, Block B, Bao Vang, Lan Do).
Under its World Trade Organization commitments, the Vietnamese government
has opened its oil and gas sector to foreign companies, which it hopes will
bring in capital, expertise and technologies to help achieve the country’s
major industry goals.
In its restructuring scheme PVN plans to focus on five crucial areas
- exploration and production
- refinery and petrochemical
- gas industry
- power generation
- oil and gas technical services.
Vietnam’s expanding offshore exploration and production has created a
steadily growing market for oil and gas equipment and services.
Opportunities exist in the following areas:
- search, survey and exploit in deep offshore water
- EOR: boost oil recovery from mature fields through advanced technologies
- technologies to optimise E&P in deep-water fields, processing of
- EPC, consulting services for deep-water field development.
In the downstream sector, opportunities can be found in a number of areas
- consulting services to establish competitive gas market
- investment in LNG terminal, gas-fired power plants, and refinery projects
- EPC, engineering and consulting services for LNG terminal development,
gas pipeline system, and combi-cycle power plants
services and equipment supplies for the aforementioned projects
- supplying LNG
- technical training, corporate and executive training across upstream and
There are international interests in the Vietnam oil and gas market, with
existing international players in both upstream and downstream. In the
upstream, there are around 30 international stakeholders operating through
production sharing contracts, business cooperation contracts, joint ventures,
joint operating contracts with PVN and its subsidiaries (PetroVietnam
Exploration and Production).
In the upstream, foreign businesses with a presence in the oil and gas
- Australia: Santos, Pan Pacific Petroleum
- Italy: Eni
- Japan: MOECO, JX Nippon
- Korea: SK Energy
- Malaysia: Petronas
- Russia: Rosnesf, Gazprom
- Spain: Repsol
- United Kingdom (UK): Premier Oil, Soco
- United States (US): Murphy Oil, ExxonMobil.
In the downstream, companies from Japan, Kuwait, Russia, Thailand, UK and
US have interests in the refinery and petrochemical sector. PVN is calling
for more foreign investment into the segment.
Tariffs, regulations and customs
Permits are awarded on a bilateral basis, with no regular upstream bidding rounds. Vietnam's Petroleum Law offers a more open and transparent licensing round scheme, through which exploration and production projects are offered to international investors.
Marketing your products and services
Australian companies need to keep regular contact with key market players
in Vietnam and identify projects at an early stage. Companies should also
maintain good relations with end-users to help identify the right
A complicated transaction system and strong competition are the main
barriers to doing business within the sector in Vietnam. Language can also
be a barrier to market entry.
Links and industry contacts
Government, business and trade resources for Vietnam
Ministry on Industry and Trade (MoIT)
Oil and Gas Vietnam Exhibition – OGAV
Vietnam Oil and Gas Group – PVN
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