Off The Wire
Vietnam plans to spend over $6 bln for crude oil, fuel storage
HANOI/SINGAPORE, July 28 (Reuters) - Vietnam plans to spend more than $6 billion to build a strategic petroleum reserve and to expand commercial storage for crude oil and oil products by 2025, according to a document reviewed by Reuters.
The Southeast Asian country joins nations such as China and India in establishing an oil buffer to enhance its energy security as crude imports have jumped while domestic production is on the decline.
Under the plan, Vietnam plans by 2020 to build strategic petroleum reserves of up to 2.2 million cubic metres of crude oil, or about 13.8 million barrels, equivalent to six days of imports. Strategic oil product reserves by 2020 would total 1.8 million cubic metres, or about 11.3 million barrels, equal to 14 days of fuel imports.
Following the approval, the Ministry of Industry and Trade, PetroVietnam and Petrolimex are expected to submit feasibility studies for the projects by September, said a source with knowledge of the matter.
Vietnam's prime minister earlier this month approved a plan to build crude and petroleum stocks of at least 90 days worth of net imports by 2020. However, the projects are likely to take longer than expected to materialise given the track record of refinery construction in Vietnam and the big funding requirements for storage projects, said Sri Paravaikkarasu, Head of East of Suez Research at energy consultancy FGE.
"Ninety days is a big target even for big countries like China and India which rely heavily on imports," she said.
The following table outlines Vietnam's strategic and commercial oil storage plans:
National reserves Timeline 2017-2025 2025-2035
Type Crude oil reserves Oil products reserves Crude oil Oil products
reserves reserves Volume 6 days of net import 14 days of net import 25-30 days of net import
1-1.7 mln tonnes Min 1.2-1.4 mln tonnes
(equivalent 1.4-2.2 (equivalent 1.5-1.8 mln
mln cubic metres) cubic metres) Location locate storage system continue hiring
near or next to oil storehouses at petroleum
refineries depots in areas across
Dung Quat storehouse Quang Ninh, Hai Phong,
(Quang Ngai province), Hanoi, Nghe An, Ha Tinh,
Nghi Son storehouse Da Nang, Binh Dinh,
(Thanh Hoa province), Khanh Hoa, Ho Chi Minh
Long Son storehouse city, Vung Tau, Dong
(Vung Tau) Nai, Can Tho, Hau Giang,
Dong Thap, Can Tho Investment $3.7 billion figure
Commercial storage Timeline 2017-2020 2020-2025 2025-2030 2030-2035
Type Petroleum; Expand 30 oil and petroleum storages and build 53 new storages across
the country Volume 35 days of net import
By 2020: min 1.6 mln By 2025: min 2 mln 2.5 mln tonnes 3 mln tonnes
tonnes (equivalent to tonnes (35 days of net (32 days of (31-32 days of
37 days of net import) import) net import) net import) Location 2.3 mln cubic metres 1.7 mln cubic metres
capacity across the capacity across the
country country Investment $3.16 bln figure (Reporting by My Pham in HANOI and Florence Tan in SINGAPORE; Editing by Christian Schmollinger)