Full debrief – Vietnamese Energy Sector

At a crossroads
Vietnam is blessed with significant indigenous hydrocarbon and hydropower resources, which have allowed the country until now to be largely self-sufficient in energy supply, and have supported impressive economic growth.

Thanks principally to the exploitation of its coal resources and the
harnessing of its rivers for hydropower production, Vietnam has to date
succeeded in meeting double-digit power demand growth, in the process
providing almost universal electricity access to its population of about 90
million. Development of its oil and gas reserves has, meanwhile, seen it
become a net crude oil exporter and meet its gas demand in full. Its
transformation from an agricultural-based economy into a manufacturing
giant has seen annual GDP growth average 7-8% over the past 20 years, and,
accompanied by the increased affluence of a growing population, has led to
soaring demand for energy, most notably petroleum products and electricity.

Major challenges now lie ahead as the most accessible oil, gas and coal
resources are close to depletion while much of its economically feasible
hydropower potential has been exploited. As a result the country will
increasingly become dependent on imports of coal and oil, and possibly also
gas and even electricity. Huge investment is required to meet future energy
demand in an unfavourable investment climate with low commodity prices.
Vietnam needs to attract private sector investment for the next phase of
development as the three state energy champions – Petrovietnam (PVN), EVN and Vinacomin – no longer have the resources to finance these investments alone. It also needs to make hard choices over its future power generation mix and by extension the development of its hydrocarbon resources to ensure security of supply and meet its international greenhouse gas commitments.


Over the last three decades, Vietnam has emerged as a significant
oil producer and now ranks as the seventh largest in the Asia Pacific
region, with annual production currently averaging around 360,000 barrels
per day (bpd). Successful exploration of principally its shallow water
fields has, meanwhile, seen a sevenfold increase in its proved oil reserves
over the last five years to 4.4bn barrels or 630m mt as of end 2015,
according to BP’s Statistical Review of World Energy 2016. As a result it
now has the third largest proved oil reserves in the region, exceeded only
by China and India. Vietnam’s oil reserves are mostly light sweet crude oil
with a density of 380 to 402 API. The country also boasts the highest crude
oil reserve-to-production ratio in the region at 33.3 years.

In addition, it has the sixth highest proved natural gas reserves in the  region, estimated at 21.8 trillion cubic feet (tcf) or 600bn cu metres
(bcm), according to BP’s 2016 annual review, with the highest regional
reserve-to-production ratio of 57.9 years, assuming continued production at
current annual levels of around 10 bcm. PetroVietnam (PVN) estimates total
proved gas reserves at 12.6 tcf with total potential resources of 24.4 tcf.
Vietnam’s oil and gas reserves are located almost exclusively offshore in
seven basins in the South China Sea: Song Hong (off the northern coastline); Hoang Sa (off the central coastline); Phu Khanh (off the central and southern coastline); Cuu Long and Nam Con Son (off the southern coastline) and Malay-Tho Chu, is located in the Gulf of Thailand, off its southwestern coastline. Half of its oil reserves are believed to lie in the northern deepwater basin of Song Hong and the rest are mainly in the Cuu Long and Nam Con Son basins. It is a similar picture in terms of gas