PetroVietnam eyes Japanese investment

State-run oil and gas group PetroVietnam may seek Japanese partners to develop as many as 20 offshore blocks in the South China Sea, according to business daily, Nikkei. PetroVietnam is thought to be seeking as much as USD 24.8bn in new upstream and downstream investment and will reportedly hold a briefing session for Japanese firms in early July 2012. It is the latest sign that Vietnamese officials are turning to international partners in order to boost oil and gas production and address persistent downstream difficulties.

Japanese investors are top of PetroVietnam’s wish-list for a number of reasons: Firstly, Japan’s need for thermal fuels has soared following the 2011 Fukushima nuclear disaster. This is driving upstream acquisitions from Australia to North America as utilities desperately struggle to secure long-term energy supplies in a highly competitive market. Secondly, the strong yen means that overseas investments are more appealing for Japanese utilities and trading houses than they have been previously. Thirdly, Japanese companies are already heavily involved in Vietnam’s energy sector. Idemitsu Kosan and Mitsui are both partners in the development of the 200,000b/d Nghi Son refinery which is yet to secure final approval but could be on-stream by 2014/2015. Nippon Oil & Energy is also thought to be in talks to acquire PetroVietnam’s 49% stake in the existing 130,500b/d Dung Quat facility. The operator is looking to raise cash for an expansion of Dung Quat to 200,000b/d by 2016/2017. Japan’s JGC Corporation is currently advising on the expansion.

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