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Last Updated: February 2017

Overview


Map of Vietnam
Map of Vietnam
  • Over the past few decades Vietnam has emerged as an important oil and natural gas producer in Southeast Asia. Vietnam has boosted exploration activities and allowed for greater foreign company investment and cooperation in the oil and gas sectors, and introduced limited market reforms to support the energy industry. On the demand side, the country’s rapid economic growth, industrialization, and export market expansion have spurred domestic energy consumption over the past decade.
  • Biofuels and waste comprised about 23% of Vietnam’s primary energy consumption in 2014, according to the International Energy Agency. As the country has industrialized and raised its electricity consumption over the past two decades, fossil fuels and renewables have replaced traditional energy sources in all sectors.
  • Vietnam, the Philippines, Malaysia, China, Taiwan, and Brunei each claim sovereignty over all or parts of the Spratly Islands, and Vietnam, Taiwan, and China claim the Paracel Islands in the South China Sea (SCS). Vietnam has reached agreements with several of its neighbors to conduct joint exploration for oil and natural gas resources in the region. However, disputes with China are yet to be resolved. In May 2014, tensions between China and Vietnam flared following a skirmish over a Chinese oil rig that Vietnam claims was planning to illegally drill into Vietnam’s continental shelf. Following this dispute, tensions have escalated in the region through 2016 as Vietnam accuses China of violating territorial rights through its recent efforts to build reefs and other activities in disputed areas of the SCS.
  • Petroleum and other liquids

  • Successful offshore exploration contributed to a substantial increase in proved crude oil reserves, which grew to 4.4 billion barrels in 2012 from 0.6 billion barrels in 2011, according to the Oil and Gas Journal (OGJ). Reserves have remained at 4.4 billion barrels through 2016. Ongoing exploration activities could increase this figure in the future, as Vietnam's waters remain largely underexplored. Vietnam is currently the third-largest holder of crude oil reserves in Asia, behind China and India.
  • Vietnam produced an estimated 320,000 barrels per day (b/d) of petroleum and other liquids in 2016, about 9% lower than production in 2015 (350,000 b/d). Although production has risen some years, overall production has dropped from a peak of 403,000 b/d in 2004 as output in the country’s large, mature fields decline. The offshore Cuu Long and Nam Con Son basins in the south have been the primary areas for oil production, but reserves in these basins are depleted and production requires enhanced oil recovery. Vietnam’s production faces decline in the next several years unless it can explore the more challenging deepwater areas. However, lower oil prices since late 2014 have hindered investments in these more technically challenging fields.
  • Vietnam is a net exporter of crude oil, primarily to other countries in the region, but is a net importer of oil products. With oil consumption increasing year-over-year and nearly doubling from 250,000 b/d to an estimated 445,000 b/d in the decade between 2006 and 2016, the country must import a majority of refined oil products to satisfy demand.
  • Vietnam has one operating refinery, the 130,000-b/d Dung Quat refinery, which has been operating since 2009. Vietnam’s state-owned Vietnam Oil & Gas Corporation (PetroVietnam) intends to increase the crude distillation capacity and to develop Dung Quat’s ability to handle sweet and less expensive sour crude oil from Russia, the Middle East, and Venezuela. The refinery’s expansion, which adds 40,000 b/d by 2022, is slated to upgrade the refinery’s fuel quality to Euro IV standards and handle a broader range of crude grades. The Vietnamese government and its project partners expect to commission the country’s second refinery, Nghi Son, by 2018. Nghi Son will add 200,000 b/d of capacity. Several other refinery projects are under planning phases, although they face investment challenges.
  • PetroVietnam is the key company in the oil and natural gas sectors and serves as the primary operator and regulator of the industry. Oil and natural gas production is either undertaken by PetroVietnam’s upstream subsidiary or through PetroVietnam’s joint venture with other companies. International oil companies (IOCs) such as ExxonMobil, Chevron, BP, and Zarubezhneft and several Asian national oil companies have formed partnerships with PetroVietnam.
  • Natural gas

  • Vietnam held 24.7 trillion cubic feet (Tcf) of proved natural gas reserves at the end of 2016, up from 6.8 Tcf in 2011, according to OGJ. Half of these reserves are located in the northern deepwater areas of the Song Hong basin and have high carbon dioxide contents, making the production investment costly. Major new developments are expected from ExxonMobil’s Ca Voi Xanh field, PetroVietnam’s Block B project, and the overlapping basin with Malaysia. However, low natural gas prices and the lack of gas infrastructure outside of the southern part of the country are impediments to upstream investment.
  • Vietnam produced 375 billion cubic feet (Bcf) of dry natural gas in 2016, according to the country’s official data, about the same as the 2015 level. All of the country’s production is consumed domestically, and Vietnam currently does not import natural gas. Although there is growing demand for natural gas from the power sector in southern Vietnam and the fertilizer industry, gas demand is dependent on future supply from production and imports.
  • Vietnamese government plans to import liquefied natural gas (LNG) in the southern part of the country to help satisfy the growing demand for gas especially in the power sector. PetroVietnam (PV) Gas, a subsidiary of PetroVietnam, is developing the 67 Bcf/y-Thi Vai LNG terminal in the Vung Tau province in southern Vietnam. This terminal is slated to serve industrial and power consumers in the surrounding area. A second terminal, Son My LNG, is designed to be built in multiple phases with the first phase having a capacity of 86 Bcf/y. Son My LNG is intended to serve a new gas-fired power project in southern Vietnam. The Vietnamese government expects both terminals to come online in 2023.
  • Coal

  • Vietnam produced about 44 million short tons of coal in 2016, 3% lower than 2015 levels, according to Vietnam’s official data. Virtually all of the coal production is in the north of the country and is mined by Vinacomin, the state-owned coal company.
  • Historically, the industrial sector has been the largest consumer of Vietnam’s coal, although the power sector is requiring much more coal supply. In the past two decades, Vietnam exported a large portion of its coal and imported a small amount since the country’s supply exceeded its consumption. The government has recently promoted coal use to fuel the power sector as the least expensive way to address power shortages and volatility in the country’s substantial hydroelectric capacity. Coal exports began slowing after 2009, and Vietnam quickly became a net coal importer in 2015. Coal imports more than doubled to 7.7 million short tons in 2015 from the prior year, while exports diminished to 1.9 million short tons. Coal-fired power generation capacity has risen to around 14 gigawatts (GW) in 2015, and there are several more projects under construction and in the planning phases.
  • Electricity

  • Electricity Vietnam (EVN) dominates the power sector. Coal, oil, hydropower, and natural gas are the primary fuels used for generation, and coal has increased its share over the past several years because it is the least expensive and an indigenous fuel source. Vietnam anticipates power demand to more than double from approximately 160 terawatthours (TWh) to 330 TWh between 2015 and 2020, according to the latest government power plan. Hydroelectricity (44%), natural gas (27%), and coal (25%) were the key contributors to Vietnam’s power generation in 2015, according to FACTS Global Energy. The latest power plan from 2016 calls for greater coal, natural gas-fired, and solar capacity to meet incremental electricity demand growth by 2030.
  • Low electricity prices have led to insufficient investment in new power plants, and the electricity grid has been strained by the country’s growing economy. EVN needs to adjust electricity tariffs and increase its revenues to attract greater investment and improve the country’s power capacity.