Several oil and gas investors have withdrawn from Vietnam, but this may be good luck.
Reviewing major oil and gas investment projects recently, most of them have postponed or stopped completely, while others are in a state of standby. Nhon Hoi oil refinery project for example, a giant project of Thailand PTT in Binh Dinh known as Victory, worth US$22 billion, was most hopeful four years ago at the time of high oil price. The project is at a standstill and the investor delayed the decision until mid-2016.
Another big project the intention of Gazprom Neft (GPN-Russia) to purchase 49 per cent shares of Dung Quat oil refinery. The deal is almost complete with preferential treatment for Gazprom Neft. However, it is recently reported that Gazprom Neft has left, with so much regret for Vietnam-Russia cooperation.
Another oil refinery project Long Son in Ba Ria – Vung Tau of Qatar oil group worth US$4.5 billion has also been withdrawn due to the strategic restructuring of the group, leaving big problem for finding another investor.
Each project has its own reason; however, the general analysis is due to low oil price and big supply by OPEC and Russia that every investor must have second thought.
In fact, not only in Vietnam, giant oil projects in the world have also ceased investments due to lowest oil price in the past 13 years. Oil projects in the USA, the Middle East, etc. have ceased operation. According to Wood Mackenzie Consultant Company, 68 major oil projects worth US$380 billion have been delayed.
However, according to experts, it may be lucky for Vietnam. Though Vietnamese oil reserve is big, it is also limited. Vietnam has exploited 14 – 15 million tonnes of crude oil a year, if it continues, especially with new projects, the oil reserve could be finished in 10-20 years. In the long term, it is not good for Vietnamese economy as well as energy security.
Furthermore, according to experts, oil refinery projects are not economically efficient. They are big in investment capital with dozen billions US dollars but fewer jobs than other sectors and harmful for environment. Many countries have moved out oil refineries to offshore islands to reduce affects on environment and people.
Therefore, it is an opportunity for Vietnam to restructure the investment, reconsidering the investments in oil and gas sector. In particular, when Vietnam is engaging in several FTAs, the economy needs to focus human resources in hi-technology, saving energy and protecting environment for sustainable economic development.
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