Shell forging stronger ties with local energy outfit

The Anglo-Dutch oil giant would invest in upstream oil and gas activities in Vietnam through a memorandum of understanding signed with PetroVietnam last week in the Netherlands during the Vietnamese Prime Minister Nguyen Tan Dung’s visit.

PetroVietnam chairman Phung Dinh Thuc said the deal would open opportunities for further business with Shell. In a recent interview with VIR, Shell Vietnam general manager Thanh Le said that Shell wished to sell LNG to Vietnam and build a large offshore movable LNG terminal next to offshore oil rigs.

Nguyen Van Hau, general director of PetroVietnam, said Shell was working with PetroVietnam to find further investment opportunities in upstream activities. Le said Shell Vietnam was working with PetroVietnam to join the project, which was also coveted by some Japanese investors.

At present, locally-made LPG can meet part of Vietnam’s total demand, so Vietnam had to import LPG from Thailand, Malaysia, Singapore, China and Taiwan. However, foreign LNG sources have been shrinking due to strong LNG price fluctuations and exporters’ policy changes.

According to PetroVietnam Gas, Vietnam’s LNG consumption was 810,000 tonnes last year and was expected to be over one million tonnes by 2013. Le revealed that Shell would be one of the biggest marketers of ethanol worldwide and Vietnam had a great material source for the second generation ethanol technology.

“If the Vietnamese government more encourages usage of biofuel in Vietnam which makes the market size large enough, then ethanol manufacturing here would be our great interest,” he said.
Shell had invested $300 million in exploration in two oil and gas production sharing contracts offshore of Danang and southern Vung Tau province since the 1990s. However, it withdrew from projects in 1996 as they were not commercially viable.

Shell is now engaged in distribution of bitumen, lubricants, chemicals, marine products, and water-proof paints and lubricants in Vietnam.