The deputy head of PetroVietnam's commercial department, Phan Kien Anh, spoke with the newspaper Tuoi Tre (Youth) about plans to increase auctions of domestically-produced gas.
The cost of domestic cooking gas is estimated at about $100 per tonne below that of imported gas, since it doesn't include import tariffs, insurance and transport costs. Why is the local price always aligned with international market prices?
All domestically-manufactured liquefied petroleum gas (LPG) comes from either the Dinh Co Gas Processing Plant or the Dung Quat Oil Refinery. Government regulations stipulate that LPG be assessed according to market prices, which means they are aligned with imported LPG sold in Viet Nam. The basic international price is set monthly by the Saudi Arabian Oil Co, which holds a dominant share of the Asian LPG market share.
Domestically-manufactured gas also includes a so-called marketing fee, including different levels depending on location and conditions for delivery, quantities and other elements. The price of domestically-manufactured gas is currently set by the market via auctions, and is usually equivalent to the imported price at the time.
Market stabilisation is not all about selling prices, and no one enterprise can control the LPG price. Market stabilisation, in my opinion, is the responsibility of LPG traders and distributors. The gas price in March increased sharply despite a large amount of imported gas available at cheaper prices. In this case, enterprises signed their contracts in September 2011 but received their products in March. They are paid according to the price in March, not the price at the time of signing the contract.
PetroVietnam only auctions about half of the gas from Dung Quat Oil Refinery and 75 per cent from the Dinh Co Gas Processing Plant. Who is getting the priority for these supplies?
I assume there are no priority policies here. PetroVietnam always puts a priority on ensuring that 100 per cent of LPG from the Dinh Co Gas Processing Plant is consumed. The plant's storage system only holds a limited volume of LPG, and when the system is full, the plant is forced to pause operations, with a negative influence on gas supplies to power plants.
But it's a fact that enterprises usually ask for lesser supplies in case of price hikes. So we only auction 75 per cent of our gas and keep the rest for subsidiary companies to ensure consumption of all of the gas produced.
Is PetroVietnam helping its subsidiary companies develop their distribution systems?
PetroVietnam has urged its companies to invest in infrastructure and use investment capital for developing distribution systems. We are currently studying a road map to auction 100 per cent of average output based on the operations of the Dinh Co Plant and Dung Quat Oil Refinery. — VNS