While Vietnam decided not to open up its fuel market to foreign investors when it joined the World Trade Organization nearly ten years ago, that door is set to be opened for international stakeholders in oil refinery projects across the country.
Foreign businesses will be allowed to distribute fuel products in Vietnam if they invest in the country’s oil refinery projects, the Ministry of Industry and Trade said, citing the government’s decision.
This will result in exceptions to Vietnam’s WTO commitments, which prevent foreign players from selling, distributing, exporting and importing fuel in the country.
A would-be joint venture between Japan’s Idemitsu and Kuwait Petroleum International Ltd. is likely to be the very first beneficiary of the new regulation.
The two companies, which are involved in constructing Nghi Son, Vietnam's second oil refinery, have applied for registration of the Idemitsu Q8 Petroleum LLC, with the purpose of distributing petroleum products in Vietnam, the Japanese firm said on Monday.
The 200,000-barrel-per-day Nghi Son facility, located in the northern province of Thanh Hoa, is scheduled to start operation in the summer of 2017.
The venture will mainly receive fuel supplies from the Nghi Son facility once it starts operating, Reuters quoted an Idemitsu spokesperson as saying.
The year 2017 is therefore likely to mark a milestone in Vietnam’s fuel distribution market, when foreign players can begin to take part.
The second possible foreign business to begin distribution of fuel products in Vietnam is Japan’s JX Nippon Oil and Energy.
In 2014 the Japanese firm closed a memorandum of understanding on strategic cooperation with Petrolimex, Vietnam’s largest fuel wholesaler.
In the memorandum, the two parties have agreed to speed up processes for the Tokyo-based company to become Petrolimex’s strategic partner by buying stakes in the firm.
Petrolimex announced in a shareholder meeting in late March that it would sell 103.5 million shares, or eight percent of its stake, at a price no less than VND38,000 ($1.7) apiece to the Japanese partner.
Petrolimex and JX Nippon Oil will also establish a joint venture to implement the project to build the Nam Van Phong oil refinery complex in the Van Phong economic zone in the south-central province of Khanh Hoa.
JX Nippon Oil is therefore seen as a potential player in Vietnam’s new fuel distribution market.
Foreign investors of other refinery projects such as Nhon Hoi Victory in Binh Dinh Province and Vung Ro in Phu Yen Province, both located in south-central Vietnam, will also be allowed to join the fuel distribution market if they keep their investment commitment, according to The Saigon Times Online.