Vietnam to build LPG depot at Dung Quat

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Mar. 18 -- Vietnam's Petrovietnam Gas Corp., keen to reduce the nation's expenditures on imports, has begun construction of a liquefied petroleum gas depot and a tank truck station at the recently launched Dung Quat refinery.

The project, valued at 226.6 billion dongs ($13.32 million), includes two 1,000-tonne LPG rundown tanks, a system to deliver LPG from the rundown tanks to tank trucks, a firefighting system, and an industrial pipeline system.

When operational in first-quarter 2010, the project will ease distribution and delivery from the refinery to the central coastal and central highlands regions, enhancing Vietnam's domestic LPG market stabilization.

Together with existing facilities of PV Gas North and PV Gas South, the new project—along with a cold LPG warehouse to be built in Ba Ria-Vung Tau province later this year—will form a complete infrastructure system for LPG distribution.

Last December, PV Gas and PV Gas South jointly inaugurated another LPG depot in the Tra Noc II industrial zone, at Can Tho city on the Mekong Delta. The 1,140-tonne capacity Can Tho LPG depot, valued at 115 billion dongs ($7.18 million) will supply some 50,000 tons/year of LPG.

The uptick in activity by Vietnam's state firms underlines the competitive nature of the county's LPG industry, starting last December when Castrol BP Petco shareholders stopped BP Gas operations after a review of LPG business in central and southern Vietnam.

Nguyen Minh Huyen, communications manager of BP Vietnam, said that lower-than-expected profit and the pressure from illegal bottling activities and counterfeit bottles on the local market led to the business closure.

Huyen said illegal filling is widespread in Vietnam, which, combined with a competitive market environment, led to reduced profits for BP Gas, which initiated operations there in 1998 to supply LPG products for household, commercial and industrial consumers.

Earlier in December, though, Elf Gas Saigon, a joint venture of Total Oil Asia-Pacific and Saigon Construction Corp., reported its acquisition of the local rival Saigon Gas Holdings Corp., including an import terminal in Go Dau.

Total said the acquisition "secured its position" as one of Vietnam's leading LPG suppliers, boosting its share of the local gas market to about 15%.

"In Asia-Pacific, Vietnam is one of our key countries for development, and this opportunity for growth fits well with our strategy in the region," said Thierry Pflimlin, senior vice-president of Total Oil Asia-Pacific.

Total operates throughout Vietnam, with affiliates Total Gas Haiphong in the North, Elf Gas Danang in the central region, and Elf Gas Saigon, Total Gas Can Tho, and now Saigon Gas in the South. All affiliates have import terminals.

Vietnam's LPG consumption averages 950,000 tonnes/year, with 30% or 285,000 tonnes/year of the total produced domestically at the country's only LPG plant in Ba Ria-Vung Tau province.

Vietnam imports the remainder, about 665,000 tonnes/year, much of it coming from neighboring China. In January this year, China exported 58,817 tonnes of LPG, with 50.1% or 30,000 tonnes of the total going to Vietnam.

Two years ago, Petrovietnam forecast that Vietnamese LPG demand would rise by more than 50% to 1.2-1.3 million tonnes/year by the end of 2010. It said additional demand will then double to 2.4 million tonnes/year by 2020, with domestic supply covering about 1.8 million tonnes of the total.

Contact Eric Watkins at hippalus@yahoo.com.

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