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Jun 17, 2022 / 12:46

Vietnam plans to increase oil stockpile

The rising fuel prices have put pressure on the economy at a time when Vietnam’s national oil and gas storage is low, estimated to meet five to seven days of demand.

Vietnam plans to expand the stockpile of oil and gas to cover one month from now on until 2025, representing a four-fold increase against the current reserve capacity.

 Deputy Minister of Industry and Trade Do Thang Hai at the press conference. Source: MoIT

Nguyen Thuy Hien, deputy head of the Planning Department under the Ministry of Industry and Trade revealed the move at a press conference on June 16, responding to questions regarding state management of oil and gas products.

On June 13, the retail price of RON95-III, making up 70% of the total amount of consumed petroleum products in the domestic market, hit a record high of VND32,370 (US$1.39) per liter. The rising fuel prices have put pressure on the economy at a time when Vietnam’s national oil and gas storage is low, estimated to meet five to seven days of demand.

“Given the limited state resources, the process would be carried out in phases until 2025. At present, the Government would continue to rent storage from companies, but it will eventually build in its own facilities,” Hien said.

Under current regulation, Vietnam’s oil and gas reserves would come from commercial reserves by petrol companies (estimated to cover 20 days), distributors (5 days), storage from the two oil refinery plants, and national reserves.

Hien added since the launch of regulation on national oil reserves, the Government has not had to release oil from this source to stabilize the market.

“Priority order would be to use commercial reserves from oil companies, followed by reserves of refinery plants, and national reserves would be the last option. Despite rising oil prices, Vietnam has not considered releasing oil from national reserves, but it is necessary to increase reserves for national energy security,” she continued.

On this issue, Vice Minister of Industry and Trade Do Thang Hai said the ministry is committed to ensuring a sufficient supply of oil and gas for the economy.

In the coming time, Hai said the ministry is planning to further import oil to meet the domestic demand in case of a slowdown in production from refinery plants.

Hai also mentioned the fact that at a time when Vietnam’s fuel prices reached an all-time high on June 13, the rising level of 24.42-62.44% remained lower compared to that of the neighboring countries (41.36-84.35% in Singapore) or the world average.

He stressed the importance of using the petrol price stabilization fund and other tools, including a 50% cut in environmental protection tax, as key steps to keep fuel prices from going out of control.

In the latest move, the Ministry of Finance has proposed to further cut environmental protection tax, but Hai suggested the option of lowering the import duty for fuels.

“The Government may consider using the social welfare fund to support the poor and vulnerable groups instead of the petrol price stabilization fund and tax cuts,” he said.