Competition in Vietnam has stiffened with the involvement of foreign investors. Bui Ngoc Bao, chairman of Vietnam National Petroleum Group, discussed the firm’s plans to expand its future operations and undergo state stake divestments
In 2016, Japan’s JX Nippon Oil and Energy acquired an 8 per cent stake in Vietnam National Petroleum Group (Petrolimex). JX Nippon Oil and Energy is a leading group in Japan with 100 years of experience.
Ngoc Bao, said " have improved our business governance by increasing transparency and operational efficiency and minimising risks. Our operational standards have been internationalised.
Specifically, the business plan for three years has been built alongside the traditional five-year plan, which enables us to achieve our targets of cutting operational costs by 5-10 per cent a year and increase the sales volume by 3.5 per cent annually.
For example, in the first nine months of this year, the sales volume rose 7 per cent on-year, thus fulfilling 76 per cent of the group’s sales target.
We welcome influential and capable foreign investors. We already have JX Nippon Oil and Energy as a foreign strategic partner that is interested in strengthening its position in our company.
We are planning to issue more shares to reduce the state’s holding, buy stake in existing oil refineries in Vietnam or abroad, or invest in new projects. We are considering the efficiency of such actions before making any final decision.
We have two mammoth projects. The first is the over $7 billion South Van Phong oil refinery project. We and JX Nippon Oil and Energy have finished the feasibility study and are seeking governmental approval for investment incentives. We want the project to be treated similarly to others of comparable size and scope in the country.
We are also preparing to develop a liquefied natural gas (LNG) project to serve power projects. We are studying a location in the Mekong Delta province of Tien Giang, which has a huge demand for LNG – in the millions of tonnes. JX Nippon Oil and Energy is also interested in this project.
State-run Electricity of Vietnam is also proposing the government to shift to this fuel for new power projects. We will build more LNG plants when market demands increase. In addition, using clean fuels has become more popular in Vietnam and is set to become even more trendy in the future. Thus, we are focusing on developing clean fuel.
As planned, important investment decisions will be made for the two projects in 2018. With these two projects, we are able to achieve the state divestment target.
We now hold 50 per cent of he retail fuel market share. Petrolimex now has 2,400 petrol stations and opens 70-100 new ones every year, which enables us to compete with any domestic or foreign rival at any level.
We are co-operating with powerful domestic groups, including Vietnam Railways, to expand our petroleum station network.
For overseas activities, we have been operating well in Singapore, Laos, and Cambodia. Sales in Singapore account for 15 per cent of the group’s total sales volume. In Laos, we focus on retail sales, while in Cambodia, we lean more towards wholesale transactions.
We are also considering overseas expansion into Myanmar. We are negotiating with a partner in Myanmar to capitalise on this growing market.
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