Gazprom Group’s foothold in Southeast Asia

In accordance with the Gazprom Group’s strategy for entering new international markets, Vietnam is one of the most promising Asia-Pacific countries in terms of energy projects. Gazprom International serves as Gazprom’s single operator for hydrocarbon prospecting, exploration and development projects outside Russia.

Participation in hydrocarbon prospecting, exploration and production across Vietnam holds a number of benefits for the Gazprom Group, especially from an economic viewpoint. The technological benefits come from gaining further international experience.

In addition, Gazprom International and Gazprom Gazomotornoye Toplivo contribute to the development of Vietnam’s NGV market.

Vietnam’s NGV market

As part of the project aimed at producing and marketing natural gas as a vehicle fuel in the Socialist Republic of Vietnam, a joint venture named PVGAZPROM Natural Gas for Vehicles (PVGAZPROM NGV) was set up by Gazprom International, Gazprom Gazomotornoye Toplivo and PetroVietnam Gas, with the Gazprom Group’s companies getting 35.5 per cent each and PV Gas receiving 29 per cent in the new entity. The registration procedure was completed in October 2015.

Eight provinces in a key economic area of southern Vietnam were chosen as a starting point for the joint venture’s business. The company launched a pilot project focused on, among other things, generating sustainable demand for gas as a vehicle fuel.

To achieve that goal, it is planned to create a small-scale gas liquefaction complex with an annual capacity of up to 12,000 tons of LNG, as well as a gas filling network for LNG and CNG.

PVGAZPROM NGV will offer natural gas as a fuel for motor vehicles, primarily in public transport. In addition, the company intends to tap into the waterborne transportation segment.

Further cooperation

The Gazprom Group established business relations with the PetroVietnam Oil and Gas Group in 1997, when the companies inked the Protocol on Cooperation. The parties entered into the Agreement of Cooperation in 2006 and into the Agreement of Further Cooperation in 2008. The Agreement on Strategic Partnership of 2009 provided for joint oil and gas projects in Russia, Vietnam, and third countries, thereby intensifying this collaboration.

In 2012, the parties extended their cooperation further, entering into a five-year Agreement on personnel training and retraining. The Agreement allows Vietnamese professionals to take internships and traineeships in Russia and beyond, including at Gazprom International’s facilities.

In 2015, PVGAZPROM Natural Gas for Vehicles, a joint Russian-Vietnamese company focused on the use of natural gas as a vehicle fuel, was registered. The joint venture consists of Gazprom EP International B.V. (35.5 per cent), Gazprom Gazomotornoye Toplivo (35.5 per cent), and PETROVIETNAM GAS (29 per cent).

In May 2016, Gazprom and PetroVietnam signed a package of documents to advance their joined efforts: the Memorandum of Understanding on the development of new oil and gas projects, the Memorandum of Understanding on power generation, and the Addendum to extend the Cooperation Agreement on personnel training. The documents provide for, among other things, new oil and gas projects in Vietnam and other countries, joint gas-fired power generation projects in Vietnam, and a five-year extension of the Cooperation Agreement on personnel training.

Nguyen Quoc Khanh and Alexey Miller. Photo by RIA Novosti. May 16, 2016
Nguyen Quoc Khanh and Alexey Miller. Photo by RIA Novosti. May 16, 2016

Nguyen Quoc Khanh and Alexey Miller. Photo by RIA Novosti. May 16, 2016

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