Idemitsu Q8 officially joins Vietnamese petroleum retail sector

IQ8's first service station was opened in Hanoi

Newcomer kicks the hornets’ nest

On October 5, Idemitsu Q8 Petroleum Limited Liability Company (IQ8), a joint venture between Japanese company Idemitsu Kosan Co., Ltd. and Kuwait Petroleum International Ltd. (KPI), held the opening ceremony of the first Idemitsu Q8 service station at Thang Long Industrial Park, Hanoi, marking the first station of a petroleum retail network named IQ8 that will spread across Vietnam.

The move is expected to create competition for the domestic petroleum retail market and benefit customers because both Idemitsu Kosan and KPI are well-known enterprises with numerous achievements in the petroleum retail business in Japan and Europe.

Speaking at the ceremony, IQ8 general director Hiroaki Honjo stated that the company set to establish the professional retail petroleum trading network in Vietnam.

IQ 8 will operate in petroleum import, wholesale, and retail, mainly through the construction and management of service stations, across Vietnam. The products will come from the upcoming Nghi Son oil refinery and petrochemical complex in the central province of Thanh Hoa, in which Idemitsu and KPI both have stakes.

“The first station is considered the beginning for IQ8’s operation in Vietnam as well as a foundation for its expansion to emerging markets in the Pacific Belt region,” said Ghanim Al Otaibi, chairman of IQ8 cum vice president of KPI in Asia.

Pressure to improve

IQ8’s petroleum stations will apply an automatic management software, permitting card payments and numerous convenient functions for customers.

Besides, stations will be equipped with the most modern safety technologies and facilities to maximally prevent leakages, thereby minimising environmental risks. Furthermore, the staff will be trained to meet Japanese standards.

IQ8’s service stations will offer plenty of advantages to attract customers, while simultaneously creating competition on the retail petroleum market that is currently dominated by domestic distributors.

“Foreign newcomers will create pressure on domestic petroleum distributors to upgrade their existing facilities and improve service quality. Petrolimex anticipated the competition created by foreign distributors and has started preparations ten years ago, thus we are ready to take on IQ8 and other competitors,” said Nguyen Quang Dung, deputy general director of Petrolimex.

However, Dung stated that in general, foreign investors financial potential is a strong advantage when they start operations in Vietnam, however, in the petroleum trading sector alone, this advantage is not as pronounced, as success also depends on market share, business site, as well as the operation network. Dung expressed confidence thanks to Petrolimex’s existing advantages.

Accordingly, with 50 years of experience in the petroleum trading sector, Petrolimex is the biggest petroleum distributor in Vietnam with an extensive distribution network. The petroleum giant currently holds almost 50 per cent of the petroleum retail market, with over 50 per cent of its products directly sold to consumers and around 20 per cent to industrial customers.

The Vietnamese petroleum retail market is considered highly attractive by potential foreign investors. Petroleum sales volume at present is between 17-19 million tonnes per year, 65 per cent of which is imported.

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