Vietnam Oil & Gas Report Q1 2011Dec 27, 2010 – The latest Vietnam Oil & Gas Report from BMI forecasts that the country willaccount for 1.59% of Asia Pacific regional oil demand by 2015, while providing 4.11% ofsupply.Regional oil use of 21.42mn barrels per day (b/d) in 2001 will reach an estimated 27.11mn b/d in2010, then rises to around 30.64mn b/d by 2015.Regional oil production was around 8.35mn b/d in 2001, and will average an estimated 8.91mnb/d in 2010. It is set to decrease slightly to 8.89mn b/d by 2015.Oil imports are growing rapidly, because demand growth is outstripping the pace of supplyexpansion.In 2001, the region was importing an average of 13.07mn b/d. This total will rise to an estimated18.20mn b/d in 2010, and is forecast to reach 21.75mn b/d by 2015. The principal importers willbe China, Japan, India and South Korea. By 2015 the only net exporter will be Malaysia.In terms of natural gas, in 2010 the region is expected to consume 489bn cubic metres (bcm) anddemand of 633bcm is targeted for 2015. Production of an estimated 412bcm in 2010 shouldreach 548bcm in 2015, implying net imports rising from around 77bcm to 84bcm. This is thanksto many Asian gas producers being major exporters. Vietnams estimated share of gasconsumption in 2010 is 1.87%, while its share of production is put at 2.22%. By 2015, its shareof gas consumption is forecast to be 2.85%, with the country accounting for 4.01% of supply.For 2011, there is considerable oil demand and oil price uncertainty, but still a very strongpossibility that oil will trend higher. Economic growth may have been subdued late in 2010 andinto early 2011, but should still support meaningful oil demand increases. Non-OPEC supply islikely to emerge only slightly higher so, with continued OPEC discipline, the foundations havebeen laid for an oil price rise - albeit falling well short of the improvement seen this year. Itseems likely that the 2010 average OPEC basket price will have emerged around the US$77.00per barrel (bbl) level, representing a year-on-year (y-o-y) gain of approximately 27%. Progresstowards at least US$80 is seen as achievable in 2011.Vietnamese real GDP growth in 2010 is forecast by BMI at 6.0%, with a forecast average annual6.5% increase in 2010 to 2015. Exploration success has been on the rise in Vietnam, with agrowing number of international oil companies (IOCs) teaming up with PetroVietnam andfinding and developing hydrocarbon resources - particularly gas. We are assuming that oil andgas liquids production will have peaked at 400,000b/d in 2010, before easing back to 365,000b/dby 2015. Beyond 2009, consumption is forecast to increase by around 5-7% per annum to 2015,implying demand of 488,000b/d by the end of the forecast period. Gas production is forecast toincrease from the estimated 2010 figure of 9.1bcm to 22.0bcm by 2015 - providing the basis forexports.
Between 2010 and 2020, we are forecasting a decline in Vietnamese oil production of 22.50%,with crude volumes peaking at 400,000b/d in 2010, before slipping to 310,000b/d by 2020. Oilconsumption between 2010 and 2020 is set to increase by 78.22%, with growth beyond 2009ranging from 5.0% to 7.0% per annum and the country using 662,000 b/d by 2020. Gasproduction is expected to rise from an estimated 9.1bcm in 2010 to 25.0bcm in 2020. With 206%demand growth, we see potential for exports midway through the period to turn into modestimports by the end of the period. Details of BMIs 10-year forecasts which provide regional andcountry-specific projections, can be found at the end of this report.Vietnam takes fourth place, behind China, in BMIs composite Business Environment (BE)league table, which reflects largely its strong upstream position. The country holds third place,behind India, in BMIs updated upstream Business Environment ratings, with its rankingreflecting a reasonable resource position, better-than-average growth outlook, attractive licensingterms and an IOC-friendly competitive environment. There is a one-point gap between Vietnamand fourth-placed Malaysia, but we believe Vietnam is safe from any near-term challenges.Vietnam now shares ninth place with Pakistan in BMIs downstream Business Environmentratings, reflecting its modest (but growing) refining capacity, above average oil and gas demandgrowth outlook, and low level of retail site intensity.