News Post
JXTG and Petrolimex sign MOU to develop LNG business in Vietnam
Japan’s JXTG Nippon Oil & Energy, a unit of JXTG Holdings has signed an MoU with state-owned Vietnam National Petroleum Group (Petrolimex) to develop an LNG business in Vietnam. The duo are expected to build facilities and collaborate on procurement in the Southeast Asian country.
Vietnam National Petroleum Group, or Petrolimex, aims to invest the equivalent of around $4 billion on LNG receiving facilities and power plants in Vietnam, and JXTG -- which has its own LNG receiving facilities in Japan -- will offer operational expertise. JXTG and Petrolimex signed a memorandum of understanding in Tokyo.
The partnership marks a new Vietnamese foray for JXTG, Japan's largest direct seller of crude oil, following the collapse of an oil refinery project due to a lack of financial support from the government. In 2016, the unit of JXTG Holdings took an 8% stake in Petrolimex for 20 billion yen ($185 million at current rates).
Coal-producing Vietnam burns the fuel for a relatively high proportion of its power. But in the face of global environmental concerns, it aims to increase its use of power derived from natural gas, which emits less carbon dioxide. The country's existing gas production is insufficient to realize that goal, prompting a rise in demand for LNG.
JXTG expects Japan's oil demand to fall to half of current levels by 2040. Hungry for growth overseas to escape the shrinking domestic market, it is working to make the Vietnamese LNG project a reality quickly. Its past attempt to build an oil refinery there was stymied when fears of a supply glut led Hanoi to offer less financial aid than the company had hoped for.
Source: Reuters and Nikkei Asian Review
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