Market Trends of Vietnam Oil and Gas Industry
This section covers the major market trends shaping the Vietnam Oil & Gas Market according to our research experts:
Upstream Segment Expected to Witness Significant Growth
- Vietnam has many blueprints for developing the upstream sector in the oil and gas market. There have been many bilateral cooperation agreements to explore more petroleum reserves between the Vietnamese government and other neighboring nations.
- In 2020, the crude oil production in the country was 207 thousand barrels per day, the lowest figure in the last five years. The private companies have shown interest in investing in more offshore projects in the country to boost production by acquiring stakes in the offshore oil and gas fields, which is expected to bolster the nation's indigenous crude oil and natural gas output.
- In December 2021, Essar Exploration and Production Ltd and Italy-based energy company Eni declared their plan to start production from offshore block-114 in 2024-2025. The two companies have already drilled three wells and expect the development plan to be ready by 2023. Block-114 is the largest oil and gas block in Southeast Asia and is estimated to hold around 2 billion barrels of oil and gas.
- In November 2021, Japan Vietnam Petroleum Company, a wholly-owned subsidiary JX Nippon Oil & Gas Exploration Corporation, renewed the contract with PetroVietnam Exploration Production Corporation (PVEP), a subsidiary of the Vietnam Oil and Gas Group, to pursue operations in Block 15-2, located offshore Vietnam. The joint venture is expected to continue the exploration and production activities even after 2025, the earlier expiry date.
- Such factors are likely to boost the dominance of the upstream segment in the market during the forecast period.
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Increased Demand for Natural Gas Expected to Drive the Market
- The growing demand for natural gas in the power and fertilizer industries is expected to boost the oil and gas market. The country plans to increase the share of natural gas in the power generation mix, which currently stands at 15%.
- According to the World Bank, Vietnam's power consumption is second among all the ASEAN countries. It is expected to grow at an annual rate of 8% through 2030. The power generation sector is largely dependent on coal power technology, which increases the emissions rate of the sector. Thus, the country has various gas-based power projects planned.
- In December 2021, a consortium of Energy Capital Vietnam (ECV), B.Grimm Power of Thailand, and Siemens Energy planned an LNG-to-power project in Mui Ke Ga (MKG), Binh Thuan Province, in Vietnam. The first stage of the project is expected to be operational by 2025. The capacity of the MKG plant is likely to be 3600 MW, using 3 million ton of LNG per year.
- In November 2021, Delta Offshore Energy's upcoming LNG-to-Power project for Bac Lieu province was included in the latest plan on Vietnam's seaport system development. The LNG-to-power project is expected to have 3.2 GW of power generating capacity and will be operational by 2024-2027.
- Such developments are likely to boost the demand for natural gas and drive Vietnam's oil and gas upstream market.
