• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 2 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 11 days Does Toyota Know Something That We Don’t?
  • 3 hours "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)
  • 5 days America should go after China but it should be done in a wise way.
  • 6 hours World could get rid of Putin and Russia but nobody is bold enough
  • 4 hours How Far Have We Really Gotten With Alternative Energy
  • 13 days China is using Chinese Names of Cities on their Border with Russia.
  • 1 day The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 2 days Even Shell Agrees with Climate Change!
  • 3 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 13 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

The Dark Horse Of The Oil Price Rally

Vietnam’s economy is this year set to exceed the government’s growth forecast, which was predicting a healthy rise of 6.7 percent, VOA reported recently, citing a government statement. The reason this will be possible is oil prices. That’s right. Few of us would think of Vietnam when the benefits of oil production are discussed, but there you have it: this tiny producer is raking in the cash and will continue to rake it in even if Brent falls back to US$65.

To get an idea of just how much oil this new Asian tiger pumps, here are the figures for September and January to September this year: 910,000 tons (6.67 million barrels) for September and 9.04 million tons (66.26 million barrels) for the first nine months of the year, according to government statistics quoted by Reuters. What’s more, the nine-month figure was down 11.7 percent on an annual basis and the September figure was down 14.2 percent. Still, Vietnam’s economy is getting enough fuel from oil sales, it seems, to hit on all cylinders.

Exports of oil have also been on the decline this year. For the nine months so far, crude exports dropped by a hefty 45.2 percent on the year and September exports shed 21.1 percent. The reason is trivial: natural decline at mature fields. At the same time, new fields are in geologically challenging areas, according to state oil company PetroVietnam, as quoted by S&P Global Platts earlier this year, when June exports took a 67.5-percent nosedive. And still the outlook for the country’s economy is bullish.

Over the first nine months of this year, the Ministry of Finance has calculated oil export revenues at US$3.13 billion. That would be 42.5 percent more than oil revenues for the comparable period of 2017, VOA reports. Put simply, higher oil prices are more than making up for the production decline, at least for the time being. Related: Goldman Sachs: This Is The Next Big Risk For Oil

If this state of affairs continues, Vietnam plans to start building more refineries. To date, the country relies on imported fuels for 70 percent of its consumption and, naturally, wants to change things. However, this may take more time than the government would like.

There are two operating refineries in Vietnam at the moment, with a combined capacity of 330,000 bpd of crude. One large-scale refinery project, the Nam Van Phong, was first approved in 2008 and it has yet to be built. With a price tag of US$4.4-4.8 billion, that’s hardly surprising. Another petrochemical project, worth US$3.7 billion, has also been put on hold as state companies participating in these projects found themselves unable to provide the capital required. This has opened up the door for foreign investors to step in, but it is too early to say if these two refineries will see the light of day.

Declining production seems to be the biggest problem for Vietnam’s oil industry. Reversing the decline would require a lot of investment, as would exploration for new reserves, especially since some of these reserves are in disputed areas of the South China Sea. In this context, high oil prices gain even greater importance for Vietnam’s budget. Count it among the producer group that is keeping their fingers crossed for the rally to last longer.

By Irina Slav for Oilprice.com

ADVERTISEMENT

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News