The country wants to enhance its energy security as crude imports have jumped while domestic production is on the decline.
Vietnam plans to spend more than US$6 billion to build a strategic petroleum reserve and to expand commercial storage for crude oil and oil products by 2025, according to a document reviewed by Reuters.
The Southeast Asian country joins nations such as China and India in establishing an oil buffer to enhance its energy security as crude imports have jumped while domestic production is on the decline.
Under the plan, Vietnam plans by 2020 to build strategic petroleum reserves of up to 2.2 million cubic metres of crude oil, or about 13.8 million barrels, equivalent to six days of imports. Strategic oil product reserves by 2020 would total 1.8 million cubic metres, or about 11.3 million barrels, equal to 14 days of fuel imports.
Following the approval, the Ministry of Industry and Trade, PetroVietnam and Petrolimex are expected to submit feasibility studies for the projects by September, said a source with knowledge of the matter.
Vietnam’s prime minister earlier this month approved a plan to build crude and petroleum stocks of at least 90 days worth of net imports by 2020.
However, the projects are likely to take longer than expected to materialise given the track record of refinery construction in Vietnam and the big funding requirements for storage projects, said Sri Paravaikkarasu, Head of East of Suez Research at energy consultancy FGE.
“Ninety days is a big target even for big countries like China and India which rely heavily on imports,” she said.