Russian petroleum giant sets up $1bn joint venture in Vietnam

The US$1billion joint venture, specializing in producing engines fueled by compressed natural gas (CNG) in Vietnam, was granted the establishment license by the local Department of Planning and Investment on September 24.

As the joint venture is now developing a production plan, it is keen on active support from the relevant state agencies of Ho Chi Minh City, Kovtun Andrey, chief representative of Gazprom International, a subsidiary of Gazprom, told city chairman Le Hoang Quan during the meeting.

The company is completing the construction of its main production plant and other functional facilities, including fuel distribution stations in the southern region, Andrey said.

Talking with Tuoi Tre (Youth) newspaper, the representative of Gazprom International said the joint venture will base its Vietnam office in the southern economic hub to promote cooperation between Gazprom and PetroVietnam, and between Russia and third parties in the region.

It is expected that the office will be officially put into operation next month, he said.

Currently, cooperation in oil and gas projects between Russia and Vietnam is advancing, and Russian corporations are looking to expand into related fields like fuel and liquefied gas distribution in Vietnam.

Also at the meeting, chairman Quan said the city welcomed foreign-invested energy projects, particularly in clean energy production, as according to the strategic development of the municipal transport sector, by 2020 all city buses will use CNG-powered engines.

The establishment of the 50:50 joint venture dates back to November 2013, when Alexey Miller, chairman of the Gazprom Management Committee and Do Van Hau, president and CEO of PetroVietnam, signed an agreement in the presence of Russian President Vladimir Putin and Vietnamese President Truong Tan Sang in Hanoi, according to Gazprom’s press release.

The creation of PVGazprom Natural Gas for Vehicles became a practical step in implementing the agreements previously achieved with the Vietnamese authorities on using natural gas as a vehicle fuel, according to the press release.

The southern region of Vietnam will be a starting point for the project, of which natural gas from the Nam Con Son basin fields and associated petroleum gas from the Cuu Long basin fields will be conveyed to Nam Con Son Terminal and Dinh Co gas processing plants near Vung Tau for treatment and subsequent liquefaction, Gazprom said in the press release.

Afterward liquefied natural gas will be transported to Ho Chi Minh City by methane carriers.

After the regasification process, which converts liquefied natural gas back to natural gas, CNG will be delivered to filling stations across Vietnam.