Business opportunities in Viet Nam
International breakfast meeting
Innovation Norway invites you to learn more about the business opportunities in the Oil and Gas sectors in
Vietnam.
Upstream Industry Overview
Currently, 20 oil and gas fields are in operations in Vietnam. The country’s oil production grew 3.11% per annum
between 1988 and 2009, and a peak of 420mbo/d in 2014, reflecting a CAGR of 3-71% in 2009-2014. However, oil
production is projected to gradually decline in the period of 2014-2020 and achieve only150 mbo/d by 2020.
Source: PVN’s report
Gas production increased by 21.9% per annum between 2002 and 2009, and is projected to grow by 6.3% in 2012 – 2020
with a peak in production in 2018 of 1,400 mmcf/d.
Source: PVN’s report
The Government actively promotes foreign involvement in the oil and gas exploration and production:
Private Ownership: Foreign companies are allowed to independently explore for oil and gas. Although the presence of
the State is still required for all producing projects, international oil companies can hold majority of shares and have the
right to receive a share of output.
More open and transparent licensing scheme: The Petroleum Law amended in 2000 and new PSC model in 2013
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provides more open and transparent scheme about duty and right of foreign investors in this industry in terms of
extension of contract time, level of cost recovery for exploration, development and production, etc.
Attractive tax framework: Special tax scheme is applied for petroleum investment promotion projects, i.e. encouraged
project could enjoy corporate income tax rate of 32% (as compared to the standard corporate tax rate applicable to oil &
gas production of 50%) and reduced royalty rate. Moreover oil and gas investors are exempted from some special tax
rate, i.e. 0% import tax for machinery equipment and materials used for oil and gas activities.
Mid and Downstream Industry Overview
Vietnam’s oil and gas market is expanding quickly on the back of the country’s strong overall economic growth. To meet
rising demand the country is embarking on an ambitious plan to build its domestic mid and downstream industry.
Rapidly Growing Oil and Gas Demand
The Vietnamese economy has been growing at an average annual rate of 7% historically and is forecast to continue its
impressive growth in the future. Vietnamese oil consumption increased by 4.7% per annum during the 2008 - 2011
period and is forecast to grow by 6.2% per year from 326 KBPD in 2011 to 554 KBPD in 2020.
Source: BMI Vietnam Oil and Gas Report Q4 2011
Gas consumption has been growing at significantly higher rate than GDP. The key drivers for this development are new
gas power plants and the growing adoption by private households and industries of gas as a source of fuel. Gas
consumption increased by 8.3% per annum during the 2008 – 2011 period and demand for gas is expected to continue to
rise by 12.1% per year during the period 2011 - 2020, reaching 24.8 billion m3 in 2020.
Source: BMI Vietnam Oil and Gas Report Q4 2011
Building a Domestic Mid and Downstream Industry to Meet Growing Demand
In the midstream segment the Government has approved a significant expansion plan in order to boost energy security
through new storage systems and gas pipelines. To implement this plan, the Government will develop an integrated
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industry with focus on the development of national gas industry infrastructure. The plan is to complete the gas industry
infrastructure in the South and commence the construction of the infrastructure in the North and Central regions.
Further investment will be made to build Nam Con Son 2 gas pipeline, Cuu Long Basin gas pipeline, Block B-Omon gas
pipeline, two projects to import LNG. The objective is to productive 14 billion m3 per year by 2015 and 15-19 billion m3
of gas by 2016 – 2025 from domestic gas fields.
So far, Vietnam’s consumption of oil and gas products has depended heavily on imports. Petroleum oil and refined
products are Vietnam’s second biggest imported product, and accounting for an average of approximately 11% of
Vietnam’s total import values during the 2005 - 2011 period. In order to realize Vietnam’s aspiration to create higher
value added products and to decrease its dependence on imports, the Government has set out ambitious plans to
develop its mid- and downstream industry. Projects in the downstream segment include refineries, fertilizer plants,
petrochemical plants, ethanol plants, etc.
The efforts in the refining segment of the industry are particularly ambitious. So far, the Country’s oil refining capacity
consists of only one refinery, Dung Quat Refinery, which came on-stream at the beginning of 2010 with a capacity of 148
KBPD. PVN is planning to develop 3 refinery-petrochemical centers in the North, South and Central of Vietnam.
Currently, at least two new refinery projects are being planned by PVN and foreign corporations. It is projected that
Dung Quat Refinery, along with the planned Nghi Son Refinery, will be able to supply 60% of domestic demand by 2016.
The great opportunities for NOR companies
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In 2012, the four new petroleum contracts have been signed which has increased the number of effective
contracts to 60. With the encouragement of Vietnamese Government toward oil exploration and production and
due to a number of blocks being unexplored. Taking this chance, NOR companies can plan to invest into such
blocks.
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Most of oil fields in Vietnam are marginal ones with fast declined production which is one of the challenges for
upstream producers. With vast experience and advanced technologies, NOR companies can apply their own
knowledge to enhance oil recovery in upstream activities.

Upstream activities in Vietnam are planned to explore in deep water areas. This will bring in new chance for NOR
companies to use their deep water drilling and subsea technology.
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For mid and down-stream areas, due to shortage of gas supply and increased gas demand in Vietnam,
Vietnamese Government has planned to import LNG in near future which will appear to be expensive. With welldeveloped LNG value chain, NOR companies will probably introduce this type of technologies in this sector.
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Even oil & gas sector in Vietnam has strongly developed over the decades, supply of state of the art equipment
are heavily dependent on import from abroad. With the well-known equipment suppliers from NOR, they can
join in the local market to support local oil and gas firms in the country.

The national oil industry in Vietnam is in high demand for experts and consultants to work with them and build
up the local staff’s capacity because they are interested expanding their activities abroad. Therefore, Vietnam
petroleum industry needs strong support from NOR companies in term of technical specialists and managers.
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