Vietnam gas major looks to US as Iran war reorders LPG flows
[HANOI] PetroVietnam Gas plans to import more liquefied petroleum gas (LPG) from the US than its traditional Middle East suppliers next month, in the latest sign that the Iran war is reordering global energy flows.
The state-owned gas major will bring in 66,000 tonnes of the widely-used cooking fuel from the US in May, versus 44,000 tonnes from the Middle East, where the US-Israeli war against Iran has disrupted production and effectively shut the Strait of Hormuz. This month, PV GAS has so far brought in 76,000 tonnes of American LPG, a massive jump from 2,200 tonnes in March, which was the first time the firm bought from the US.
"Most of our term contracts were disrupted as suppliers declared force majeure due to the war," Pham Van Phong, president and CEO of PV GAS, said in Ho Chi Minh City on Thursday (Apr 23). That prompted the company to "secure alternative supplies from new partners in Australia, the US, Europe, and Africa", he said.
PV GAS will ship in a total of 250,000 tonnes of LPG in the three months following the outbreak of the conflict, it said. Of that, just over half will be from the US.
The purchases point to a widespread reconfiguration of the global LPG trade triggered by the war, with a number of Asian countries struggling to manage unprecedented shortages after Iranian strikes knocked out production in top supplier Qatar.
Major importer India has boosted its refinery output of the gas used in millions of kitchens and factories, while consumers such as PV GAS are being forced to turn to new suppliers as expectations set in that a return to pre-war conditions is unlikely.
"Imports from the Middle East involved shorter distances and times compared with markets like the US," Phong said. "But we do not expect to return to previous import volumes from that region. Instead, this is an opportunity for us to rethink our approach, diversify our supplier base and reshape our supply chain."
While Vietnam's fuel supplies appear stable for now, the government has had to dig deep into its emergency fund for petroleum products to steady domestic prices. It has also turned to partners including Russia, South Korea and Japan to shore up future and alternative power supply, including through deals on nuclear energy and other infrastructure.
PV GAS has been granted approval by the Haiphong People's Committee to develop a large-scale LPG terminal in the northern coastal port city, Phong said, a project that's meant to significantly increase the company's import, storage and distribution capacity. It's estimated to cost 7.5 trillion dong (S$290 million), with a targeted start date in the third quarter of 2028.
The company is also considering building a liquefied natural gas terminal and storage facilities in the second phase of the Haiphong project, although the timeline and investment size have yet to be specified, according to Phong. The Ho Chi Minh City-based firm has increased re-gasification capacity at its Thi Vai LNG terminal from 171 tonnes to 288 tonnes per hour to meet gas demand for electricity during the dry season, when hydropower generation drops.
Shares of PV GAS have climbed about 8 per cent this year, outpacing the benchmark VN Index which has increased about 4 per cent. BLOOMBERG
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