Vietnam National Petroleum Group (Petrolimex) has entered into a co-operation with Japan's JXTG Nippon Oil & Energy in a bid to build facilities and collaborate on procurement. The two giants expect to pour investment in producing liquefied natural gas (LNG), an area where JXTG has substantial experience.
Petrolimex and Japan’s JXTG Nippon Oil & Energy will invest into LNG production to satisfy growing unmet demand in Vietnam
Vietnam’s current gas production capacity cannot fully satisfy demand, leaving significant opportunities for liquefied natural gas suppliers. Petrolimex is reported to be planning to invest approximately $4 billion on preparing facilities and building power plants in Vietnam.
Vietnam's strongly growing gas demand was the main reason behind Petrolimex's co-operation with JXTG, since the Japanese firm has its own LNG facilities in Japan.
Strong LNG demand could translate into more imports from foreign countries, which would be a blow to government coffers. Hence, international co-operation to increase LNG production capacity is crucial.
The partnership marks a new foray in Vietnam for JXTG, Japan's largest direct seller of crude oil. In 2016, a subsidiary of JXTG Holdings took an 8 per cent stake in Petrolimex for ¥20 billion ($185 million at current rates), Nikkei reported.
According to JXTG’s predictions, Japan's oil demand would decrease by 50 per cent of current levels by 2040. Therefore, co-operation with Vietnam-based firm Petrolimex is a strategic move which can ensure steady profits even as its home market begins to shrink.