HANOI — Vietnam’s state-controlled Petrolimex, the top distributor of gasoline to the country’s more than 40 million motorbikes, aims to diversify operations ahead of a projected long-term slowdown in demand for the fuel.
Formally called Vietnam National Petroleum Group, the company operates about 5,000 gas stations nationwide and has added locations at a pace of 70 per year, supported by Vietnam’s high economic growth of nearly 7%.
But the fuel importer is taking steps to branch out, such as building a liquefied natural gas terminal and adding electric vehicle chargers and convenience stores, Petrolimex Chairman Pham Van Thanh told Nikkei in a recent interview.
Edited excerpts from the interview follow.
Q: Tell us about Petrolimex’s decision to retreat from a plan to break into the oil industry’s midstream by building what would have been Vietnam’s third refinery.
A: State-owned PetroVietnam group operates one refinery in Vietnam, and another run partly by Japan’s Idemitsu Kosan began operating in 2018. Their refineries can meet about 90% of domestic demand for gasoline.
It has become difficult to receive tax and other incentives equivalent to those for the two refineries from the Vietnamese government.
We have yet to abandon the plan but are considering building an LNG import terminal as an alternative. We have signed a memorandum of understanding with Vietnam Electricity, which is building a [gas-fired] power plant. As our terminal to import petroleum products can be used, we consider the accord compatible with the LNG business.
Q: With demand for gasoline forecast to slow, how is Petrolimex preparing itself?
A: Demand for gasoline is expected to increase 5% or so annually, though slower than Vietnam’s economic growth [of 6% to 7%]. We don’t expect major changes in the business environment in the coming five years. On a longer-term basis, however, we will need to prepare for widespread use of electric vehicles and motorcycles.
We have joined hands with [Vietnamese conglomerate] Vingroup, planning to release EVs starting in 2019. We have already begun installing chargers at our gas stations, hoping to have them at all our stations.
Q: How does Petrolimex plan to make its gas stations more competitive?
A: We want to make use of management know-how of JXTG Nippon Oil & Energy [a Japanese company holding an 8% stake in Petrolimex]. We will increase combination gas stations and convenience stores. We plan to open them on a trial basis in big cities such as Hanoi and Ho Chi Minh City in 2019.
As gas stations combined with convenience and other retail stores require land lots bigger than before, we will promote the scrap-and-build of gas stations. We will pursue how to make our gas stations friendlier to users by developing good relations with convenience store operators.
Q: Self-service stations are increasing.
A: We have some 30 self-service stations and will expand the network in earnest. But Vietnam is a cash-based society, and the credit card use has yet to become common.
We cannot simply introduce other countries’ practices as-is, and so will operate them in a manner matching the Vietnamese market while analyzing customers’ reaction.
Q: Would you comment on a proposal under which the JXTG group will spin off its Marifu Refinery in Japan and sell a stake in it to Petrolimex?
A: I cannot say anything specific now, but we are holding talks with the JXTG group on a 50-50 joint venture.
We have already told the Vietnamese government of our intention. As the Vietnamese government has the final say, I don’t know if we can establish a joint venture in April [as planned].
