Vietnam warned of risks if it buys oil to store

Though domestic petroleum depots are full, the Vietnam Energy Association (VEA)
wants to buy oil to store.

As the crude oil price has fallen to a record low, VEA and some businesses, including the national oil and gas giant PetroVietnam, believe that now is the time to buy oil for storage.

Vietnam warned of risks if it buys oil to store


Paul Sankey from Mizuho Bank believes that the price will be negative again when the world’s storage capacity fills up by the end of May.

However, experts warn that it would be risky to buy oil for storage because there is still no policy on the activity, and that the ‘bottom fishing’ deal may lead to big losses.

Nguyen Quang Dung, deputy CEO of Petrolimex, said the inventory level of enterprises, including Petrolimex, is high because of the continued price falls. He declined to say whether more oil should be bought for storage. 

As the crude oil price has fallen to a record low, VEA and some businesses, including the national oil and gas giant PetroVietnam, believe that now is the time to buy oil for storage.

A large part of the petroleum products in stock was bought at high prices before.

 

In principle, petroleum distribution companies have to store products at a certain level to satisfy market demand as stipulated in the government’s Decree 83.


The challenge for Vietnam is the lack of national depots. There are only two oil containing depots belonging to Dung Quat and Nghi Son Oil Refineries, while the two depots are full because of the high inventory level of the refineries.

Regarding the suggested plan on chartering tankers to store oil, a representative of PetroVietnam said it is not feasible because of limited financial capability.

A senior executive of a large enterprise in the south also said buying oil for storage was a solution applied by his enterprise in the past, but the conditions are different now.

“The stockpile is too high, while the revenue has dropped dramatically. We are sure of taking loss in Q1. Depots are all full. If we buy oil at this moment, we don’t know where to put it, not to mention the risk in prices,” he said.

Despite the complaints about the lack of depots, VEA still insists on buying oil for storage when the price is low.

VEA’s chair Tran Viet Ngai said oil should be bought when it is cheap.

Every year, Vietnam needs 2.5-3 million tons of DO and FO as fuel for power plants. Some thermopower plants use oil as the only fuel to generate electricity. And they have depots.

Ngai urged the Ministry of Industry and Trade (MOIT) to grant quotas to enterprises to import oil and petroleum products when the prices are low.

Le Ha 

Will Vietnam issue oil bonds?

Will Vietnam issue oil bonds?

Some experts have suggested issuing oil bonds to store oil and petroleum products as oil prices now are low.

Historic low oil prices hardly impact Viet Nam's economy at this time

Historic low oil prices hardly impact Viet Nam's economy at this time

Oil may reach its lowest price in history this week but its impacts on the world economy and Viet Nam have been limited at this time when the COVID-19 pandemic is keeping people at home and transportation has been cut off.  

 
 

Other News

.
Alibaba.com rolls out export-focused program for Vietnamese SMEs
Alibaba.com rolls out export-focused program for Vietnamese SMEs
BUSINESSicon  07/09/2020 

Alibaba.com, the global business-to-business (B2B) e-commerce platform of Alibaba Group, has launched a landmark initiative to help businesses in Vietnam go online and reach an enormous pool of qualified global buyers.

Profit taking to weigh on local market, but September may be bright
Profit taking to weigh on local market, but September may be bright
BUSINESSicon  07/09/2020 

Vietnam’s stock market rally may slow this week as investors eye profits but the one-month projection is still optimistic.

E-commerce gives impetus to woodworking sector
E-commerce gives impetus to woodworking sector
BUSINESSicon  06/09/2020 

In the rapid development of e-commerce, online stores and factories are one of the solutions with which enterprises can cope with the prolonged Covid-19 pandemic while laying a foundation for digitalized business

Logistics groups strive to exploit EVFTA potential
Logistics groups strive to exploit EVFTA potential
BUSINESSicon  07/09/2020 

The EU-Vietnam Free Trade Agreement has created a new driving force for Vietnam’s logistics, but the industry needs to take further action to unlock its full potential.

The path to economic recovery and further growth
The path to economic recovery and further growth
BUSINESSicon  06/09/2020 

While Vietnam has experienced an unprecedented boom in recent decades, the current pandemic is now having a clear negative impact on the economic outlook. 

Vietnam’s plywood suppliers under scrutiny over practices
Vietnam’s plywood suppliers under scrutiny over practices
BUSINESSicon  06/09/2020 

As the trade tensions between the United States and China refuse to slow down, Vietnam-based plywood exporters are under pressure of investigation for alleged issues with the sources of their input materials.

Local wood industry overshadowed by sourcing issues
Local wood industry overshadowed by sourcing issues
BUSINESSicon  05/09/2020 

Vietnam’s wood industry has shown signs of recovery in the third quarter of 2020. However, legal complications may arise through illegally-sourced raw materials from foreign suppliers and a lack of uniformity.

Consumers beware of e-swindlers preying on fledgling cashback apps
Consumers beware of e-swindlers preying on fledgling cashback apps
BUSINESSicon  06/09/2020 

While cashback is considered a strong method to encourage cashless payments, numerous websites and apps are taking advantage of uninformed consumers with untransparent and illegal multi-level marketing models.

One fewer thing to worry for enterprises
One fewer thing to worry for enterprises
BUSINESSicon  06/09/2020 

Businesses will have one fewer thing to worry about in 2021 as the minimum wage is not expected to be increased for privately-owned enterprises.

New strategies required to set deeper roots for wood industry
New strategies required to set deeper roots for wood industry
BUSINESSicon  06/09/2020 

To expand Vietnam’s wood industry sustainably, its development strategy must not only focus on the policies of importing countries but also domestic priorities.

Four Vietnamese-born billionaires in the US
Four Vietnamese-born billionaires in the US
BUSINESSicon  06/09/2020 

These are the most famous businessmen of Vietnamese origin in the US.

Airline service fees reduced by half for next six months
Airline service fees reduced by half for next six months
BUSINESSicon  05/09/2020 

Fees for takeoff and landing and aircraft operating services for domestic flights will continue to be cut by 50 per cent for the next six months to support airlines affected by the COVID-19 pandemic, according to a Transport Ministry circular.

Funds enjoy growth in August
Funds enjoy growth in August
BUSINESSicon  05/09/2020 

Investment funds involved in Vietnam’s equity market reported positive growth in net asset value (NAV) in August due to a stock market upturn.

Local authorities tighten control over investments in condotels
Local authorities tighten control over investments in condotels
BUSINESSicon  07/09/2020 

Hanoi local authorities are seeking to strengthen management over the construction, investment and trade of condotels, officetels and resort villas.

Vietnam aims to diversify local retail market
Vietnam aims to diversify local retail market
BUSINESSicon  05/09/2020 

The Ministry of Industry and Trade (MoIT) plans to consolidate traditional markets in rural areas while developing a large number of convenience stores and diversifying types and methods of modern business.

Auto manufacturers in Thailand, Indonesia look to Vietnam to sell cars
Auto manufacturers in Thailand, Indonesia look to Vietnam to sell cars
BUSINESSicon  07/09/2020 

Car imports in Vietnam have increased again after a long slump caused by the impact of Covid-19. Thailand and Indonesia have been the biggest sellers.

8-month trade surplus at record high, experts warn of risks
8-month trade surplus at record high, experts warn of risks
BUSINESSicon  05/09/2020 

Vietnam's trade surplus in the first eight months of the year was a record high. However, experts still see risks.

VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 6
VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 6
BUSINESSicon  06/09/2020 

Trading accounts of foreign investors highest in 8 months

90 percent of Vietnamese millionaires invest in real estate
90 percent of Vietnamese millionaires invest in real estate
BUSINESSicon  04/09/2020 

While COVID-19 continues to impact the whole economy, most millionaires in Vietnam have been investing in the real estate market.

Vietnam retaining fast-growing status
Vietnam retaining fast-growing status
BUSINESSicon  04/09/2020 

Over past decades, Vietnam has weathered all difficulties to orchestrate economic miracles, with its deepened international integration bringing about massive opportunities to expand trade and investment.

 
 
 
Leave your comment on an article

OR QUICK LOGIN