Vietnam oil gas report q1 2016

BMI Industry ViewBMI View: Declining production and rising domestic consumption will end Vietnam's self-sufficiency in crude oil and natural gas by 2019 and 2017, respectively.. Source:

Trang 1

Q1 2016 www.bmiresearch.com

VIETNAM

OIL & GAS REPORT

INCLUDES 10-YEAR FORECASTS TO 2024

Published by:BMI Research

Trang 2

Vietnam Oil & Gas Report Q1 2016

Part of BMI’s Industry Report & Forecasts Series

Published by: BMI Research

Copy deadline: November 2015

All information contained in this publication is

copyrighted in the name of Business Monitor

International Ltd, and as such no part of this

publication may be reproduced, repackaged,redistributed, resold in whole or in any part, or used

in any form or by any means graphic, electronic ormechanical, including photocopying, recording,taping, or by information storage or retrieval, or byany other means, without the express written consent

of the publisher

DISCLAIMER

Trang 3

Part of BMI’s Industry Report & Forecasts Series

Published by: BMI Research

Copy deadline: November 2015

All information contained in this publication is

copyrighted in the name of Business Monitor

International Ltd, and as such no part of this

publication may be reproduced, repackaged,redistributed, resold in whole or in any part, or used

in any form or by any means graphic, electronic ormechanical, including photocopying, recording,taping, or by information storage or retrieval, or byany other means, without the express written consent

of the publisher

DISCLAIMER

All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of

publishing However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International Ltd accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication All information is provided without warranty, and Business Monitor International Ltd makes no representation of warranty of any kind

as to the accuracy or completeness of any information hereto contained.

Trang 5

BMI Industry View 7

Table: Headline Forecasts (Vietnam 2013-2019) 7

SWOT 8

Industry Forecast 9

Upstream Exploration 9

Latest Updates 9

Structural Trends 9

Table: Proven Oil And Gas Reserves (Vietnam 2013-2018) 11

Table: Proven Oil And Gas Reserves (Vietnam 2019-2024) 11

Upstream Projects 12

Table: Vietnam - Key Upstream Projects 12

Upstream Production - Oil 17

Latest Updates 17

Table: Oil Production (Vietnam 2013-2018) 19

Table: Oil Production (Vietnam 2019-2024) 19

Upstream Production - Gas 20

Latest Updates 20

Table: Gas Production (Vietnam 2013-2018) 22

Table: Gas Production (Vietnam 2019-2024) 22

Refining 22

Latest Updates 22

Table: Refining Capacity and Refined Products Production (Vietnam 2013-2018) 25

Table: Refining Capacity and Refined Products Production (Vietnam 2019-2024) 25

Refined Fuels Consumption 26

Latest Updates 26

Table: Refined Products Consumption (Vietnam 2013-2018) 28

Table: Refined Products Consumption (Vietnam 2019-2024) 28

Gas Consumption 29

Latest Updates 29

Table: Gas Consumption (Vietnam 2013-2018) 30

Table: Gas Consumption (Vietnam 2019-2024) 31

Trade - Oil 32

Crude Oil Trade Forecasts 32

Latest Updates 32

Trang 6

Table: Crude Oil Net Exports (Vietnam 2013-2018) 34

Table: Crude Oil Net Exports (Vietnam 2019-2024) 34

Fuels Trade Forecasts 34

Latest Updates 34

Table: Refined Fuels Net Exports (Vietnam 2013-2018) 36

Table: Refined Fuels Net Exports (Vietnam 2019-2024) 36

Trade - Gas (Pipeline And LNG) 36

Latest Updates 36

Table: Gas Net Exports (Vietnam 2013-2018) 38

Table: Gas Net Exports (Vietnam 2019-2024) 38

Industry Risk Reward Index 39

Table: Asia: Upstream Risk/Reward Index 40

Table: Asia: Downstream Risk/Reward Index 42

Vietnam - Risk/Reward Index 45

Vietnam Upstream Index - Rewards 45

Vietnam Upstream Index - Risks 45

Downstream Scores 45

Market Overview 47

Vietnam Energy Market Overview 47

Oil & Gas Infrastructure 50

Oil Refineries 50

Table: Refineries In Vietnam 50

Oil Storage Facilities 50

LNG Import Terminal 50

Gas Pipelines 51

Table: Major Gas Pipelines In Vietnam 51

Competitive Landscape 53

Competitive Landscape Summary 53

Table: Key Players - Vietnam Oil And Gas Sector 55

Table: Key Upstream Players 55

Table: Key Downstream Players 55

Company Profile 56

Petronas Vietnam 56

PetroVietnam 59

Rosneft Vietnam 67

Zarubezhneft/Vietsovpetro 70

Other Summaries 73

Regional Overview 83

Asia - Weak Oil Prices Will Hit Region's Long-Term O&G Production 83

Vietnam Oil & Gas Report Q1 2016

Trang 7

Glossary 94

Table: Glossary Of Terms 94

Methodology 96

Industry Forecast Methodology 96

Source 98

Risk/Reward Index Methodology 98

Table: Bmi's Oil & Gas Upstream Risk/Reward Index 100

Table: Weighting 101

Trang 8

BMI Industry View

BMI View: Declining production and rising domestic consumption will end Vietnam's self-sufficiency in

crude oil and natural gas by 2019 and 2017, respectively Consumption growth will be driven by a more than threefold increase in the country's refining capacity over the next five years, as well as sizeable gains

in gas demand from the automotive and power sectors - characterised by the growing proliferation of natural gas vehicles and gas-fired electricity generation

Table: Headline Forecasts (Vietnam 2013-2019)

2013 2014e 2015f 2016f 2017f 2018f 2019f

Crude, NGPL & other liquids prod, 000b/d 349.2 311.0 444.0 464.3 480.0 485.0 466.1

Refined products consumption & ethanol, 000b/d 471.5 485.7 502.7 520.3 538.5 557.4 574.1

e/f = BMI estimate/forecast Source: EIA, BMI

Latest Updates And Key Forecasts

■ Declining production and rising domestic consumption (alongside more than a threefold increase it thecountry's refining capacity over the next five years) will see Vietnam become a net importer of crude oiland natural gas from 2019 and 2017, respectively

■ Our natural gas consumption forecasts for Vietnam assumes that two proposed LNG import terminalprojects, the Thi Vai and Son My terminals, will become operational by 2017 and 2018, respectively.Delays or cancellations to these projects could result in Vietnam experiencing a gas deficit in themedium-to-long term

■ Russia continues to maintain a large presence in the Vietnamese O&G sector In addition to holding

exclusive rights to a 49.0% stake in PetroVietnam's (PVN) Dung Quat refinery, Gazprom formed a

natural gas vehicle joint venture with PVN on October 15 2015 to invest up to USD1.0bn to build upCNG filling stations and refitting stations in Ho Chi Minh City This moves grants Russia early exposure

to Vietnam's fast growing natural gas vehicle sector

■ Exploration efforts remain relatively robust in Vietnam's offshore blocks, though ongoing maritimedispute with China impedes all such efforts in the highly prospective South China Sea

Trang 9

Vietnam Oil And Gas SWOT

Strengths ■ Good maritime links to other Asian markets

■ Relatively open to foreign investment

■ Solid economic performance over the next decade will underpin steady growth infuels consumption

Weaknesses ■ Government sets the domestic retail prices of fuels and, as such, unexpected price

hikes could adversely impact consumption growth

■ State presence in both the upstream and downstream remains substantial, throughnational oil and gas arm PetroVietnam The need to appease PetroVietnam in keycontract negotiations creates a difficult operating environment for private andinternational investors

Opportunities ■ Several large refinery construction projects in the pipeline, which will more than triple

the country's total distillation capacity by 2019 This offers downstream opportunities

■ Relatively robust exploration in its offshore blocks

■ Deficit in midstream infrastructure presents investment opportunities

Threats ■ Tension with China over territory in the South China Sea curtails all exploration

activities in the disputed waters

■ Delays or cancellations to proposed LNG import terminals may lead to a gasshortage, leading the country to turn to other energy sources

Trang 10

Industry Forecast

Upstream Exploration

BMI View: Vietnam's crude oil and natural gas reserves will start to trend downwards from2016 and 2018,

respectively, as low oil prices slowdown offshore exploration and dissuade firms from bringing new

production sources online.

■ Although nearly all of the country's hydrocarbon production occurs offshore, Malaysia-based

independent oil and gas firm Mitra Energy is exploring for both conventional and unconventional

resources in the onshore block MVHN/12KS in the Hanoi Trough Completion of ongoing resourceevaluation works is expected by end-2015

Structural Trends

Currently, nearly all of Vietnam's proven crude oil and natural gas reserves lie offshore, mostly in the CuuLong and the Nam Con Son basins off the country's southern coast - at the time of writing, proven oilreserves stood at around 4.4bn bbl and gas reserves at 707.9bcm

It is our view that while small-scale discoveries will uphold current reserve levels in the short-to-mediumterm, Vietnam's oil and gas reserves will start to decline from 2016 and 2018, respectively, as the pace ofnew discoveries lag reserves additions amid the current lower oil price environment This will trim

Vietnam's proven reserves down to 4.0bn bbl for oil and 660bcm for gas by 2024

Ongoing Exploration Provides Upside Risk

That said, Vietnam has a strong pipeline of exploration projects in its offshore acreages which could poseupside risk to our long-term hydrocarbon reserves and production forecasts, though this will hinge on themovement of crude prices in the coming years

Trang 11

Some notable exploration efforts include:

■ Gazprom: In 2014, Gazprom and PetroVietnam (PVN) signed an agreement regarding the joint

development of the Nagumanovskoye and the Severo-Purovskoye offshore oilfields In May 2015, thefirms also began discussing potential joint venture in the offshore blocks 129-132, which would be thefirst deepwater well in Vietnamese territory beyond a depth of 1,600 metres

■ ONGC Videsh (OVL): The international subsidiary of Indian state-run Oil and Natural Gas

Corporation signed an agreement with PVN for mutual cooperation in the former's Block 128 in the Phu

Khanh basin and the latter's 102/10 and 106/10 blocks in the Song Hong basin

■ Pan Pacific Petroleum: The firm's exploration campaign in Block 07-03, in the Nam Con Son basin has

yielded results from a discovery called Red Emperor Flow testing was conducted in the CRD-3Xappraisal well and returned a flow rate of around 8,000b/d Final investment decision was due in 2015,with the block expected online in 2017

■ Talisman: The Canadian firm is planning to drill two key exploration wells in 2014, in Blocks 135 and

136 in the Nam Con Son basin The first, in Block 136, is targeting an extension of the Ca Rong Doprospect in Block 07-03; the second prospect, Vung May, straddles both Blocks 135 and 136 The results

of the exploration activity are yet to be published

■ Kris Energy: In March 2014, Kris Energy was awarded a production sharing contract (PSC) for Block

115/09 offshore Vietnam, in the Song Hong Basin The PSC is for an initial period of four years, and the

company has announced that they will begin reprocessing legacy 2D seismic data and the acquisition of3D seismic data later in 2015

■ Eni: Italian firm Eni entered into production sharing contracts with PVN for several exploration blocks

-Block 122, 116 and 124 in H214 In March 2015, it launched seismic surveys in the offshore blocks 120

(where it holds 66.7% interest and KrisEnergy the rest) and 114 (which it jointly operates with Essar

Energy).

■ ExxonMobil: ExxonMobil and co-partner PVN discovered significant gas reserves in the Ca Voi Xanh

field in offshore block 117, 118 and 119, though official resource estimates have not be given

■ Idemitsu Kosan/Sumitomo Corporation: In August 2015, Japanese firms Idemitsu Kosan and

Sumitomo Corporation will explore for hydrocarbons in the shallow water blocks 39 and 40/02, which

are located off the southwest coast of Vietnam, with funding from JOGMEC

■ Mitra Energy: The independent Malaysia-based oil and gas firm is exploring for conventional and

conventional resources in the onshore block MVHN/12KS in the Hanoi Trough The firm expects tocomplete ongoing resource evaluation works at the block by end-2015

South China Sea Dispute

While the South China Sea (SCS) is estimated to hold sizable oil and gas reserves, exploration and

development of assets in the area remain stunted due to ongoing territorial disputes, notably with China.According to latest estimates by the EIA, the SCS's estimated proven and probable oil and gas reservesamount to about 11bn bbls of oil and 5.7tcm of natural gas

Trang 12

Table: Proven Oil And Gas Reserves (Vietnam 2013-2018)

f = BMI forecast Source: EIA, BMI

Table: Proven Oil And Gas Reserves (Vietnam 2019-2024)

Trang 13

Upstream Projects

Table: Vietnam - Key Upstream Projects

Est.Peak Oil/Liquids Range (b/d)

Est.Peak Gas Output (bcm) Type of Project

(PVEP) (50%), SapuraKencana Petroleum

Blocks

102 &

106 Ham Rong, ThaiBinh

Petronas (50%), ATI Petroleum (10%), PetroVietnam (20%), Singapore Petroleum

Block

09-3/12,

Trang 14

Vietnam - Key Upstream Projects - Continued

Block

106/10 Block 106/10

ONGC Videsh(OVL) (50%), Petrovietnam Exploration Production Corporation

Trang 15

Blocks

135 &

136/3 Blocks 135 &136/3

Talisman Energy (40%), Mubadala Petroleum (20%), PetroVietnam

Kuwait Foreign Petroleum Exploration Company (KUFPEC) (35%), Petrovietnam Exploration Production Corporation (PVEP) (30%), Mitra

Block 120 Block 120 KrisEnergy (33.33%)Eni S.p.A (66.67%), Exploration Oil & Gas Block

Block 39 Block 39 Sumitomo (25%), IdemitsuPetroleum (75%) Exploration Oil & Gas Block

40/02 Block 40/02 Sumitomo (25%), IdemitsuPetroleum (75%) Exploration Oil & Gas Block

SapuraKencana Petroleum (50%), PetroVietnam

(28.5%), Soco International (30.5%),

Trang 16

Block

05-2,

05-3

Mok Tin, Hai

Thak, Kim Cuong

Tay PetroVietnam (51%),Gazprom (49%) Production 13000 2 Oil & Gas Tien Hai

C, Song

Hong

Petrovietnam Exploration Production Corporation

Block

12E, 12W (Blackbird)Chim Sao

Premier Oil (53.125%), Santos Limited (31.875%), Petrovietnam Exploration Production Corporation

Block 9-2 Ca Ngu Vang

PetroVietnam (50%), Soco International (25%), PTT

Exploration and Production Public Company Limited - PTTEP

Block

Petrovietnam Exploration Production Corporation (PVEP) (50%), Vietnam Oil

Trang 17

Block

Petrovietnam Exploration Production Corporation (PVEP) (25%), Seoul City Gas Co Ltd (75%), LG International Corporation, Daesung Industrial, Hyundai Corporation, Daewoo International, Korea National Oil Corporation (KNOC),

Block

Source: BMI Upstream Projects Database

Trang 18

Upstream Production - Oil

BMI View: Vietnam's crude oil production will remain on an uptrend through to 2018, supported by

additional output from new fields and employment of EOR techniques at the country's large ageing fields Lack of new discoveries will nevertheless see output swing to a decline from 2019

Latest Updates

■ Vietnam's crude oil production will increase by 9.2% over the next three years, from 444,000b/d in 2015

to 485,000b/d by 2018 This will largely be driven by additional production at the Te Giac Trang (TGT)field, as well as the utilisation of enhanced oil recovery (EOR) techniques at mature fields, which willhelp to sustain production and improve recovery rates

■ We expect natural declines and the slowdown in upstream activities to hit the country's long-term

production potential, which will see oil output decline from 2019 and thereafter

Structural Trends

Vietnam's crude oil production is forecasted to remain on an uptrend through to 2018, buoyed by additional

output from Hoang Long Joint Operating Company's TGT field in the Cuu Long Basin The firm expects

the start-up of an additional production platform at the field to increase its output from 33,000b/d to

50,000b/d by 2018, contributing to the overall surge in Vietnam's oil production over the next two to threeyears Our data shows that Vietnam's crude oil, NGL and other liquids production will increase from444,000b/d in 2015 to reach 485,000b/d by 2018

The government remains firmly committed to its plans to increase the country's oil output, especially tooffset the loss in export revenue caused by the plunge in oil prices since H214 Start-up of production at

new fields such as Lam Son Joint Operating Company's Thang Long and Dong Do fields (online in 2015 and expected to reach peak production of about 19,800b/d by 2018) and Cuu Long Joint Operating

Company's Su Tu Nau field in Block 15-1 (targeting first production in November 2015), will provide a

boost to production in the short-to-medium term Additionally, EOR techniques will also help to sustainproduction at existing mature fields, albeit temporarily Notably, these fields include the flagship Bach Ho

field as well as JX Nippon's Rang Dong oilfield in Block 15-2, Cuu Long Basin.

Trang 19

Oil Production Forecast

(2013-2024)

Crude, NGPL & other liquids prod, 000b/d (LHS) Crude, NGPL & other liquids prod, % y-o-y (RHS)

2013 2014 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f0

200 400 600

-20 0 20 40 60

However, we still expect production to decline from 2019, given our expectation for the current slowdown

in upstream investments and lower oil prices to weigh on Vietnam's long-term production potential Thiswill limit discovery of new sources of output growth, which are required to offset natural declines at thecountry's mature fields, notably the Bach Ho field

The Bach Ho field, which accounted for 76.5% of Vietnam's total oil output in 2014, is depleting and

maintaining recovery rate is proving increasingly difficult for operator Vietsovpetro New fields will

struggle to mitigate this lost output beyond 2019 even if new wells are drilled on the fringes of Bach Ho Assuch, we forecast Vietnam's crude oil production to decrease by 17.5% over 2019-2024, from 466,120b/d to382,460b/d

Trang 20

Table: Oil Production (Vietnam 2013-2018)

Crude, NGPL & other liquids prod, 000b/d 349.2 311.0 444.0 464.3 480.0 485.0

Table: Oil Production (Vietnam 2019-2024)

Crude, NGPL & other liquids prod, 000b/d 466.1 448.0 430.6 413.9 397.9 382.5

Trang 21

Upstream Production - Gas

BMI View: Vietnam's natural gas production will grow robustly over 2015-2016, underpinned by a

ramp-up in production at existing fields and the start-ramp-up of new project We highlight that natural declines at maturing fields will weigh on overall production from 2017 and thereafter.

Latest Updates

■ We maintain our view that Vietnam's natural gas production is poised to uptrend in the short-term,climbing by 19.5% between 2015 and 2016, on the back of upgrades to new fields and the start-up of newprojects

■ Post-2017, however, we project natural declines at the country's more mature fields to begin to weigh onoverall production, seeing Vietnam's gas output to fall from 10.8bcm in 2017 to 8.7bcm by 2024

Structural Trends

We forecast Vietnam's natural gas production to peak in 2016, rising by 19.5% from 9.2bn cubic meters(bcm) in 2015 to 11.0bcm in 2016 This increase will be a result of a ramp-up in production at existingfields as well as additional output contributed by the start-up of new projects However, as the pace of newproduction growth to lag natural declines at maturing fields, we see overall production embarking on agradual downtrend from 2017 and thereafter

The short-term boost to Vietnam's natural gas production will come from the completion of Phase III

development at TNK-BP's Lan Do gas field in the Nam Con Son basin and a ramp-up in associated

condensates production at Cuu Long Joint Operating Company's Su Tu Den oilfield Additionally, commencement of production at Vietsovpetro's Thien Ung and Mang Cau fields in 2016 will also

contribute additional sources of gas output

Trang 22

Gas Production Forecast

(2013-2024)

Dry natural gas production, bcm (LHS) Dry natural gas production, bcm, % y-o-y (RHS)

2013e 2014e 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f0

5 10 15

0 10 20

-10 30

However, we expect natural declines at maturing fields to begin to weigh on overall output from

2017 Major declines at some of the country's more mature assets, notably PetroVietnam's Tien Hai C field

in the Song Hong basin and TNK-BP's Lay Tay field in the Nam Con Son basin (which together accountedfor about 28.1% of Vietnam's total gas production in 2014), will take Vietnam's gas production from10.8bcm in 2017 to 8.7bcm by 2024

Upside Risk

Several discoveries made over the last few years pose upside risk to our long-term natural gas productionforecast for Vietnam, though development decisions will likely hinge on whether such projects proveeconomic amid lower oil prices

■ On August 11 2015, PetroVietnam reported first commercial gas flow from its Thai Binh gas

development project in the Song Hong basin, yielding initial gas flow rates of around 0.15mn cubicmeters (mncm) from its TB-1P well Production is expected to be increased to 0.6mncm following tests

to the TB-2 well

Trang 23

■ ExxonMobil made significant gas discoveries from its Ca Voi Xanh field in Block 118, Phu Khanh basin

in 2012, which it is seeking to jointly-develop with co-partner, PetroVietnam However, further researchinto technology will likely be needed to help remove the high hydrogen sulphide and carbon dioxidecontent found in the field's gas

■ Japanese firms Idemitsu Kosan and Sumitomo Corporation found oil and gas in the offshore blocks 39

and 40/02, off southwest coast of Vietnam While official estimates of the blocks' prospective resourceshave not been released, the decision by both firms to pursue further exploration (as disclosed on August2015) suggests that preliminary findings have been sufficiently promising

■ Idemitsu also reported gas finds in the blocks 05-1B and 05-1C in the Nam Con Son basin, along with

joint-venture partners, JX Nippon and INPEX Corporation.

Table: Gas Production (Vietnam 2013-2018)

Vietnam Dry natural gas production, % of domesticconsumption 101.6 100.9 100.9 100.5 96.6 94.2

Table: Gas Production (Vietnam 2019-2024)

Vietnam Dry natural gas production, % of domesticconsumption 92.0 82.0 72.8 67.7 64.7 62.1

Refining

BMI View: Vietnam's refining capacity will more than triple over 2015-2020, as the Vung Ro and the Nghi

Son refineries come online in 2016 and 2017, respectively Several more proposed facilities could see this figure expand even further, though construction progress remains stunted amid insufficient funding

Latest Updates

Trang 24

■ We maintain our positive outlook on Vietnam's refining capacity growth over the next five years, which

we forecast will more than triple, from 140,000b/d in 2015 to reach 500,720b/d by 2019

■ According to industry sources, construction of the Nghi Son refinery is more than 60.0% complete, and is

on course to become operational by mid-2017

Structural Trends

Vietnam's refining capacity is set to more than triple over the next five years, from 140,000b/d in 2015 to500,720b/d by 2019, driven by the start-up of new refineries - the Vung Ro (160,720b/d) and the Nghi Son(200,000b/d), which we expect to come online in 2016 and 2017, respectively

At present, nearly all of the country's refining capacity is provided by PetroVietnam's Dung Quat refinery,

with total nameplate capacity of 140,000b/d The country also has a smaller refinery, the Ba Ria-Vung Taurefinery with a capacity of 2,612b/d

Upside Risk

Our Global Refineries database shows a further three proposed refineries, the Long Son, Nhon Hoi and theNam Van Phong refineries, which have been approved by the government but have yet to secure sufficientfunding to commence construction These refineries will have a combined refining capacity of around841,700b/d; if any of these projects come online within the next 10 years, Vietnam's total distillationcapacity will increase further in the latter half of our forecast period to 2024

That said, rising concerns about diminishing local crude feedstock and lack of sufficient investment

incentives for high-cost projects are dampening the outlook for these projects For instance, Qatar

Petroleum, one of the joint-venture partners in the Long-Son plant project, has announced its intention to

withdraw from the project on November 19 2015

Trang 25

Refining Capacity Forecast

(2013-2024)

Refined products production, 000b/d (LHS) Crude oil refining capacity, 000b/d (LHS) Crude oil refining capacity, utilisation, % (RHS)

2013e 2014e 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f0

500

250 750

80 90 100 110

The expansion in refining capacity will occur alongside rapid increase in Vietnam's refined fuels productionover the next decade, which we forecast will see average growth of 15.0% per annum over 2015-2024 Thelargest production gains observed in the production of transport-related fuels, such as gasoline and diesel,due to strong fuels demand from the transport sector, which will be fuelled by the growing appetite amongthe country's expanding middle class for road travels and solid growth in car sales over the next five years

Trang 26

Table: Refining Capacity and Refined Products Production (Vietnam 2013-2018)

Refined products production & ethanol, 000b/d 152.2 153.0 153.4 199.3 298.0 446.1

Table: Refining Capacity and Refined Products Production (Vietnam 2019-2024)

Crude oil refining capacity, utilisation, % 102.0 107.1 107.3 107.5 107.7 107.9

Refined products production & ethanol, 000b/d 512.8 538.4 539.8 540.9 541.7 542.9

Trang 27

Refined Fuels Consumption

BMI View: Vietnam's refined fuels consumption will grow steadily through to 2024, underpinned by solid

economic performance and strong car sales growth over the next five years, though we highlight that rising fuel efficiency gains and a more pronounced shift to gas use in the transport and manufacturing sectors pose downside risk to our forecasts.

Latest Updates

■ Vietnam's refined fuels consumption will grow steadily over the next decade, at an average annualgrowth rate of 3.0% over 2015-2024 Much of this increase will be underpinned by strong demand forgasoline and diesel from the transport sector

■ Domestic fuels prices remain highly volatile, though the government's is attempting to bring it more inline with global pricing dynamics That said, recent cuts to gasoline, diesel and kerosene prices will likelysupport a short-term rise in demand for these fuels

Structural Trends

We anticipate steady growth in Vietnam's refined fuels consumption over the next 10 years, alongside itsexpanding economy, which we forecast to see solid average annual growth of 6.0% over 2015-2024 Thiswill see Vietnam's total fuels requirement increase by 32.3%, from 502,110b/d in 2015 to 664,730b/d by2024

A large part of this increase will be seen in the country's consumption of automotive fuels as strong growth

in car sales (anticipated to grow at an average rate of 11.4% through to 2024) ramp-up domestic demand forgasoline and diesel A stronger-than-anticipated growth of the Vietnamese autos market could pose furtherupside risk to our forecasts In fact, the country's low passenger cars to population ratio - which stood at23.0 out of 1,000 people in 2014 (compared with that of a developed economy such as South Korea at284.6) - points to a market with plenty of growth potential

Trang 28

Refined Products Production And Consumption Forecast

(2013-2024)

Refined products production, 000b/d (LHS) Refined products consumption, 000b/d (LHS) Refined products consumption, % y-o-y (RHS)

2013e 2014e 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f0

250 500 750

0

2

6

8 10

Domestic Fuels Prices To Remain Volatile

Additionally, low domestic fuels prices, alongside sustained weakness in global crude prices, will support a

near-term increase in fuels consumption Petrolimex, the country's leading fuels importer and distributor,

has been consistently reducing retail prices of gasoline, diesel and kerosene since July 2015, in line with thegovernment's efforts to bring domestic prices more in line with global market prices Most recently, theorganisation cut prices of the aforementioned fuels by a further 6.5%, 1.0% and 1.0%, respectively, onSeptember 3 2015 That said, we note that domestic retail prices will remain highly volatile over the comingyears, as the power to hike or lower prices still lie firmly within the relevant price-setting authorities Infact, fuels prices in Vietnam have been readjusted 11 times so far in 2015, including four hikes

Downside risks to our forecast could come from increased fuel efficiency and a more pronounced switchfrom oil to gas, particularly in the transport and manufacturing sectors, though the country's relativelymoderate gas output and a lack of gas import facilities will limit gas' gains over oil in the short term

Trang 29

Table: Refined Products Consumption (Vietnam 2013-2018)

Table: Refined Products Consumption (Vietnam 2019-2024)

Trang 30

Gas Consumption

BMI View: Greater adoption of CNG-fuelled vehicles and rising prominence of gas-fired electricity

generation will boost gas consumption in the transport and power sectors, seeing Vietnam's overall gas demand to increase at an annual rate of 5.0% over the next decade

Latest Updates

■ We maintain our expectation for Vietnam's gas consumption to grow strongly over the next 10 years,driven by greater proliferation of CNG-fuelled vehicles and rising gas-fired electricity generation in thepower sector

■ On October 15 2015, PetroVietnam and Gazprom formed a CNG joint venture in Ho Chi Minh City,

which will make converting gasoline or oil-powered engines to run on gas more accessible to domesticconsumers, posing upside risk to our forecasts

Structural Trends

We forecast Vietnam's gas consumption to grow strongly over the next decade, driven by a wider adoption

of CNG-fuelled vehicles in the transport sector, as well as rising gas-fired electricity generation in thepower sector This will see Vietnam's gas demand growing at an average rate of 5.0% per annum over thenext 10 years, from 9.1bcm in 2015 to 14.1bcm by 2024

CNG Cars To Drive Gas Consumption Growth

We expect to see a growing number of CNG-fuelled cars in the coming years, thanks to the government'splan to promote the use of gas as an alternative fuel in the transport sector to reduce air pollution in the

major cities At present, PetroVietnam operates a fleet of 250 CNG-fuelled buses and four CNG fuelling

stations in Ho Chi Minh City and Vung Tau, though this figure could increase in the coming years as thefirm plans to have all of the city's buses running on CNG by 2020 Similarly, Dong Nai-based transport firm

Sonadezi Transport Corporation announced plans to invest up to USD30.0mn over the next five years to

expand the size of Dong Nai's CNG-fuelled bus fleet, from 162 currently to 393

Further upside risk to our forecasts come from the recently formed natural gas vehicle joint venture between

PetroVietnam and Russia's Gazprom The two firms could invest up to USD1.0bn to construct a production

plant specialised for CNG-fuelled engines, together with other associated infrastructure, including vehiclerefitting stations and CNG fuelling stations in Ho Chi Minh City

Trang 31

Gas Production And Consumption Forecast

(2013-2024)

Dry natural gas production, bcm (LHS) Dry natural gas consumption, bcm (LHS) Dry natural gas consumption, % y-o-y (RHS)

2013e 2014e 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f0

5 10 15

0 10 20

-10

Moreover, gas will retain a prominent role in the Vietnamese power sector over the next decade According

to our Power team, the country's gas-fired electricity generation is forecasted to increase by 49.2% by theend of the decade, even as the growing use of coal erodes the share of gas in the total power mix

Table: Gas Consumption (Vietnam 2013-2018)

Trang 32

Table: Gas Consumption (Vietnam 2019-2024)

Trang 33

Trade - Oil

BMI View: Vietnam is on course to become a net importer of crude oil for the first time since 1990, as

massive refining capacity additions entail imports to satisfy large new demand for crude feedstock, which will not be met via declining domestic production While growth in refining capacity will reduce the

country's need for fuels imports over the next five years, strong domestic consumption growth over the longer term will see refined fuels imports rebound over 2021-2024.

Crude Oil Trade Forecasts

Trang 34

Crude Oil Net Exports Forecast

(2013-2024)

Crude & other liquids net export, 000b/d (LHS) Crude & other liquids net export, % y-o-y (RHS)

2013e 2014e 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f-200

0 200 400

-300 -200 -100 0 100 200

Though the influx of additional crude feedstock for its refineries will reduce the need to import refined fuelsand provide some respite, rising domestic demand will increase Vietnam's reliance on crude oil and

products imports over the longer term

Impending Crude Shortfall Offers Trade Opportunities

Vietnam's need to import crude oil will open up trade opportunities for both regional and internationalsuppliers According to Trade Map ICT data, Vietnam imported small quantities of oil from Brunei,

Azerbaijan and Malaysia between 2011 and 2013 - the existing relationship between these countries andVietnam will serve them in a good stead to capitalise on Vietnam's looming crude shortfall We also expectsuppliers in the Middle East to vie for market share as well, especially as the addition of Iranian crude to themarket from early-2016 waits to flood an already oversupplied market Furthermore, regional supplier, such

as Timor-Leste, could also compete for stakes, given that it holds a geographical advantage over regional competitors

non-Vietnam Oil & Gas Report Q1 2016

Trang 35

A more distant possibility is the start-up of pipeline gas trades with China For instance, the Vietnam

National Petroleum Group (Petrolimex) has floated the possibility of constructing such a pipeline with

Chinese state-owned entity PetroChina However, talks remain stunted due to the project's high estimated

cost

Table: Crude Oil Net Exports (Vietnam 2013-2018)

Crude & other liquids net export, 000b/d 198.4 159.5 292.2 266.9 184.0 41.0

Table: Crude Oil Net Exports (Vietnam 2019-2024)

Crude & other liquids net export, 000b/d -44.5 -88.2 -106.6 -124.4 -141.5 -158.0

Fuels Trade Forecasts

Trang 36

54,430b/d by 2020 However, as domestic demand begins to outpace new capacity additions towards thelatter half of our forecast period to 2024, we anticipate a resurgence of imports over 2021-2024.

Refined Products Net Exports Forecast

(2013-2024)

Refined products net exports, 000b/d (LHS) Refined products net exports, % y-o-y (RHS)

2013e 2014e 2015f 2016f 2017f 2018f 2019f 2020f 2021f 2022f 2023f 2024f-400

-300 -200 -100 0

-75 -50 -25 0 25 50

Vietnam obtains the majority of its refined fuels imports from Singapore Although the recent cut in importduties on oil products imported from Association of Southeast Asian Nations (ASEAN) countries as per theASEAN Trade In Goods Agreement has helped imports increase in recent months, the country's

diminishing dependence on imports will hit Singapore, which supplied nearly 49.5% of Vietnam's totalrefined fuels imports in 2013

Trang 37

Table: Refined Fuels Net Exports (Vietnam 2013-2018)

Table: Refined Fuels Net Exports (Vietnam 2019-2024)

Trade - Gas (Pipeline And LNG)

BMI View: Vietnam's self-sufficiency in gas will come to an end in 2017 The country will require 0.4bcm

of LNG imports in 2017, though this will subsequently increase to 5.4bcm by 2024 alongside growing domestic gas needs, largely from the power and transport sectors

Latest Updates

■ Vietnam's self-sufficiency in gas is forecast to end in 2017, as rising domestic gas needs entail LNGimports We anticipate Vietnam to initially require about 0.4bcm of LNG imports in 2017; this couldsubsequently increase to 5.4bcm by 2024

■ Our forecasts assume that several LNG terminal projects in the pipeline will come online within ourforecast period to 2024 - the Thi Vai and the Son My LNG terminals

Structural Trends

Currently, Vietnam remains self-sufficient in gas However, with domestic natural gas production projected

to decline over the medium-to-long term, we forecast Vietnam to begin to require imported gas from 2017onwards to satisfy domestic gas needs Our forecasts show that the country will initially demand about0.4bcm of imports from 2017, which will subsequently increase to reach 5.4bcm by 2024

Trang 38

Gas Net Exports Forecast

Note: Negative means imports e/f = BMI estimate/forecast Source: EIA, BMI

As our data assume that several proposed LNG projects in Vietnam will come online within the nextdecade, we note that any delays or cancellations to these projects will pose a significant downside risk toour forecasts

PetroVietnam has signed a memorandum of understanding (MoU) and a front-end engineering and design

contract with Tokyo Gas to develop the Thi Vai LNG import terminal, which we expect to come online by

2017 - the facility is initially expected to have capacity to import around 1.4bcm of LNG, with further

expansion works likely to boost this figure to 4.9bcm by 2020 and 8.3bcm by 2023 Gazprom has signed an agreement with PV Gas to supply LNG to the terminal once built Additionally, PetroVietnam also has an agreement with Shell to jointly develop a second import facility, the Son My LNG terminal, though

construction is yet to start

Trang 39

Table: Gas Net Exports (Vietnam 2013-2018)

Table: Gas Net Exports (Vietnam 2019-2024)

Trang 40

Industry Risk Reward Index

BMI View: Low oil prices continue to suppress Asia's Upstream Risk/Reward Index scores, slowing

investment in upstream activities and hitting the region's long-term production potential Downstream scores remain largely stable, with the exception of several emerging economies which have outperformed as

a result of strong refined fuels demand growth and an improved refining sector outlook.

Q-o-Q Change In Regional ScoresAsia: Oil & Gas Risk/Reward Index

■ Vietnam, Timor-Leste and South Korea saw gains in their Upstream RRI scores this quarter, largelyowing to an improved reserves and production growth outlook Diminishing state ownership of upstreamassets supported Timor-Leste's scores

Định dạng
Số trang	102
Dung lượng	459,34 KB