Foreign giants make first incursion into Vietnam’s petrol retail market

By Anh Minh   October 5, 2017 | 10:06 pm PT
The presence of foreign firms is expected to create fair competition in a market that has long been dominated by state monopolies.

The first foreign-owned gas station in Vietnam opened on Thursday in Hanoi, marking the first time a foreign joint venture has entered the country's petroleum distribution market.

Over a year ago, Japanese petroleum giant Idemitsu Kosan Group received an investment license to open a joint venture with Kuwait Petroleum International (KPI) in Vietnam.

As a result, the Idemitsu Petroleum Q8 Co. Ltd was formed, with each party holding a 50 percent share.

After opening its first station in Thang Long Industrial Park in Hanoi’s Dong Anh District, the joint venture plans to expand its retail gasoline business across Vietnam, said CEO Hiroaki Honjo.

The presence of the first 100 percent foreign-owned company is expected to create a more competitive petrol market in Vietnam, where the sector has long been dominated by state-owned monopolies like Petrolimex, PVOil and Saigon Petro.

“It is completely normal to find more and more foreign giants showing interest in Vietnam’s petrol retail market," Ngo Tri Long, a Vietnamese economist, said.

"This trend will force local firms to change, and the more competitive the market becomes, the more consumers will benefit."

Idemitsu Kosan Group and KPI are both shareholders in the Nghi Son Refinery in Vietnam’s central province of Thanh Hoa, with each party owning 35.1 percent of the capital in the project.

The launch of their joint venture coincides with the opening of the $9-billion refinery, which is scheduled to start commercial operations in the final quarter of 2017.

Idemitsu Kosan is the second largest petroleum firm in Japan after Nippon Oil, while KPI, an arm of Kuwait National Petroleum Company, is the owner of 4,800 gas stations in Europe and the Q8 petroleum brand that sells more than 450,000 barrels per day worldwide.

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