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During a meeting at PetroVietnam Oil Corporation (PV Oil) last week, Shell showed its interest in becoming the liquefied natural gas supplier for the corporation’s projects. Shell is also looking to move into the Vietnamese fuel distribution system through acquiring a stake in PV Oil.
The Dutch group’s deputy chairman Douglas Buckley sought clarification regarding the criteria in selecting a strategic investor for PV Oil. This move hallmarks Shell’s return to the Vietnamese market after deciding to transfer its entire stake in a joint gas venture in the northern city of Haiphong and a 100 per cent Shell-invested company in Ho Chi Minh City to Thai Siam Gas in 2012.
However, the road ahead for its return remains bumpy. Shell, along with other foreign investors such as South Korea’s SK Energy and Japan’s Idemitsu Kosan Global, lost the opportunity to hold a strategic stake in PV Oil in June 2018.
The domestic oil company halted the selection of new investors after the Vietnamese government did not allow an extension for its share offering.
In assessing their options in the Vietnamese fuel distribution market, foreign investors are also looking to the divestment of Vietnam National Petroleum Group (Petrolimex) as an alternative to PV Oil.
Of the 14,000 fuel stations in Vietnam, Petrolimex owns 5,200 stations, holding 45 per cent of the market, followed by PV Oil with 3,000 sites.
Some 50 per cent of products sold by Petrolimex went directly to customers, with an additional 20 per cent going directly to industrial customers.
Nonetheless, there remains ample space for newcomers in the market, provided they prove competitive.
Japan’s Idemitsu Q8 Petroleum LLC (IQ8) was the first foreign-owned fuel retailer in Vietnam and has recently opened its third fuel service station in the northern province of Hung Yen.
IQ8 received approval to distribute fuel in Vietnam after the Vietnamese government pledged to allow the foreign shareholders of the $10 billion Nghi Son refinery and petrochemical complex in the central province of Thanh Hoa to distribute its products in Vietnam.