Foreign investors pouring more money into petrol market

An MOIT (Ministry of Industry & Trade) report shows there are 29 petrol distribution chains in Vietnam and the number has been increasing rapidly in the last year with at least five distributors set up this year. 

Petrolimex (PLX) has recently announced a plan to pay 2016 dividends to its shareholders, under which VND3.736 trillion would be paid for the 1.16 billion shares in circulation. 

In 2016, the corporation obtained turnover of VND123.097 trillion and pretax profit of VND6.3 trillion, an increase of 68% over 2015.

The State, the biggest shareholder at Petrolimex, which holds a 75.9% stake, would receive VND3.16 trillion in dividends.

JX Nippon Oil & Energy, with 103,528,476 shares, would receive VND333.7 billion, or US$14.8 million.

The Japanese oil & gas group in 2016 spent 20 billion yen, or US$183 million, to acquire an 8% stake in Petrolimex.

Within the framework of WTO and 11 FTAs, Vietnam has not committed to open the petrol market. Foreign investors are not allowed to set up petrol distribution networks in Vietnam, except up oil refineries, and need to have their own networks to sell their products.

In April 2016, Idemitsu Kosan from Kosan decided to invest in Nghi Son Oil Refinery in Thanh Hoa province. It will have the right to join the distribution market once Nghi Son becomes operational, slated for 2017.

To distribute petrol products, Idemitsu Kosan and Kuwait Petroleum International have set up a legal entity in Vietnam. 

Prior to that, Petrolimex signed an MOU with JX Nippon Oil & Energy on the two sides’ strategic cooperation and said they were following necessary procedures to make the Japanese investor Petrolimex’s strategic partner.

JX Nippon Oil and Energy  will team up with Petrolimex to establish a joint venture to develop the Nam Van Phong oil refinery project.

At present, Petrolimex, PV Oil and Saigon Petro are dominating the petrol distribution market with 75% market share.

At Petrolimex, since the maximum foreign ownership ratio is 20%, analysts believe there are not many opportunities for foreign investors. 

However, the opportunities to join the Vietnamese petroleum distribution market are open in other companies.

PV Oil is one. Holding 22% of market share, PV Oil still doesn’t have strategic investors and any commitment with a partner.

The door to the Vietnamese petroleum market is open to investors who can buy PV Oil shares.