Vietnam’s energy sector faces tough competition

HANOI – Vietnam’s energy sector is facing tough competition with many countries in Asia and America since most energy giants have scaled down investment due to the low oil price, said Mark Edmunds, Southeast Asia Energy & Resources Industry Leader and Asia Pacific Oil & Gas Sector Leader for Deloitte.

Speaking to the Daily, Edmunds said many countries are struggling to attract foreign investors in the sector as the oil price has remained low over the past four years. Even big companies like ExxonMobil, BP and Shell have become choosy before entering a market.

To attract investors, authorities should consider important factors such as tax policies, business environment and administrative papers. With less capital moving around, companies are looking for shorter investment cycles to recover cash quickly.

Aside from Southeast Asia, Mexico is emerging as a new investment destination for oil giants. It has opened its market after prohibiting foreign investment for nearly 80 years.

Regarding power generation in Vietnam, Edmunds said the nation has seen many coal fired and hydropower plants. However, the Government is shifting to renewable energy sources such as solar, wind and natural gas.

The U.S. has improved air quality significantly thanks to the use of gas-fired electricity, while China and India are also following suit. This move would be good for Vietnam as well as a more balanced use of energy sources will help protect the environment.

At present, Vietnam still imports natural gas for domestic use. However, as the demand for natural gas continues to rise, the nation is expected to become a natural gas exporter in the future.

The expert said Vietnam is going on the right way for giving incentives to attract foreign investors into the energy sector. Earlier, many large enterprises have invested in Vietnam because of the qualified workforce and appropriate investment policies.

Under the current circumstances, the nation should invest in technology to develop its natural resources properly, and protect its natural gas reserves and the environment, Edmunds added.

Source: The SaiGon Times