partnership with petrovietnam 2012

Partnership with Petro ietnam

2012

This Publication is prepared in the consultation with PricewaterhouseCoopers (Vietnam) Ltd and is intended to provide a high level overview of PVN’s investment projects. The Publication does not constitute an offer or invitation or a solicitation of any offer or invitation for the sale or purchase of any of the assets, business or shares described herein. The information in this Publication does not purport to be comprehensive. No representation or warranty, express or implied is or will be given by PVN, PwC or their respective directors, offi cers, employees or advisers or any other persons as to the accuracy and completeness of this Publication. No responsibility or liability is accepted for the accuracy or suffi ciency thereof, or for any errors, omissions or misstatement, negligent or otherwise relating thereto.

This Publication is all right reserved by Petrovietnam (PVN).

4 Message from the President and CEO 6 Chapter 1: Vietnam – An Accessible Growth Market7 Vietnam – One of the Most Dynamic Economies in Southeast Asia 11 Promising Energy Market from both the Supply and the Demand Side 13 An Attractive Destination for FDI in the Region 15 Country Snapshot16 Chapter 2: PVN as the partner of choice 17 Historical Milestones17 Major business activities and strategy 18 PVN as the partner of choice21 Chapter 3: Partnership by Sector22 1. Upstream Industry 25 Song Hong Basin 30 Phu Khanh Basin32 Onshore Mekong Delta (DBSCL)34 Nam Con Son Basin 36 Phu Quoc Basin 40 Malay – Tho Chu - Phu Quoc Basin42 2. Mid and Downstream Industry45 Nam Con Son No.2 Pipeline46 Ca Mau Gas Processing Plant47 Dung Quat Refi nery 48 Long Son Refi nery49 Ca Mau Fertilizer Plant50 Petrovietnam Gas Corporation (PVGas)51 Petrovietnam Petrochemical & Textile Fiber Joint Stock Company (PVTex)52 3. Power Industry56 Song Hau 1 Coal-fi red Power Plant57 Hoa Thang 1 Wind Power Project58 Thai Binh 2 Coal-fi red Power Plant 59 Vung Ang 1 Coal-fi red Power Plant 60 Quang Trach 1 Coal-fi red Power Plant61 Long Phu 1 Coal-Fired Power Plant62 DakDrinh Hydro Power Plant63 Hua Na Hydro Power Plant64 Nhon Trach 1 Thermal Power Plant 65 4. Services 69 Phuoc An Port Project (PAP)71 Dung Quat Shipyard (DQS)74 Petrovietnam Construction Joint Stock Corporation (PVC)75 Petrovietnam Tower 77 Petrovietnam Finance Corporation (PVFC) 78 Petrovietnam Transportation Corporation (PVTrans)79 Petrovietnam Oil Stockpile Company Limited (PVOS)80 Appendix 1 - List of Selected Key Legal Documents85 Appendix 2 - Abbreviations

Table of Contents

Message from the President and CEO

On behalf of Vietnam Oil and Gas Group (Petrovietnam), I would like to extend our warmest greetings and sincere gratitude to you.

Vietnam is forecast to be the fastest growing economy in Southeast Asia over the next few years. The country is not only rich in oil and gas resources but also has a rapidly growing industrial sector and 87 million aspiring consumers which together drive demand for energy products. Due to its promising economic development potential and open investment regime the country has attracted a large number of foreign investors and will continue to be a preferred investment destination in the future.

Petrovietnam is proud to play a pivotal role in the development of Vietnam’s economy. We have been the fl agship energy group of the country since our establishment in 1975. Over the past 3 decades, we have expanded from oil and gas exploration and production into refi ning and petrochemicals and related sectors such as power generation, support services, ship building, infrastructure and others. Our presence has expanded to cover 14 countries and will continue to explore new opportunities overseas.

In 2011, Petrovietnam generated total revenues of USD 35 billion, accounting for a signifi cant part of Vietnam’s GDP and was a major contributor to the State Budget. Between 2006 and 2010, the group achieved an average annual revenue growth rate of 28% and is recognized as the economic locomotive of the country.

We are currently operating 20 oil and gas fi elds in the Country, along with 5 abroad and we operate the fi rst oil refi nery in Vietnam. In the power sector, we are the second largest power producer in the Country and will continue to maintain this position. In the midstream sector, we operate 5 gas pipelines with a total capacity of 14 billion m3 per day.

Successful collaboration with foreign partners has contributed an important part to our success. We are confi dent of continuing our highly successful growth path and invite you to join us in making profi table investments in Vietnam’s fast growing economy. This project summary gives an overview of 29 investment opportunities in 4 areas namely Upstream, Mid and Downstream, Power and Services.

We enclose summaries of these investment opportunities in the following sections. Further detailed information can be obtained via direct discussions with Petrovietnam’s executives.

We look forward to cooperating with you in the near future.

Dr. Do Van Hau

Partnership with Petrovietnam 20126

Chapter 1: Vietnam - an AccessibleGrowth Market

7Chapter 1: Vietnam – An Accessible Growth Market

Vietnam is one of the fastest growing economies in Southeast Asia. The country is listed in Goldman Sachs’ Next Eleven (N-11) list as having a high potential of becoming one of the world’s largest economies in the 21st century and in JP Morgan’s Frontier Five – frontier markets that are worth further investigation by global investors illustrating the general opinion that this is a country possessing huge potential.

The country has achieved a real annual GDP growth rate of approximately 6.6% during the period 2007 – 2011 and is forecast to achieve 6.9%1 on average in the next fi ve years (2012 – 2016). With regard to the economy’s productivity, the Nation’s nominal GDP per capita grew at a CAGR of 12.9%2 in 2001 – 2011 to reach approximately USD1,3923 in 2011, which meant that Vietnam had achieved the status of an average-income country.

Although the country still lags behind its peers in Southeast Asia in terms of GDP and GDP per capita, Vietnam is believed to have tremendous long-term growth potential. By 2016, Vietnam’s economic growth rate is forecast to exceed that of other Southeast Asian countries, making it a dynamic player in the region

Real GDP Growth (%) GDP (2010)USD billion

GDP per capita (2010) USD2006 2011 2016f

Thailand 5.1 1.2 5.1 318.9 4,921

Indonesia 5.5 6.5 6.3 706.5 2,968

Malaysia 5.8 5.1 5.7 237.8 7,737

Philippines 5.3 3.6 5.4 199.6 2,007

Vietnam 8.3 5.9 7.7 103.5 1,191

Cambodia 9.5 4.8* NA 11.2 795

Myanmar 12.4 9.6* NA NA NA

China 12.7 9.2 7.7 5,824.0 4,437

Note: (*) data in 2010

Vietnam - One of the Most Dynamic Economies in Southeast Asia

Source: GSO, EIU, World Databank and PwC’s calculation

(4)

-

4

8

12

16

2006 2007 2008 2009 2010 2011 2012f 2013f 2014f 2015f 2016f

Real GDP Growth (%), 2007 – 2016

Thailand

Indonesia

Malaysia

Philippines

Vietnam

Cambodia

Myanmar

China

Affected by the global economic

crisis

ForecastActual

-----------------------------------------------------------------------------------------------------(1) EIU’s forecast Feb 2012, PwC calculation

(2) PwC calculation(3) EIU’s forecast Feb 2012


High but Curbed Inflation

3.2%

3.8%

4.8%

5.2%

5.3%

5.6%

18.6%

3.4%

3.6%

4.7%

2.2%

6.3%

4.1%

8.4%

Malaysia

Thailand

Phillippines

Singapore

Indonesia

China

Vietnam

Inflation in selected Asian countries,

2011 & 2016

2016f2011

Source: Vietnam GSO, EIU forecast

As a result of the Nation’s booming economy, Vietnam witnessed high and fl uctuating infl ation rates over the years since the opening up of its economy. Nevertheless, the Country is expected to effectively control this indicator at a more levelled-off pace going forward following implementation of the Government’s strategic plans to direct the economy towards more sustainable growth. In particular, infl ation is expected to ease as a result of the Government’s various fi nancial and administrative measures. Excessive credit growth has been curbed by the Central Bank’s interest rate policy and caps on credit growth. Moreover, public expenditure was reduced. Various price-control measures were introduced, such as supporting certain manufacturing industries to ensure better demand-supply balance, reduced import tariffs on gasoline to lower petroleum price, etc. These measures have proven to be effective, as the growth rates of monthly price indices have dwindled after reaching a peak in August 2011.

Changing of the Economic Structure Towards an Industrial Economy by 2020 and Increasing Involvement from the Foreign and Private Sectors

Vietnam has transformed itself into a dynamic market-based economy in which industry and services have been playing increasingly important roles. With progressive measures to liberalise Vietnam’s market, the economy has seen a structural shift from one that was very agriculture focused to one that is increasingly industrial and services focussed. The industrial and construction sectors are now responsible for a much larger share of GDP and have been expanding at a higher rate than the overall economy, refl ecting the critical role of these sectors in boosting the Country’s overall performance.

Sector% of Real GDP 2000

% of Real GDP 2011

CAGR2000 – 2011

Industry & Construction 35% 41% 8.9%

Services 41% 37% 7.2%

Agriculture, Forestry & Fishery 23% 22% 3.6%

Source: Vietnam GSO 2011

Industrialisation has been achieved at a remarkable rate across certain sub-sectors, particularly manufacturing which grew at 10%4 on average in the last decade. This is the fastest-growing sub-sector in Vietnam’s economy and thus can be considered the Nation’s economic engine. To be on track against the industrialisation goal by 2020, under which industry’s contribution to the overall economy overwhelms all other sectors, Vietnam will have to continue to focus on developing its industrial sector, providing various incentives to investors as well as opening up to private domestic and foreign investors. With an ever larger contribution to the country’s GDP, the role of the foreign and private sectors has become increasingly important to Vietnam’s economy over the last ten years.

GDP Structure by Ownership, 2000 - 2011

40.8% 36.5%

48.4% 49.9%

10.8% 13.6%

2000 2011

FDI

Non-state

State

Source: Vietnam GSO

Privatisation and Equitisation

Within 10 years from 2000, the number of private enterprises grew 11.3% per annum, reaching 48,358 private companies in 2010. This boom was fostered by a new Enterprise Law with simplifi ed business registration procedures.

To make the country’s privatisation process more comprehensive, the Government has also sped up equitisation in state-owned enterprises. In particular, the Vietnamese government has an ambitious plan to extend the equitisation process to major state-owned conglomerates in sectors such as power and

-----------------------------------------------------------------------------------------------------(4) Vietnam GSO, PwC calculation


telecommunications. By 2014, the Government aims to replace the current monopoly and subsidised power situation with a competitive power generation market. In seaport construction, the PPP form of investment is encouraged and is becoming increasingly popular.

Doors are also widened for foreign players. Foreign investors now can acquire shares in domestic corporations, in some industries being able to take a majority stake if desired. Further liberalisation and growing foreign involvement is expected in the electricity sector.

An Export-Led Growth Economy

Exports made up 88.2% of Vietnam’s GDP in 2011 with the highest rate of change over more than the last 4 years since 2007 in comparison with other countries in Southeast Asia as well as against large exporters in Asia like China and India.

IndonesiaMalaysia

-Phillipines

Thailand

Vietnam

Singapore

China

India

-12%

-8%

-4%

0%

4%

8%

0% 50% 100% 150% 200% 250%

Ch

ange

in e

xpor

ts a

s %

of

GD

P (

200

7-20

11)

Total exports as % of GDP, 2011

Level and Growth of Exports

Source: Economic Intelligence Unit 2012

Vietnam’s key export products are garments and textiles, crude oil and footwear. These are labour-intensive industries. Although crude oil is the second largest exported product, export volumes of this natural resource have reduced since the country started paying more attention to the export of processed products and supplied domestically produced crude oil for use in its local refi neries.

14.2

7.2

6.6

6.1

4.2

3.9

3.6

3.2

2.7

1.6

4.8

7.4

3.0

2.7

1.4

1.6

1.4

0.8

0.7

0.7

Textile, sewing products

Crude oil

Footwear

Fishery products

Electronic goods and parts

Wood and wooden products

Rice

Rubber

Coffee

Coal

Vietnam's major goods for exportation, 2005 - 2011 (USD billions)

2011

2005

Source: Vietnam GSO, Vietnam Customs 2011

Improved Legal System

With the Government’s continuous efforts to improve its institutional systems, Vietnam’s legal system has improved remarkably, resulting in a higher ranking for the country in rule of law indicators, and enabling it to catch up with its more developed peers in the region such as China and Thailand.

Rule of law rankings - Vietnam and comparison countries,2010

Reliability of policeservices

(Low) Business costsof crime and...

(Low impact of)Organized crime

Judicialindependence

SingaporeChina

Thailand

VietnamCambodia

Efficiency of legalframe workin...

Property rignts(Low occurence of)Diversion of...

(Low occurence of)Irregular...

Ethical behavior offirms

Control ofCorruption (WB)

Rule of Law (WB)

Source: WEF Global Executive Opinion Survey 2011-2012; Worldwide Governance Indicators 2010 - World Bank

Stable Political System

The Socialist Republic of Vietnam is led by the Communist Party of Vietnam (CPV) which has been the sole political party in Vietnam since the country’s independence in 1975. Since the 11th Party National Party Congress in January 2011, at which the CPV reaffi rmed its staying power as the ruling party, there has been no sign of any likely change in power. Such long-term political stability has been Vietnam’s trump card in attracting foreign investors since it has generated the image a safe and stable country.


By virtue of such consistency as a one-party State, together with the clear mechanisms for leadership transition and the likelihood that policies will not change drastically in the medium term, Vietnam is well-known for its political stability. According to the 2010 Foreign Invested Enterprises Survey5, political stability ranks among the top three determinants encouraging FDI fl ows into Vietnam.

Prospects of a Better Administrative Environment

Though various measurements have been taken to improve the administrative environment, this remains an issue that has diluted foreign investors’ interest in Vietnam’s business environment. However, the Government is determined to change the situation through several major reform initiatives such as Project 30 (Vietnam’s Master Plan of Administrative Procedure Simplification in the field of state management for the period 2007 – 2010). The project has brought significant changes in Vietnam’s business environment such as in the customs area with the widespread introduction of e-customs and implementation of one-stop shop customs procedures which have allowed businesses to cut costs. According to the Organization of Economic Cooperation and Development, Vietnam’s success in Project 30 will provide useful lessons for other emerging nations which are also in the process of administration reforms.

A Large Pool of Well-Educated Workers at a Relatively Low Cost

Growth ’06 – ’10

1.2%

3.6%

0.5%

2.7%

1.6%11 11 12 12 1235 36 37 38 3938 39 39 40 3944 45 46 47 51

112 114 116 119 118

-

50

100

150

200

250

2006 2007 2008 2009 2010

Labor force (million people), 2005-2010

Indonesia

Vietnam

Thailand

Philippines

Malaysia

Source: World Bank

Abundant labour supply is one of the Country’s main attractions for foreign investors as well as it being a solid base for sustainable economic growth. In the 2005 - 2010 period, the employed population grew at a CAGR of 2%. Vietnam’s workforce growth is comparable with other fast-developing Southeast Asian countries like Indonesia,

Malaysia and the Philippines. By 2020, nearly 70% of the population, or about 70 million people, will be of working age. Labour quality is in line with the region, with the same adult literacy rate (93%6) as China, Malaysia and Thailand. In addition, there have been an increasing number of Vietnamese students studying overseas with an estimated 25,0007 foreign-educated students graduating each year. This is a positive complement to the country’s skilled workforce.

The labour quality has also improved as a result of the Government’s attention to education related investment as well. According to the World Bank, Vietnam’s public spending on education is higher than that of most of its neighbouring countries in Southeast Asia (5.2% of GDP in 2009 in comparison with Malaysia’s less than 5%, Thailand’s 4%, and Indonesia’s 3.5%). This bodes well for the long term future of the country.

Average wage, 2010 (Minimum annual salary per worker, USD)

Vietnam 1,002

Indonesia 1,027

China 1,500

Philippines 2,053

Thailand 2,293

Malaysia 4,735

Owing to its maintenance of a relatively low average labour cost base, Vietnam has become increasingly competitive compared to its neighbouring countries in the region and to the world’s favourite labour markets, such as China. The country’s competitive labour costs, its high quality, hard working and abundant workforce have specifi cally encouraged global producers and manufacturers (e.g. Canon, Intel, Samsung, Honda, etc.) to relocate their production hubs to Vietnam. In 2010, Intel – the world’s largest chip maker – opened its biggest chip factory in the world in Vietnam. Intel said it was attracted to Vietnam by its skilled, vibrant workforce, as well as the support and incentives Intel received from the Vietnam Government, the Saigon Hi-tech Park and suppliers. Other big names that have chosen Vietnam as a manufacturing base include Nokia, which is building a USD 300 million mobile phone plant, Danish-owned ScanCom International - one of the world’s leading exporters of wooden outdoor furniture, XP Power - the UK-listed electronic components manufacturer, etc.

-----------------------------------------------------------------------------------------------------(5) USAID, VNCI. The survey was conducted with 1,155 Foreign-Invested Enterprises (FIEs) from 47 different countries throughout Vietnam’s 63 provinces(6) World Databank(7) British Council


Rich natural mineral resources, strong oil & gas demand and fast-growing refining capacity have helped vietnam stand out as an attractive upstream and downstream market for exporters, investors and manufacturers in the asia pacific region

Oil Demand and Supply

Vietnam will have strong demand for oil for the foreseeable future in line with the Country’s economic growth. The Nation’s consumption rate (see chart) is expected to grow at a much higher rate than those of other benchmarked countries in the Asia Pacifi c region, including the fastest-growing economy, China.

Philippin

es

Vietnam

China

Thailan

d

Mala

ysia

Australi

a

-

2

4

6

8

10

12

14

16

Ba

rre

ls/y

ea

r

Oil consumption per capita, 2010-2015

2010

2015f

4.2%

(0.8) %

2%

3.2%

1.4% 4.6%

CAGR ’10 – ’15

Source: BMI Vietnam Oil and Gas Report Q4 2011

Vietnam’s oil reserves in 2010 were the fourth largest in the Asia Pacifi c region after China, India and Malaysia while its gas reserves ranked seventh. The country’s oil reserves accounted for 10% of the region’s total and increased by an annual average rate of 8.5% from 2000 – 2010. Thanks to an oil reserves-to-production ratio (RPR) that is the region’s highest, Vietnam holds fourth place in Asia Pacifi c, behind Australia, the Philippines and India, in BMI’s Upstream Business Environment rating

3.6

17.519.9

11.8

32.6

22.2

30.0

9.9 11.3

0

5

10

15

20

25

30

35

-

5

10

15

20

Ye

ars

Bil

lio

n b

arr

els

Asia-Pacific Oil Reserves and RPR, 2010

Oil reserve

Thaila

nd

Brunei

Austral

ia

Indones

ia

Vietnam

Mal

aysia

India

China

Other

Asia

...

RPR

Source: BP’s World Energy Report 2011

Gas Demand and Supply

-

400

800

1,200

1,600

Cu

bic

me

tre

s

Gas consumption per capita, 2010 – 2015

2010 2015f

Philippin

es

China

Vietnam

Thailan

d

Mala

ysia

Australi

a

3.4%13.5%

3.4%

8.1%

4.6%1.3%

CAGR ’10 – ’15


Promising Energy Market from both the Supply and the Demand Side


Vietnam’s gas consumption per capita is only 8% of the level in more developed countries like Malaysia. Given the country’s high gas consumption growth rates, it is likely to become a notable potential market.

The country’s gas reserves made up 4% of the region’s total and increased by an annual average rate of 13.8% in 2000 – 2010. New gas sources discovered off the South-wwestern coast of Vietnam have encouraged construction of pipelines to transport gas onshore and have thus boosted gas production. The country has the prospect of achieving high gas output levels in the near term, with a signifi cant forecast growth of 22%8 between 2011 and 2015.

-

2,000

4,000

6,000

8,000

10,000

-

100

200

300

400

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

Mil

lio

n m

3

Mil

lio

n t

on

s

Gas production in Vietnam, 2000 - 2011

LPG Dry Gas

Source: BMI Vietnam Power Report Q3 2011

In view of the signifi cant growth in national gas consumption, Vietnam is expected to become a net importer of LNG in order to meet the increasing domestic demand from 2015.

Refi nery Demand and Supply

Currently, Vietnam’s refi ning capacity covers approximately 30% of domestic petroleum demand. This fi gure is forecast to reach 60% by 2015 when Nghi Son Refi nery will enter into commercial operation. The six benchmarked countries account for nearly 50% of the region’s refi ning capacity, with China being the biggest producer. Although Vietnam accounts for the smallest portion of the region’s total output, the country’s growth in this industry is impressive. Vietnam has been on track in playing catch-up with the region with the aim of becoming self-reliant in refi ned products in the future.

Philippin

es

Mala

ysia

Vietnam

Australi

a

Thailan

d

China

-

2,000

4,000

6,000

8,000

10,000

12,000 '0

00

ba

rre

ls/d

ay

Oil refining capacity, 2010 – 2015

2010 2015f

CAGR ’10 – ’15

11.9% 0% 31% 0%0%

3.4%


Hungry for electricity to support the country’s industrialisation process, Vietnam is an attractive destination for investments in power infrastructure projects

Philippin

es

Vietnam

Thailan

d

China

Mala

ysia

Australi

a

-

5

10

15

MW

h

Electricity consumption per capita, 2010 – 2015

2010 2015f

CAGR ’10 – ’15

3.8%8.5%

4.0%5.8% 4.2%

(0.2)%


Vietnam’s current consumption remains low compared with developed countries, but the country’s per-capita power consumption growth rate is expected to hit an impressive 8.5% vs. China’s 5.8% in the period 2010 – 2015. Rapid economic growth has created a huge demand for electricity and hence for new power plants. Electricity demand has consistently exceeded supply over recent years.

To support Vietnam’s transition to a market economy, the Government has implemented a 3 stage scheme to develop a competitive power market. As part of this effort, a gradual adjustment to the tariff has been implemented with the aim for the tariff to be on full commercial basis.

-----------------------------------------------------------------------------------------------------(8) BP’s World Energy Report 2011, PwC calculation


Vietnam is a key destination for FDI in the region as a result of the Country’s open economic policies and moves to ease regulatory restrictions on investments as part of its accession to the WTO in 2007 and in accordance with several bilateral agreements that are in place. For example, Enterprise Law issued in 2005 has provided a common legal framework for all enterprises of different sectors (i.e. FDI, domestic private and SOEs). The Law has created a more equal regulatory environment for both domestic and foreign entities with almost no discrimination. In some cases, especially at the provincial level, FDI enterprises receive even more privileges and incentives than local private enterprises, such as lower tax rates or access to land.

In addition, due to its political stability, many foreign investors have considered Vietnam an investment hub alternative to China. Since 2007, FDI in Vietnam has increased signifi cantly. The FDI sector has reported impressive average growth of 23% per annum9 in terms of contribution to nominal GDP over the last decade, refl ecting the sector’s increasingly signifi cant role within Vietnam’s economy.

Foreign Investment

Vietnam has introduced various measures to encourage foreign investment into Vietnam. Investment in certain sectors, for example, infrastructure, high- and bio-technology, development of the petrochemicals industry is highly encouraged. Similarly, investment in certain geographical areas of Vietnam can be encouraged. Overall, investment or business sectors in Vietnam can be divided or categorised into four areas: those in which foreign investment is ‘specially encouraged’; those in which foreign investment in ‘encouraged’; those in which foreign investment is ‘conditional’ upon satisfying additional conditions; and fi nally those in which foreign investment is ‘prohibited’.

Under Viet Nam legal system, investment projects in the ‘specially encouraged’ and ‘encouraged’ sectors can be entitled to land incentives and tax incentives. The extent of the tax incentives has been however been reduced over the past few years so that only a few of these encouraged sectors are now entitled to them.

Industry sectors in which investment is encouraged/specially encouraged to support the country’s sustainable economic growth include amongst others:

• Production of light construction, composite, sound-proof of or other types of new materials;

• Construction of establishments using new energy, such as solar or wind power or bio gas;

• Application of high, new and bio-technology;• Treatment of pollution, protection of environment

and collection of waste;• Developing the petrochemicals industry ;• Investing in building power plants, power distribution

and transmission networks;

Corporate Structure

Vietnam now allows companies to be transformed into joint-stock companies in order to attract more capital from foreign investors, diversify investment forms, and improve the investment environment. In addition, listed companies have been able to increase the proportion of shares held by foreign investors from 30% to 49% since 2005. The Investment Law was introduced and applicable to all types of enterprise, providing equal treatment for enterprises of all nationalities without any discrimination between domestic and foreign investors. Following WTO commitments, signifi cant changes are expected across various sectors, including to the ownership structure in the services sector. From 2011 foreign investors will be allowed to establish a 100%-foreign-owned company in petroleum exploitation support services.

Incentives for Foreign Investment

Since 2009, tax incentives have been available for some of sectors that are special encouraged or encouraged by the Government. These sectors include scientifi c research and technological development, infrastructure development, projects in high-tech industries or high-tech zones, software development, training and health care, culture, sports and environmental activities. Accordingly, taxpayers may be eligible for preferential tax rates, tax holidays and reductions. An enterprise can be exempted from Corporate Income Tax (CIT) for a certain period beginning immediately after it fi rst makes profi ts, followed by a period where tax is charged at 50% of the applicable rate;

An Attractive Destination for FDIin the Region

-----------------------------------------------------------------------------------------------------(9) Vietnam GSO, PwC calculation


Import duty exemptions are also available for the import of machinery and equipment to form fi xed assets of encouraged projects and for use in the oil and gas sector;

Value-added tax (VAT) is exempted for certain categories of purchases: imported leased drilling rigs and ships that cannot be produced in Vietnam; equipment, machinery, spare parts, specialised means of transportation.

Multi & Bilateral Trade Agreements

The Vietnamese Government has been pursuing an open economic policy in favour of foreign trade, rapid liberalisation and integration into the global economy. In order to improve the foreign trade environment, various actions have been taken by the Government. In terms of external relationships, the Country has increased its presence in the international arena to boost its market openness and to liberalise foreign investment activities. Vietnam has been a WTO member since 2006. Since then, the Country has gradually improved its regulatory environment in accordance with its WTO commitments.

Apart from the WTO, Vietnam is also a member of a growing network of Free Trade Agreements (FTAs), both individually and as a member of ASEAN. Particularly, in 2011 – 2012, Vietnam has begun negotiating a Free Trade Agreement with the EU. Vietnam has become a negotiating member of the Trans-Pacifi c Strategic Economic Partnership (TPP) on Financial Services and Investment Agreements. Accordingly, trade barriers will be lowered further and agreement between the EU and the TPP is expected to be concluded in 2013 – 2015.

Vietnam’s Investment Factsheet

The last ten years witnessed a steady FDI infl ow into Vietnam with signifi cant growth in terms of both registered and disbursed capital refl ecting investors’ long-term interest in and commitment to the country. Amidst the world economic downturn, disbursed FDI remained relatively stable at USD10 to USD11 billion per annum during 2008 – 2010.

20012002

20032004

20052006

20072008

20092010

2011

2 3 3 3 3 4

8

12 10

11 11

555 808 791 811 970 987

1,544 1,557

1,208 969

1,091

-200 400 600 800 1,000 1,200 1,400 1,600

- 2 4 6 8

10 12 Foreign Direct Investment, 2001-2011

Disbursed Capital (Bill. USD) No. of Projects

Source: Vietnam GSO, MPI

Longer-term prospects for Vietnam as an FDI destination are expected to remain favourable since the Government is making tremendous efforts to fi x infrastructure and red tape problems which in the past have caused issues for investors.

By sector, manufacturing has been the largest FDI-attracting sector since 1988. In terms of investment sources, strong economies in Asia including Korea, Japan, Taiwan and Singapore have been Vietnam’s largest long-term investors.

Manufacturing

56%

Real estate28%

Construction6%

Accommodation and Food service 6%

Electricity, gas, stream

and air conditioner supply 4%

Newly registered capital by sector, 1988 - Jun.2012

204billion

USD

Top fi ve inbound FDI1988 – Jun 2012

Registered Capital 1988 – Jun 2012 (USD Bill.)

Japan 28.0

Korea 24.1

Taiwan 23.7

Singapore 23.1

British Virgin Islands 15.5

Source: MPI 2012

Relative to GDP, its net fl ows of inward FDI are much higher than the other Asia Pacifi c countries.

Indonesia

Malaysia

Phillipines Thailand

Vietnam

Singapore

China

India

-40%

-30%

-20%

-10%

0%

10%

0% 5% 10% 15%

Ch

an

ge

in

ne

t fl

ow

s o

f in

wa

rd F

DI

as

% o

f G

DP

(2

00

7-2

011

)

Net flows of inward FDI as % of GDP, 2011

Openess to Foreign Investment

Source: Economic Intelligence Unit 2012


Area 330,957.6 sq km Currency Vietnamese Dong (VND)

Population • 87.84 million • 31.7% in urban areas

Exchange rate (2011) USD 1 = VND 20,649

Key Cities• Capital: Hanoi City• Largest city: Ho Chi Minh City

(Population: 7.5 million) Labour force 51.4 million

Administrative Units

64 provinces and cities directly under the Central Government Exports

USD 53.1 billion (fi rst half of 2012)Major commodities: textiles, crude oil, footwear, fi shery products, electronic goods, computers and partsMajor trading partners: US, EU, ASEAN, Japan, China,

GDP Nominal – USD 122.8 billion Per capita – USD 1,375Growth – 5.89%

Imports

USD 53.8 billion (fi rst half of 2012)Major commodities: Machinery, instruments, refi ned petroleum oil, iron, steel, textile fabrics, electronic goods, computers & partsMajor trading partners: China, ASEAN, Japan, Korea, EU

GDP composition

Agriculture: 22%Industry: 41%Services: 37%

Foreign Direct Investment

USD 203 billion (1988 – Jun. 2012)Major investors: Japan, Korea, Taiwan, Singapore, British Virgin Islands

Country Snapshot

VIETNAM

MALAYSIA

THAILAND

LAOS

CAMBODIA

Source: Vietnam GSO Jun. 2012, MPI Jun.2012


Chapter 2: PVN as the Partner of Choice

17Chapter 2: PVN as the Partner of Choice

Established in 1975, Vietnam National Oil and Gas Group (Petrovietnam - PVN) is among Vietnam’s leading economic groups with signifi cant contribution to the Country’s economy. The Group’s total revenue is equivalent to around 20% of the entire Country’s GDP.

PVN has maintained its position as the Ccountry’s economic locomotive. In 2011, PVN achieved a total revenue of USD 32 billion and profi ts before tax of USD 4.25 billion. It and contributes for approximately 30% to the State Budget. Looking towards 2015, PVN targets to reach c. USD 47 billion in total revenue.

PVN is now focusing on fi ve core businesses structured around the oil and gas sector, namely: oil and gas exploration and production, refi nery and petrochemicals, gas, power generation, and petroleum services.

PVN not only has a formidable presence in the domestic market but has grown noticeably in international markets thanks to its foreign strategic partnerships. PVN has participated in a number of oil and gas exploration and exploitation contracts in Russia, Latin America, Middle East, Africa and Southeast Asia.

The Group’s growth internationally both helps to broaden its market potential and also to promote its brand and re-affi rm Vietnam’s economic position in the international arena.

Major Business Activities and Strategy

The Group’s fi ve core businesses are supplemented by a number of related business activities of supporting industry companies.

In terms of oil and gas exploration and production, PVN is currently operating twenty oil and gas fi elds in the country and fi ve others abroad. It is cooperating with various international petroleum companies in the implementation of 60 petroleum contracts at home

and 17 contracts in 14 countries. In the future, PVN will continue to conduct more oil and gas exploration activities over the entire continental shelf of Vietnam while at the same time, invest further in overseas exploration ventures.

In the refi nery, petrochemicals and bio-fuel sector, the Group plans to expand refi nery and petrochemicals capacity and build supporting storage and supply systems of equal size. The Dung Quat Refi nery is now supplying

Historical Milestones

1975

Establishment of General Department of Oil and Gas (now PVN)

1976 -1980

Executed 5 petroleum contracts with 3 foreign oil companies for exploration and production in the South Continental Shelf

1981 - 1988

Vietsovpetro (VSP) established as a joint venture between Vietnamese and USSR Government;

1986: First barrel of crude oil was produced in Bach Ho field, listing Vietnam in the world's oil producer map

1988:Petrovietnam's first millionth ton of crude oil produced.

1989 - 2000

Following Vietnam's "Doi Moi", PVN signed 40 contracts with 50 international oil companies

1997: PVN's 50 millionth tons of crude oil produced

2000 - Present

Development and internationalization of E&P activities;

and downstream activities;

2005 - 2009:Construction and operation of Vietnam's first oil refinery plant in Dung Quat;

2009: PVN's 250millionth ton of crude oil and 50billion m3 of gas produced

2011: PVN’s 280millionth ton of crude oil and 70 billion m3 of gas produced.

Expansion of mid


30% of domestic demand. In the coming years, PVN will make more investments in expanding the Dung Quat Refi nery and in constructing the Nghi Son and Long Son Refi nery and Petrochemical Complex (the Long Son Petrochemical Plant) to raise the total refi ning capacity to 16-17 million tons per year by 2015 and 30 million tons per year by 2025.

As for the gas industry, PVN will develop an integrated industry with a focus on the development of the national gas industry infrastructure. The completion of the gas industry infrastructure in the South and the formation of the infrastructure for the gas industry in the North and Central regions will ensure suffi cient gas supply to industry and for public consumption. PVN’s objective is to produce 17-21 billion m3 of gas a year by 2015, 22-29

billion m3 of gas and 3-4 million tons of LPG by 2025.

In the power generation sector, the Group will continue to participate in power generation and be the second largest power producer after EVN. Its focus will be gas- and coal-fi red power generation in parallel with the gas industry development programme mentioned earlier so that by 2015 the total power generation capacity of all PVN’s power plants will be over 9,250 MW and 13,000 MW by 2020 accounting for approximately 20% of total Country’s power production.

With regards to petroleum technical services, PVN will continue to develop its capability to better address the domestic petroleum services demand while making fi rm steps towards the regional and international markets by 2020.

Vision Toward 2025 “To Be The Flagship Petroleum Group In The Region By 2025 – A Pride Of Vietnam”

PVN and the Government

PVN is a leading state-owned economic Group with revenue accounting a signifi cant partfor 20% of the Nation’s GDP and contributing a signifi cant part to the State Budget. PVN is one of the government bodies used to realize national macroeconomic objectives. On the one hand, the Government reserves total control over the corporation’s organisation and operations. On the other hand, PVN acts as the Country’s economic locomotive not only in the oil and gas sector but also in energy-related industries. PVN is considered the government vehicle for implementing and realising national strategic energy plans as well as other macroeconomic plans to support the country’s growth.In the Government’s future energy plan to boost the Country’s energy sector as well as strengthen its global competitiveness, PVN is placed at the core. In other words, the Group is backed by the Government and receives support in terms of both fi nance and policy-related matters.

In the power sector PVN also has a pivotal role in realizing the Country’s energy development plan. PVN has been assigned by the Government to develop a number of important national power projects. PVN is the second largest power producer in the country, only after EVN. PVN also represents the Country in promoting energy cooperation between Vietnam and other countries through various cooperation agreements signed between the corporation and foreign National Oil Corporation (NOCs).

PVN is the fl agship of Vietnam’s state-owned enterprises (SOEs). Vietnam has ambitious plans to speed up the

renovating and modernizing the Country’s large SOEs, transforming them into international competitors that are more market-oriented and effi cient. PVN takes a lead role in this plan.

PVN as the Partner of Choice

PVN is the preferred partner for foreign companies who wish to participate in the country’s energy market. The Group has impressive track records in developing projects on its own and together with foreign partners. The following successful stories provide an overview of what PVN and its partners have achieved together:

Nam Con Son Pipeline 1

The Nam Con Son Pipeline is the fi rst and longest pipeline of Vietnam. It was developed jointly by PVN (51%), BP (32.67%) and ConocoPhillips (16.33%) in the form of a BCC.

The pipeline has a capacity of 7 billion m3 per annum and came into commercial operation in 2003. It supplies natural gas to the Phu My Power Complex, Phu My Fertilizer and other petrochemical factories in the surrounding area. The pipeline currently operates at full capacity. The revenue from transportation of gas in 2010 reached USD 220 million.

The success of Nam Con Son pipeline 1 encouraged PVN to expand the project to Phase 2, which expects to enter commercial operation by 2018.

19Chapter 2: PVN as the Partner of Choice

Block B – Omon Gas Pipeline Project

The project Block B – Omon Gas Pipeline is a key project in Vietnam’s oil and gas industry. Construction of the pipeline system started in November 2009 and is planned for commercial operation in Q2/2014. Once put into operation, the system will transfer natural gas from Block B, 48/95 and 52/97 (B & 52) in the southwest sea of Vietnam to provide gas for power plants in Omon and Tra Noc – Can Tho Province (capacity: 3,000 MW), to 2 Ca Mau power plants and to households in the southwestern region of the country.

With a total length of 400 km, of which the offshore length is 246 km and the onshore length is 154 km, cutting across Can Tho City and 4 provinces (Hau Giang, Kien Giang, Bac Lieu, Ca Mau), the project can deliver 18.3 millions m3/day-night (6.4 billion m3/year).

Total investment capital of the project is USD 1 billion in which PVN holds a 51% ownership, Chevron 29%, MOECO 15% and PTTEP 5%. The cooperation for this project marked a milestone in Vietnam’s long-term partnership with foreign counterparts in constructing gas pipelines. The project will act to encourage foreign investors to participate in implementing gas projects in Vietnam in the future.

Vietsovpetro Joint Venture

This is the fi rst joint venture with foreign partners of Vietnam in the oil and gas sector and is one of the most successful foreign partnerships. Three of their oilfi elds are currently under production of which Bach Ho is the largest oilfi eld in Vietnam and the 3rd largest in the Northwest Pacifi c Region (Japan, China and ASEAN). OAO Zarubejneft holds a 49% interest in the joint venture. The remaining 51% is held by PVN.

In 2011, the total revenue from sale of crude oil reached USD 5.61 billion. The Russian partner’s share of the profi ts reached over USD 580 million, a USD 121 million higher than previous year.

Nghi Son Petrochemical and Refinery Complex

Nghi Son is Vietnam’s second planned refi nery after the Dung Quat Refi nery. Once operations commence in 2016 (targeted), the plant will have a capacity (Phase 1) of 10 million tons of crude oil per year (200 thousand BPD), using crude oil from the Middle East. Nghi Son’s main products will include A92, and A95 petroleum, diesel, jet fuel, etc. Nghi Son and Dung Quat’s outputs are suffi cient to meet about 60% of domestic demand for petroleum products.

The project is being jointly developed by Kuwait Petroleum International (KPI) 35.1%, Idemitsu Kosan (IKC) 35.1%; Petrovietnam 25.1% and Mitsui Chemicals (MCI) 4.7%. With the involvement of foreign partners, Nghi Son Refi nery will become a refi nery of international standards with modern technology. The joint venture also gives the refi nery a stable and long-term crude oil supply that helps it to maintain sustainable growth and competitiveness in terms of operations and effi ciency and the establishment of high quality human resources.

PVN – Gazprom Gas Exploitation Joint Venture

The Joint Venture Agreement (JVA) with Gazprom - Russia’s top gas producer - is PVN’s most recent partnership. The two corporations signed a JVA in April 2012. Under this agreement, Gazprom holds a 49% share in the joint venture, the key business activity of which is to exploit gas in Block No. 05.2 and 05.3 along Vietnam’s continental shelf. Two gas condensate fi elds Moc Tinh and Hai Thach as well as the Kim Cuong Tay oil fi eld were discovered in these two blocks. Gas reserves in these fi elds are estimated at 55.6 billion m3, together with 25.1 million tons of gas condensate. Gazprom and PVN have plans to launch the construction of 16 production wells at depths of 2,000 to 4,600 meters in order to develop the fi elds.

PVI’s Partnerships with Oman, Talanx and Sun Life

PVI is one of the leading insurance companies of Vietnam. In 2011, PVI generated a gross premium of US$202 million. Total revenue growth was 25% year-on-year. 2011 was the second year PVI was rated Financial Strength Rating of B+ (Good) by A.M Best and acknowledged as the honourably prized Insurance Company of the Year, Vietnam by World Finance. PVI Reinsurance - a subsidiary of PVI, was also rated Financial Strength Rating of B+ (Good) by A.M Best in 2011.

After signing the partnership agreement with Oman Investment Fund, PVI has entered into a strategic investment agreement with Talanx Insurance Investment (Germany). Recently, PVI and Sun Life Financial have signed an agreement to form a life insurance joint venture - PVI Sun Life. This establishment will help PVI to become the second insurance company in Vietnam providing both life and non-life insurance products.


Overview of Non E&P Projects

No. Project Name Owner Location

Total Investment Capital (million USD)

Total Assets 31/12/2011 (million USD)

Equity Ownership Offering

I Mid-and-Downstream 7 projects

I-1 Nam Con Son No.2 Pipelines PVGas Ba Ria - Vung Tau Province 1,300 49%

I-2 Ca Mau Gas Processing Plant PVGas Ca Mau Province 700 49%

I-3 Dung Quat Refi nery (Existing) PVN Quang Ngai Province 3,000 49%

I-4 Dung Quat Refi nery (Expansion) PVN Quang Ngai Province 1,212 49%

I-5 Long Son Refi nery PVN Ba Ria - Vung Tau Province

7,000-8,000 71%

I-6 Ca Mau Fertilizer Plant PVN Ca Mau Province 900.2 49%

I-7 Petrovietnam Gas Corporation (PVGas) PVN, other investors Ho Chi Minh City 2,209 21.7%

I-8Petrovietnam Petrochemical & Textile Fiber Joint Stock Company (PVTex)

PVN, PVFCCo, Vinatex, Phong Phu Corp. Hai Phong City 324.85 20%

II Power 9 projects

II-1 Song Hau 1 Coal-fi red Power Plant PVN Hau Giang Province 1,633 49%

II-2 Hoa Thang 1 Wind Power Plant PVPower Binh Thuan Province 83 49%

II-3 Thai Binh 2 Coal-fi red Power Plant PVN Thai Binh Province 1,656 49%

II-4 Vung Ang 1 Coal-fi red Power Plant PVN Ha Tinh Province 1,595 49%

II-5 Quang Trach 1 Coal-fi red Power Plant PVN Quang Binh Province 1,778 49%

II-6 Long Phu 1 Coal-fi red Power Plant PVN Soc Trang Province 1,595 49%

II-7 DakDrinh Hydro Power PlantPV Power, BIDV, Licogi, SongDa Group, DHC’s employees

Quang Ngai Province 238 42.32%

II-8 Hua Na Hydro Power Plant PV Power; Lilama, BIDV, MB Nghe An Province 288 31.2%

II-9 Nhon Trach 1 Thermal Power Plant PVPower Dong Nai Province 322 49%

III Services 7 projects

III-1 Phuoc An Port PVN, Sonadezi Corp Dong Nai Province 979 49%

III-2 Dung Quat Shipyard PVN Quang Ngai Province 749 49%

III-3 Petrovietnam Construction Joint Stock Company (PVC)

PVN, VanEck Association Corp., Vietwealth Corp, Others

Hanoi City 817 17%

III-4 Petrovietnam Tower PVC Hanoi City 571 49%

III-5 Petrovietnam Finance Corporation (PVFC)

PVN, Morgan Stanley, Others Hanoi City 4,300 15%

III-6 Petrovietnam Transportation Corporation (PVTrans)

PVN, PVFC, ACB, Others Ho Chi Minh City 388 22.4%

III-7 Petrovietnam Oil Stockpile Company Limited (PVOS)

PV Oil, Binh Son Petrochemical Company Ltd (BSR) SEK

Ho Chi Minh City 2.610 29%

-----------------------------------------------------------------------------------------------------(10) Newly set-up company

21Chapter 3: Partnership by Sector

Chapter 3: Partnership by Sector

1. Upstream Industry

2. Mid & Downstream Industry

3. Power Industry

4. Services


Upstream Industry Overview

1. Upstream Industry

Surging Oil and Gas Production in the Short Term

Vietnam Oil Production (Gross, mbo/d)

198

219

84

198

619

88

199

019

92

199

419

96

199

820

00

200

220

04

200

620

08

2010

2012

2014

2016

2018

2020

2022

2024

450

400

350

300

250

200

150

100

50

0

Da

ily

Pro

du

ctio

n (

mb

o/d

ay)

Source: PVN’s report

The country has emerged as an oil producer since the discovery of the Bach Ho (White Tiger) oil fi eld in 1987. One of the biggest new oil fi eld developments is the Su Tu Vang (Golden Lion) fi eld, started in 2008, and Te Giac Trang (White Rhino), started in 2011.

Vietnam’s oil production grew 3.11% per annum between 1998 and 2009, and will reach a peak of 420 mbo/d in 2014, refl ecting a CAGR of 3.71% in 2009-2014. However, oil production is projected to gradually decline in the period of 2014 – 2020 and achieve only 150 mbo/d by 2020.

Vietnam Gas Production

Ga

s P

rod

uct

ion

(m

mcf

/d)

1,600

1,400

1,200

1,000

800

600

400

200

-

$180

$160

$140

$120

$100

$80

$60

$40

$20

$-

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

2010

2012

2014

2016

2018

2020

2022

2024

Oil

Pri

ce $

/bbl

PVN Net Gas Entitlerrent Vietnam Government Gas to PVN Not-PVN Gas Oil Price

Source: PVN’s report

Gas production increased by 21.9% per annum between 2002 and 2009, and is projected to grow by 6.3% in 2012 – 2020 with a peak in production in 2018 of c.1,400 mmcf/d. According to PVN press releases, many gas pipeline projects have been invested to feed the rapid expansion of Vietnam’s gas industry. PVN plans to invest US$ 1.3 billion to develop a second gas pipeline from Nam Con Son Basin to Southern Vietnam, which will boost onshore gas production by 30% - 40%. In 2010, a US$ 1 billion BCC was signed between PVN, Chevron (America), MOECO (Japan) and PTTEP (Thailand) to build a 400 km pipeline from Cuu Long Basin to Can Tho, which is expected to start production by 2014.

Important Asian Market with Promising New Reserves

Vietnam has 1 million km² sea areas and the Country has the 4th largest11 oil reserves in Asia Pacifi c. The national crude oil reserve is expected to reach 1.1 million m3 in 2020 and 3.1 million m3 in 202212. Moreover, it is located in close proximity to major oil consumer China.

PVN as the Key Partner in Exploration and Production

PVN is by far the most important oil and gas producer in Vietnam. PVN has an 85% market share in the oil/liquid production market and a 71% market share in the gas production market. The Group has built several partnerships with international oil companies. The largest partnership is Vietsovpetro, which is a joint venture of PVN and the Russian Government. The Group currently accounts for approximately 40% of Vietnam’s crude oil production and operates the biggest oil fi eld, Bach Ho (White Tiger).

In addition to development of domestic oil fields, PVN has expanded its network in Asia, Commonwealth of Independent States (CIS), the Middle East, Africa and South America. In recent years, PVN has participated

-----------------------------------------------------------------------------------------------------(11) BP Statistical Review of World Energy Report 2011 (*) Note: Oil and gas production data is crude production volume from oil fi elds(12) PVN’s report

23Chapter 3: Partnership by Sector - Upstream Industry

in exploration and production 17 contracts in 14 countries.

The Government actively promotes foreign involvement in the oil and gas exploration and production13:

• Private Ownership: Foreign companies are allowed to independently explore for oil and gas. Although the presence of the State is still required for all producing projects, international oil companies can hold majority of shares and have the right to receive a share of output14.

• More open and transparent licensing scheme: The Petroleum Law amended in 2000 provides more open and transparent scheme about duty and right of foreign investors in this industry in terms of

extension of contract time, level of cost recovery for exploration, development and production, etc.

• Attractive tax framework: Special tax scheme is applied for petroleum investment promotion projects, i.e. encouraged project could enjoy corporate income tax rate of 32% (as compared to the standard corporate tax rate applicable to oil & gas production of 50%) and reduced royalty rate. Moreover oil and gas investors are exempted from some special tax rate, i.e. 0% import tax for machinery equipment and materials used for oil and gas activities.

PVN is now offering a number of joint exploration projects in Vietnam. The project details are outlined in the following project profi les.

ALGERIAPetroleum Contract, Block 433a&416b

CONGOPetroleum Contract, Block Marine XI

MADAGASCARPetroleum Contract, Block Majunga(offshore Propond)

CUBAPetroleum Contract, Blocks 31,32,42 & 43(offshore)

VENEZUELABlock Junin-2

PERUPetroleum Contract, Bfock 162

RUSSIAN FEDERATIONRusvietpetro: A Joint Venture with ZarubezhnefttGaspromviet: A Joint Venture with Gas prom

MONGOLIAPetroleum Contract, Block Tamsag

UZBEKISTANPetroleum Contract, Block Kossor

LAO PDRPetroleum Contract, Block Champasakand SaravanPetroleum Contract, Block SavanakhetCAMPUCHIAPetroleum Contract, Block XV

MALAYSIAPetroleum Contract, Block PM304,(offshore)Petroleum Cortract, Block 5K305,(offshore)INDONESIAPetroleum Contract,Block Randugunting

MYANMARPetroleum Contract, Block M2

Overseas Oil and Gas Exploration and Product Projects

-----------------------------------------------------------------------------------------------------(13) Source: Oil and Gas Law #19/2000/QH10, BMI Oil and Gas Report Quarter4/ 2011

(14) Generally, all of the natural resources belong to the Government


Cuu Long Basin Nam Con Son Basin Song Hong Basin Phu Khanh Basin

Malay-Tho Chu Basin

Tu Chinh Basin

01&02 (HN) PCOSB

01/97&02/97 Lam son JOC

01/10&02/10 PVEP POC

09-1 Vietsovpetro

09-2 Hoan vu JOC

09-2/09 PVEP POC

09-2/10 PVEP POC

09-3 (DM-NR) VRJ JOC

15-1 (ST) Cuu long JOC

15-1/05 PVEP POC

15-2 (RD) JVPC

15- 2/01 (HSD) Thang long JOC

16- 1 (TG) Hoang long JOC

16-2 PVEP POC

DBSCL-02 Total E&P Vietnam

DBSCL-03 Total E&P Vietnam

100&101/04 Santos

102 (TB), 106 (HR) PCVL

102&106/10 PVEP POC

103&107/04 PVEP POC

104&109/05 Premier Oil

105&110/04 Neon Energy

111/04, 112, 113 Vietgazprom

114 Essar E&P Ltd.

117, 118, 119 ExxonMobil

120 Neon Energy

121 Origin Energy

MVHN-02 Quad Energy

MVHN-01KT Arrow

MVHN-02KT Keeper

123 Santos

128 ONGC Videsh

148&149 PVEP

45 Mitra Energy VNMH

46 (CN) Talisman Vietnam

46/02 Truong Son JOC

46/07 Mitra Energy

B & 48/95 Chevron Vietnam

51 Mitra Energy

52/97 Chevron Vietnam

PM3 CAA Talisman

Bacbo Gulf-2005 HTSP133&134 Talisman

135&136/03 Talisman

156-159 ExxonMobil

04-1 Vietsovpetro

04-2 Pearl Oil Tephrite

04-3 Vietsovpetro

05- 1a (DH) PVEP POC

05-lb&05-lc Idemitsu

05/10 (HT&MT) Bien Dong POC

05-2/10 Talisman

06-1 TNK Vietnam

07/03 Premier Oil

10&11-1 (GC) Con Son JOC

11-2 (RD&RDT) KNOC

12W (CS&D) Premier Oil

13/03 Santos

19 Mitra Energy VNPQ

20 Mitra Energy VNRD

28&29/03 BHP Billiton

129-132 Vietgazprom

Vietnam Petroleum Activities


Song Hong Basin - Blocks 101 & 100/04

Key opportunity highlights

Proven Petroleum System

High quality oil & gas sampled in exploration wells.

Excellent reservoir properties, high fl ow rate potential.

Exploration uncertainty is trap size.

Gas monetisation uncertainty in economic assessment.

Geological setting

Block 101 & 100/04 is located within the proven petroleum system and surrounded by discoveries. Oil and gas were found in Tertiary clastics in wells of this block. The Ha Mai, Cat Ba fi elds were discovered in 2009 and 2011, with proven reserves of around 30.2 Bcf gas and 4.7 MMbbls. The main objective is Tertiary clastics and Paleozoic carbonate. Several discoveries are found in the east of Block 101 & 100/04 in the Beibu Wan Basin. The largest fi eld, Wei 12-1 is estimated to have recoverable reserves in the range of 85 – 100 MMBO with single well production rates of up to 34,000 BOPD. Within the northern Song Hong Basin recent discoveries are at Yen Tu-1X and Ham Rong-1X wells in Middle Miocene sandstones and Paleozoic limestones.

Prospects

Eleven (11) promising prospects have been identifi ed with total resources of around 547 mbbls oil and 297 bcf gas. The main proven targets are Tertiary clastics and Paleozoic carbonate.


Song Hong Basin - Blocks 108/04, 116

Geological setting

The Tertiary sedimentary Song Hong Basin is made up of different structural units with different hydrocarbon potential.

Block 108/04 lies in the Central Trough of the Song Hong Basin, which is fi lled up with a sediment package accumulated in tectonically stable conditions.

Block 116 lies in the Quang Ngai graben where Tertiary sediment comprised of Eocene to present day sediment with a thickness of appx. 9,000 m. Quang Ngai graben is a relatively simple geological structure (a narrow deep sag) dominated by Miocene submarine sand bodies of high reservoir quality. This graben is one of the major kitchens in the Southern part of Song Hong Basin.

Petroleum systemsProven petroleum basin containing oil discoveries (10 oil and gas discovery wells)

Source rock

Oil and gas-prone Paleogen-Lower Miocene lacustrine shales in Quang Ngai graben and the centre of Song Hong Basin. Probably Middle Miocene marine mudstone in the center of the Song Hong Basin.

ReservoirMiocene clastic turbidite fans; Lower Miocene sandstone; Pre-Tertiary basement.

SealLocal seal in Lower Miocene shales; Regional seal in Miocene-Pliocene shales.

Trap

Major prospects for low magnitude four way dip closure on the Dong Son uplift in the block 108/04 related to gas accumulation.

Pre-Tertiary basement highs, drape over basement, stratigraphic traps (block 116).


Song Hong Basin - Blocks 108/04, 116

Block 108/04

Area: 1,210 km2

Location: Offshore North Vietnam

Sea level: 20-50 m

Seismic: 460 line-km 2D

Well: No well

Block 108/04 is thought to have commercial hydrocarbon potential. There are many oil and gas discoveries found in adjacent areas such as Ham Rong, Yen Tu, Hac Long and Dong Fang

Block 116

Area: 5,033 km2

Location: Offshore North Vietnam

Sea level: 20-110 m

Seismic: 3619.3 line-km 2D

Well: No well

Block 116 is thought to have hydrocarbon potential. Oil and gas discoveries are found in neighbouring blocks 114, 115, 117 and 118.


Song Hong Basin - Blocks Hanoi Trough (MVHN), MVHN - 01KT & 03KT

Geological setting

Ha Noi Trough is divided into the Central Belt sandwiched between the Song Chay and the Vinh Ninh fault zones; the NE Belt from Vinh Ninh fault zone passing through the Song Lo fault; and the SW Belt between the Red River fault and the Song Chay fault.

The sedimentary section consists of two structural units. The lower unit is Proterozoic to late Mesozoic paleo-basement. The upper one consists of Cenozoic sedimentary rocks that overlie unconformably on the older formations.

The upper structural unit in MVHN with maximum thickness of 7km, has been formed in Eocene-Oligocene by extension activity. In the Late of Oligocene, extension activity stopped, and subsidence occurred throughout the area. From Late Middle to Late Miocene, there was an inversion tectonic phase that formed a series of reverse faults such as the Vinh Ninh fault and the Tien Hai fault.

Petroleum systems

Source rockTerrestrial and terrestrial/lacustrine Oligocene sediments; Promising Triasic shale (found in tidal zone of the area)

ReservoirMiocene sandstone, Oligocene sandstone, Devonian-Carboniferous-Permian carbonate

SealRegional seal: Upper Miocene-Pliocens claystone; Local seal: Oligocene and Miocene claystone, fault seal

TrapOligocene and Miocene anticlines; Pre-Tertiary basement highs; stratigraphic trap; drape over basement


Song Hong Basin - Blocks Hanoi Trough (MVHN), MVHN - 01KT & 03KT

Block MVHN (Hanoi Trough)

Area: 3,631 km2

Location: Onshore Song Hong Basin

Seismic: 6,000 line-km 2D

Wells : 46 petroleum exploration wells

MVHN is a petroleum-potential block. This is demonstrated by oil and gas discoveries at the wells and one gas fi eld is producing. Offshore close to the MVHN one gas fi eld in block 102 is going to be developed. Block 106 has the Ham Rong Oil discovery

Block MVHN-01KT & 03KT

Area: 3,627 km2

Location: Onshore of Song Hong Basin

Seismic: 3,400 line-km 2D

Wells : • 37 petroleum exploration wells • 15 Coal Bed Methane wells

MVHN-01KT & 03KT are considered to be coal bed methane blocks. Exploration CBM work showed high CBM potential at intervals of 800-1,500 meters


Phu Khanh Basin - Blocks 122, 124

Geological setting

The Tertiary sedimentary Phu Khanh Basin is related to the development of the Bien Dong Sea, extrusion of Indochina (L. Eocene – E. Oligocene), and associated with sea fl oor spreading (Top Oligocene), end of rifting and sea fl oor spreading (Top Middle Miocene) and thermal subsidence.

Petroleum systemsProven petroleum basin containing oil discoveries

Source rockLacustrine sediments deposited in graben and half-graben lakes during the main rifting phase.

ReservoirPaleogene fl uvial sandstones; Neogene turbidite-, shelf-, lowstand delta- and coastal sandstones; Early Miocene platform and reef carbonates; Pre-Tertiary basement.

SealLocal seal: interbedded shales;Regional seal: Late Miocene & Pliocene shales.

TrapFaulted basement highs; drape clastics on basement high/ tilted fault blocks; fl ower structures; carbonate platform.

Hydrocarbon Occurrence

Oil discovery and gas shows in two exploration wells and one oil seepage in Dam Thi Nai area.


Phu Khanh Basin - Blocks 122, 124

Block 122

Area: 7,007 km2

Location: Offshore, middle part of Vietnam

Sea level: 50-2000 m

Seismic: 4,000 km 2D

Well: No well

Potential for shallow water paleo-shelf margin carbonate, clastic and carbonate structural traps and deep water sands.

Block 124

Area: 6,030 km2

Location: Offshore middle part of Vietnam

Sea level: 50-2000 m

Seismic: 1,900 km 2D & 851 km2 3D

Well: Two wells (one oil discovery)

Petroleum potential: Miocene carbonate, coastal sand, lacustrine delta, basin fl oor fan & Pre-Tertiary basement.


Onshore Mekong Delta (DBSCL) - Blocks DBSCL-01,02,03&04

Geological setting

Mekong delta comprises a Permian and Triassic Basin in the Northwest and Tertiary sedimentary basin in the Southeast and is related to the two rifting phases in Permian and Early Oligocene.

An extension and drifting phase until the end of the Permian period, with consequent compressive phenomena affecting the Khorat Basin in Thailand.

Shrinking and/or Collision phase between early Triassic to Jurassic, at fi rst in the northeast with the South-China block along Song Ma suture line; then to the west along the Nan Uttaradit and Bengtong Raub suture lines.

Petroleum systems in the Mekong delta are referred to adjacent basins

Khorat Basin:

Source rockPermian/Triassic fl uvial-lacustrine shale; Main gas potential

ReservoirWeathering granites basement, fractured dolomites/limestone Permian; fl uvial sandstone Triassic/Jurassic

Seal Interbeded Permian, Triassic and early Jurassic shales

TrapClastics drape on paleo highs, titled fault blocks, carbonate platform, inversion folding

Cuu Long Basin:

Source rock Lacustrine Oligocene shale

Reservoir Oligo-Miocene clastics, fractured granites basement

Seal Olio-Miocene Interbeded shales

Trap Faulted basement highs, drape clastics, titled fault blocks


Onshore Mekong Delta (DBSCL) - Blocks DBSCL-01,02,03&04

DBSCL02 and 03 are close to the Khorat Basin which has prolifi c hydrocarbon potential in Pre-tertiary fractured carbonate reservoirs

DBSCL01 is close to the Cuu Long basin, which has prolifi c hydrocarbon potential in Tertiary clastics and basement reservoirs

DBSCL01, 02, 03 & 04 are potential but frontier and regarded as attractive areas for exploration

Block DBSCL-01,02,03&04

Area: 54,500 km2

Location: Onshore Mekong Delta, South of Vietnam

Seismic: 1,317 km (2D) • DBSCL-01: 717 km seismic 2D• DBSCL-02: 300km seismic 2D• DBSCL-03: 300 km seismic 2D• DBSCL-04: No seismic data

Well: six wells


Nam Con Son Basin – Block 06/94, 22/03

Geological setting

Nam Con Son was formed as a rift basin during the Oligocene period as a result of the Bien Dong extension. It shows elongated depressions trending SW-NE. Tertiary sediment reaches 14,000 meters deep.

Block 06/94 lies on the East depression zone, and the Dua uplift sub-zone, which developed in a NE-SW anticlinal structure associated with carbonate formation.

Block 22/03 is a transition zone of NCS Western difference subzone and Natuna adjacent subzone where faulting activity outweighs with two fault systems: NE-SW & NW-SE. This block is composed of a deep narrow trough (up to 6000m) with uplift ranges.

Block 06/94

Area: 4,147 km2

Location: Offshore South Vietnam

Sea level: 20-100 m

Seismic: 17,204.1 km2 2D & 1,022 km2 3D

Well: four wells

Objectives: Oligocene-Miocene sandstones and Miocene limestones

Four nearby gas-condensate fi elds: Lan Tay, Lan Do, Hai Thach and Moc Tinh.

Petroleum systemsProven petroleum basins containing oil and gas

Source rockCoals, coaly shales interbedded with claystones in the Oligocene continental and Lower Miocene marine environment.

Reservoir

Upper Miocene-Oligocene fl uvial-deltaic sandstones, Middle Miocene shallow marine sandstones up-mid Miocene carbonates, turbidite channel sandstones and weathered and fractured Mesozoic Basement rocks.

SealLate Miocene - Early Pliocenefi ne grain sediment. Oligocene - Miocene shale, silt, coal shale and calcareous shale layers are effective local seals.

TrapBasement highs and may be either structural or stratigraphic traps such as carbonate reefs/build-up, fl ower structures, sand lens, turbidite


Nam Con Son Basin – Block 06/94, 22/03

Block 22/03

Area: 4,753 km2

Location: Offshore Southern part of Vietnam

Sea level: 20-100 m


Well: One well (oil show and good seal)

Prospects & leads: Five

Objectives: Pre-Tertiary fractured basement and Miocene sandstone

Estimated HC Reserve: 2.2 BCFS

Petroleum systemsProven petroleum basins containing oil and gas

Source rock Oligocene shale and coaly shale

ReservoirOligocene and Miocene sandstones; fractured granite basement

SealLower Miocene – Pliocene shale: good regional seal; Late Oligocene claystone: local seal

Trap Basement high, tittled fault block and combination types


Phu Quoc Basin - Blocks 31, 32, 33, 34, 35 & 36/03

Geological setting

Phu Quoc–Kampot Som Basin is a Late Jurassic to Early Cretaceous foreland basin developed in response to the build-up of the paleo-Pacifi c magmatic arc. It forms an elongated, more than 500 km long sediment-filled depression extending from south-western Cambodia in the north to the central southern part of the Gulf of Thailand. This basin is up to 150 km wide with its axis along the approximate latitudes of 1030–1040.

Petroleum systems

Source rock Oligocene shales

Reservoir Oligocene – Miocene sandstones

Seal Oligocene – Miocene interbeded shales

Trap Tilted fault blocks


Oil fi elds in adjacent Cuu Long basin.

Block 31 32 33 34 35 36/03Area (km

2) 5,036 4,440 4,630 4,700 4,630 2,950

Sea level (m) 20 20 - 30 30 - 40 50 50 50 Seismic 2D (km) 1,294 685 431 477 380 593 Well 1 - - - - -

HC Potential Cenozoic Basin

Cenozoic Basin

Cenozoic Basin

Cenozoic Basin

Cenozoic Basin

Cenozoic Basin


Phu Quoc Basin – Block 37, 38, 41, 43, 44, 47/01

Petroleum systems

Source rockThe Cretaceous Phu Quoc Formation, which contains coal layers (the so-called “jet coal”) and Triassic black shales.

ReservoirJurassic-Cretaceous sandstones; Late Triassic sandstones; Permian limestones (Ratthuri group).

SealRegional seal: Tertiary marine mudstones are the regional seal. The local seal is interbedded shales and fault seals

Trap

Structural traps: Inversion/compression-related structures;

Stratigraphic traps: Carbonate build-ups and combined structural-stratigraphic traps.


Gas fi elds / discoveries in the Khorat Mesozoic basin and onshore Thailand.


Block 37

Area: 5,020 km2

Location: Southwest Offshore Vietnam

Sea level: 20-30 m

Seismic: 775 km 2D

Well: No well

HC Potential in Mesozoic basin

Block 38

Area: 6,060 km2


Sea level: 30-40 m

Seismic: 800 km 2D seismic

Well: No well


Block 41

Area: 5,020 km2


Sea level: 20 m


Well: No well

Prospects & Leads: 4


Block 43

Area: 4,850 km2


Sea level: 20 m


Well: No well




Block 44

Area: 4,760 km2

Location: Southwest offshore Vietnam

Sea level: 20 m


Well: No well


Potential in Mesozoic basin

Block 47/01

Area: 5,850 km2


Sea level: 20-50 m


Well: No well

Prospects & Leads: 5 MZ

Potential in Mesozoic basin


Malay - Tho Chu - Phu Quoc Basin - Block 48/05

Geological setting

Malay Basin is a NW-SE trending asymmetric feature, 500 km long and 200 km wide, with a steep south-western margin and more than 8,000 meters of Tertiary fi ll. The origin of this basin is related to major Paleogene plate tectonic movements which led to the collision of India with Eurasia and the resultant opening of the South China and Andaman seas. The SW Vietnam offshore basin is located in NE fl ank of Malay basin.

Petroleum systemsProven petroleum basin containing oil and gas fi elds/discoveries in Cenozoic basin

Source rock

Oligocene lacustrine organic mater and mixture of lacustrine and terrestrial organic material, oil prone generation.

Lower Miocene source rocks are mainly gas prone with minor oil potential; they contain mainly kerogen type III and a mixture of type I & III.

Reservoir Miocene deltaic clastic

SealLocal interbedded shales and regional Late Mio & Pliocene shales

Trap Faulted closure anticlines, stratigraphy traps


Gas and condensate fi elds in adjacent Blocks B&52/97.


Malay - Tho Chu - Phu Quoc Basin - Block 48/05

Block 48/05

Area: 4,260 km2

Location : Southwest Offshore Vietnam

Sea level: 50 m


Wells: None

HC Potential for Cenozoic and Mesozoic structural traps


2. Mid and Downstream Industry

Mid And Downstream Industry Overview

Vietnam’s oil and gas market is expanding quickly on the back of the country’s strong overall economic growth. To meet rising demand the country is embarking on an ambitious plan to build its domestic mid and downstream industry. The following chapter explains the development of the market and the participation opportunities which PVN is offering to foreign investors.

Rapidly Growing Oil and Gas Demand

The Vietnamese economy has been growing at an average annual rate of c. 7% historically and is forecast to continue its impressive growth in the future. Vietnamese oil consumption increased by 4.7% per annum during the 2008 - 2011 period and is forecast to grow by 6.2% per year from 326 KBPD in 2011 to 554 KBPD in 2020.

-

100

200

300

400

500

600

Vietnam's Oil consumption ('000 b/d)

2008200920102011

2012f

2013f

2014f

2015f

20l6f

2017f

20l8f

2019f

2020f


Gas consumption has been growing at a signifi cantly higher rate than GDP. The key drivers for this development are new gas power plants and the growing adoption by private households and industries of gas as a source of fuel. Gas consumption increased by 8.3% per annum during the 2008 – 2011 period and demand for gas is expected to continue to rise by 12.1% per year during the period 2011 - 2020, reaching 24.8 billion m3 in 2020.

0

5

10

15

20

25

30

Vietnam's Gas consumption (bcm)

200820092010

20112012

f2013

f2014

f2015

f20l6

f2017

f20l8

f2019

f2020f


Building a Domestic Mid- and Downstream Industry to Meet Growing Demand

In the midstream segment the Government has approved a signifi cant expansion plan in order to boost energy security through new storage systems and gas pipelines. To implement this plan, PVN will develop an integrated industry with focus on the development of national gas industry infrastructure. The plan is to complete the gas industry infrastructure in the South and commence the construction of the infrastructure in the North and Central regions.

Further investment will be made to build Nam Con Son 2 gas pipeline, Cuu Long Basin gas pipeline, Block B-Omon gas pipeline, two projects to import LNG. The objective is to productive 14 billion m3 per year by 2015 and 15-19 billion m3 of gas by 2016 - 2025 from domestic gas fi elds.

The plan envisions developments which will require a total investment of USD 4.8 billion by 2015. This will ensure the effective transportation of gas from new gas discoveries off the Southwestern coast of Vietnam to areas of demand several new gas pipelines are being planned.

So far, Vietnam’s consumption of oil and gas products has depended heavily on imports. Petroleum oil and refi ned products are Vietnam’s second biggest imported

43Chapter 3: Partnership by Sector - Mid & Downstream Industry

product, accounting for an average of approximately 11% of Vietnam’s total import values during the 2005 - 2011 period. In order to realize Vietnam’s aspiration to create higher value added products and to decrease its dependence on imports, the Government has set out ambitious plans to develop its mid- and downstream industry.

Projects in the downstream segment include refi neries, fertilizer plants, petrochemical plants, ethanol plants, etc.

The efforts in the refi ning segment of the industry are particularly ambitious. So far, the Country’s oil refi ning capacity consists of only one refi nery, Dung Quat Refi nery, which came on-stream at the beginning of 2010 with a capacity of 148 KBPD. PVN is planning to develop 3 refi nery-petrochemical centers in the North, South and Central of Vietnam. Currently, at least two new refi nery projects are being planned by PVN and foreign corporations. It is projected that Dung Quat Refi nery, along with the planned Nghi Son Refi nery, will be able to supply 60% of domestic demand by 201615.

• Dung Quat Refi nery: This is the Country’s fi rst refi nery and commenced commercial operation in 2010. Currently, Dung Quat Refi nery runs at full capacity and supplies approximately 30% of the total Country’s petroleum demand. PVN is in the process of preparing the feasibility to expand the capacity of Dung Quat Refi nery up to 192 KBPD. The Expansion Phase is expected to come into commercial operation by 2018.

• Nghi Son Refi nery: Another large refi nery project with a capacity of 200 KBPD is located in Thanh Hoa province. This project is jointly developed by Idemitsu (Japan – 35.1%), KPC (Kuwait – 35.1%), PVN (25.1%) and Mitsui Chemicals (Japan – 4.7%). The project has been licensed and in the process of fi nalizing fi nancial arrangement for EPC award and implementation.

• Long Son Refi nery: PVN plans to develop a 200 KBPD refi nery in Long Son, a province of Ba Ria – Vung Tau. This project has a planned cost of approximately US$ 7-8 billion and expected to be put into operations after 2020. PVN is currently looking for strategic investors and fi nanciers.

With respects to Petrochemical and Bio-fuel segment, PVN plans to develop 3 bio-fuel plants which are expected to put into operation in 2012 and Long Son petrochemical complex, the project is expected to come into operation by 2017.

PVN Offers Attractive Opportunities to Participate

To achieve its ambitious plan, PVN calls for participation from the private sector and is offering various opportunities along the mid- and downstream value chain to foreign investors to participate in the industry’s future growth. The opportunities are at different stages of development (see table below).

FS Stage FEED/EPCstage Construction stage Operational stage

Dung Quat Refinery(Existing)

Long Son Refinery

Dung Quat Refinery (Expansion)

Nam Con Son No.2 Pipelines

Ca Mau Gas Processing Plant

Ca Mau Fertilizer Plant

Petrovietnam Gas Corporation (PVGas)

PetrovietnamPetrochemical & Textile Fiber Joint Stock Company (Dinh Vu Polyester Fiber Plant)

Partnership with PVN in Mid and Downstream Industry

-----------------------------------------------------------------------------------------------------(15) Source: BMI Q1 2012

The opportunities are described in detail on the following pages.


Dung Quat RefineryOwner: PVN

Nam Con Son No.2 PipelineOwner: PVGas

Long Son Refinery Owner: PVN

Petrovietnam Gas Corporation (PVGas) Owner: PVN, others

Ca Mau Gas Processing PlantOwner: PVGasCa Mau FertilizerOwner: PVN

Petrovietnam Petrochemical & Textile Fiber Joint Stock (Dinh Vu Polyester Fiber Plant)Owner: PVN, PVFCCo, Vinatex, Phong Phu Corp.

Petrovietnam Mid & Downstream Projects Map


Nam Con Son No.2 Pipeline

Project Overview

Key business activities: • Transporting gas from Hai Thach, Moc Tinh fi elds

(blocks 05-2 & 05-3), Thien Ung, Mang Cau fi elds (blocks 04-3) and other gas fi elds in the Nam Con Son and Cuu Long Basins

• Transporting imported gas from neighbouring countries

Location: Nam Con Son Basin to the landfall station in Long Hai district, Ba Ria - Vung Tau

Capacity: 7 bcm/year

Capabilities: Dinh Co GPP2• GPP mode: processing capacity from 6.78 to 9.2

million m3/day, operating from 2015; • Handling mode: Modifi ed GPP 16.2 to 18.4 million

m3 gas/day.

Facilities:• Total area: 72.7 ha of land;• Pipelines:

- Off-shore pipelines from Nam Con Son Basin to Dinh Co Gas Processing 2 (GPP2): 334 km length;

- On-shore pipelines from Dinh Co GPP2 to Phu My GDC: 30 km length;

- Two onshore condensate and LPG pipelines from Dinh Co GPP2 to Thi Vai terminal.

Project life: 30 years

Current ownership: PVGas (100% )

Current Status & Schedule

Commercial operation: Q2/2015

Completed works:• Feasibility study (FS)• Environmental impact assessment (EIA) reports • PMC contractor selection

• On-going works: • Front End Engineering Design (FEED)• Additional geological survey for FEED (onshore

pipeline) • Site clearance

Expansion plan:• GPP Mode: Construction of two additional production

lines from 2018 that can handle up to 18.4 million m3/day of dry gas

Key Investment Considerations

Market potential: • New gas discoveries: The project will provide

infrastructure to support for new gas discoveries in Nam Con Son Basin and for gas imported from TAGP or from Natuna D-Alpha in the South-East Asia region;

• Market demand/growth: The demand for gas is expected to continue to rise by 12.1% per year during the period 2011 – 2020, reaching 24.8 bcm in 2020. Southern provinces are expected to show above average growth due to new gas-fi red power plants, fertilizer factories as well as industrial and commercial households;

• Supply defi cits: Southern Vietnam currently is facing a gas supply defi cit. The launch of the Nam Con Son 2 Pipeline is forecast to address this defi cit;

Competitive advantages:• Government support:

- Tax incentives: + Corporate Income Tax (CIT):

□ 10% for fi rst 15 years from commencement of operation;

□ Exemption for 4 years from the fi rst year of making profi ts;

□ 50% reduction for the following 9 years; + Import duty exemption for construction materials, machineries, equipment, tools and spare parts which cannot be produced locally to form fi xed assets;

- Land cost reduction;• Existing facilities: Nam Con Son No.2 can take full

advantage of existing facilities and experience from previous gas projects such as Thi Vai terminal and GDC Phu My;

• Stable supply: Abundant supply of gas as a result of PVGas ownership;

• Advantageous location: Located in the highest gas consumption region in Vietnam;

Equity ownership offering: 49%

Economic Performance

Investment capital: approximately US$ 1,300 million

NPV: US$ 733 million

IRR: 18%

Payback period: 6.7 years


Ca Mau Gas Processing Plant

Project Overview

Key business activities: Process gas from blocks PM3-CAA, 46-Cai Nuoc, B, 48/65, 52/97

Location: Ca Mau province

Capabilities:• Gas: max input 22.48 million m3/day • LPG: average production: 647 tons/day• Condensate: average production: 255 tons/day

Facilities:• Gas processing plant;• Pipeline from GPP to Mui Tram Terminal;• Mui Tram Terminal;• Pipeline from Mui Tram Terminal to Single Point

Mooring (SPM);


Current ownership: PVGas (100%)


Expected time of commercial operation: Q4/2015

Completed works:• FS• Tender plan • EIA report

On-going works: • FEED bid fi nalization• Site clearance • EPC selection preparation


Investment capital: Approximately US$ 700 million

NPV: US$ 240 million

IRR: 16%

Payback period: 9.4 years


Market potential: • Market demand/growth: The demand for gas is

expected to continue to rise by 12.1% per year during the period 2011 – 2020, reaching 24.8 bcm in 2020. Southern provinces are expected to show above average growth with new gas-fi red power plants, fertilizer factories as well as industrial and commercial households;

• Supply defi cits: Southern Vietnam currently has a gas supply defi cit. The launch of the Ca Mau Gas Processing Plant is forecast to contribute to address this defi cit.


- Tax incentives: + Expected to enjoy highest CIT incentives including 10% for fi rst 15 years, 4 years of CIT exemption and 9 years with 50% reduction;

+ Import duty exemption for construction materials, machineries, equipment, tools and spare parts which cannot be produced locally to form fi xed assets ;

- Reduced land rental cost; - Other incentives applicable to investment project

located in investment encouraged region.• PVN support: PVGas provides the plant with easy

access to customers throughout Vietnam;• Existing Infrastructure/Technology: Can utilise the

infrastructure and technology in a modern Gas – Power – Fertilizer complex;

• Stable (fuel) supply: stable feedstock supply from PVGas;

• Advantageous location: Located in the largest gas consumption region of the country and next to customers such as Ca Mau Fertilizer Plant.



Dung Quat Refi nery

Project Overview

Key business activities: Producing LPG; Unleaded Gasoline; Jet-A1/kerosene; Diesel; FO; Polypropylene, Sulfur

Location: Quang Ngai province - Central of Vietnam

Capacity:• Existing plant: 148 KBPD / 6.5 KMTA• Expansion plant: 44 KBPD

Facilities:• Total area: 338 ha of land and 471 ha of sea (existing)

and 134.6 ha (expansion);• Main process units: CDU; NHT; ISOM; CCR; KTU;

RFCC; LCO HDT; LTU; NTU; ARU; SWS; CNU; PRU; SRU; PPU; Utilities and offsite facilities are designed in accordance with the standard of a grassroots refi nery;

• Tank farm: Crude Tank Farm (520,000 m3); Product Tank Farm (390,000 m3); Intermediate Tanks (280,000 m3);

• Marine facilities: - Crude offl oading facility SPM; - Product jetty: up to 30,000 DWT vessels; - Breakwater: 1,600 m long and 10-11 m high.

Project life: 20+ years

Current ownership: PVN (100%)


Existing plant: Commenced commercial operations since June 2010; achieved 100% capacity utilization

Expansion plant:• Pre-Feasibility Study (Pre-FS) was approved by the

Vietnamese Government• Use of imported crude oil• DFS is being fi nalized• Expected commercial operations in Q1/2018


Investment capital: approximately US$ 3 billion (for existing plant)

NPV: US$ 400 million (for existing plant, FS)

IRR: 11.69% (for existing plant, FS)

Payback period: 15 years (FS)


Market potential: • Market demand/growth: Vietnam’s average refi ned

product demand is forecast to grow rapidly between 2010 and 2025, but currently relies on import;

• Supply defi cits: At present, Dung Quat Refi nery supplies approximately 30% of the total country’s petroleum demand. It is projected that Dung Quat Refi nery, along with the planned Nghi Son Refi nery, will be able to supply 60% of domestic demand by 2016.


- Tax incentives; + CIT:



□ 50% reduction for the following 9 years; + Personal Income Tax: 50% reduction; + Import duty exemption on machinery, equipment to form fi xed assets and certain materials for 5 years from commencement of operation;

- Exemption from land rental and land use fee for the entire project life;

- Various other fi nancial and non-fi nancial supports (e.g. infrastructure) from the Government as this is a core State project in the government’s plans to develop its mid- and downstream industry and the project locates in investment-encouraged region.

• First-mover advantage: First operating refi nery in Vietnam;

• Existing infrastructure / Technology: Modern technology of international brands like UOP

• Stable (fuel) supply: A long-term, stable and comprehensive oil supply source assured by PV Oil;

Equity ownership offering: 49% for both existing plant and the expansion phase


Long Son Refi nery

Project Overview

Key business activities: producing LPG, unleaded gasoline, jet-A1, diesel, fuel oil, and/or asphalt

Location: Long Son Petroleum Industrial Zone, Ba Ria - Vung Tau province

Capacity: 200 KBPD (10 KMTA)

Facilities:• Total area: 810 ha including future expansion;• Infrastructure and utilities (power, water,

communication).

Technology: Advanced technology in deep processing

Project life: 25+ years



Expected commercial operation: after 2020

On-going works: Looking for strategic foreign partners


Investment capital: US$ 7 – 8 billion

Financial feasibility: In progress


Market potential:• Market demand/growth: Vietnam’s average refi ned

product demand is forecast to grow rapidly between 2010 and 2025. Transport fuels (i.e. gasoline, diesel/gasoil) are expected to show above average growth rates;

• Supply defi cits: At present, Dung Quat only supplies approximately 30% of the total country’s petroleum demand. It is projected that Dung Quat, along with the planned Nghi Son Refi nery, will be able to supply 60% of domestic demand by 2016. Long Son refi nery is expected to fi ll up the remaining supply shortage.


- Be strongly supported by the Vietnamese Government and Petrovietnam as this is a core state project in the government’s plans to develop its mid- and downstream industry in the Southern region;

- Tax incentives: + CIT:

□ 10% for the fi rst 30 years; □ Exemption for 4 years from fi rst year of making profi ts;

□ 50% reduction for the following 9 years. - Expected to enjoy other favourable tax incentives

available to national important projects;• Good transportation infrastructure: Located close to

domestic and international seaway transportation gateways used for crude import and product distribution;

• Advantageous location: Located in southern Vietnam - the biggest petroleum fuel consumption market which represents 60% of the country’s demand;

• Additional facilities: Ability to share some common facilities with the Southern Petrochemical Complex such as: marine facilities, power generation, other utilities and technical services.



Ca Mau Fertilizer Plant

Project Overview

Key business activity: Producing granular urea

Location: Ca Mau Gas-Power-Fertilizer Complex, Khanh An commune, U Minh district, Ca Mau province

Capacity: 800,000 tons of urea/year

Technology: • Ammonia synthesis technology of Haldor Topsoe SA

– Denmark;• Urea synthesis technology of SAIPEM – Italy;• Spout Fluid Bed Granulation of Tokyo Engineering

Corp. – Japan;

Facilities:• Total area: 52 ha of land;• Ship loader for export urea to barge/ship;• Other necessary facilities;



First commercial operation: April 2012


Investment capital: US$ 900.2 million (FS)

IRR: approximately 14% (FS)


Market potential:• Supply defi cits:

- Currently, most of fertilizer plants are located in the North, except Phu My plant located in Ba Ria-Vung Tau;

- Mekong Delta, which accounts for approximately 50% of the total consumption of the country, has no fertilizer plant.

Competitive advantages• Government supports:




□ 50% reduction for the following 9 years; + Import tariff: Import tax exemption for machineries, equipment, tools and spare parts used to form fi xed assets;

- Exempted from land rental fee; - Access to low interest credit facility offered by

Vietnam Development Bank. Ministry of Finance provided loan guarantee;

• Existing infrastructure/Technology: Enjoy existing infrastructure, facilities, and technology of Ca Mau Gas – Power – Fertilizer Complex;

• Stable fuel supply from two main sources: Source 1: Block PM3 – CAA, Cai Nuoc mine;

• Advantageous location: Located near the Mekong Delta - the largest farming area nationwide whilst also being the main gateway for exporting its products to Cambodia. Ca Mau province is located in the central urea consumption area so the plant will benefi t from lower distribution cost compared to other competitors.



Petrovietnam Gas Corporation (PVGas)

Company Overview

Establishment: 20 September 1990

Key business activities: • Products & Services: Collection, transportation,

storage, processing and trading activities related to gas and gas related products;

• Geographical coverage: - Gas: Cuu Long, Nam Con Son, Malay-Tho Chu

basins; Southeast and Southwest regions; and the Song Hong basin (ongoing);

- LPG: across the country; - Condensate: Ba Ria - Vung Tau province

• Target client : - Gas: Power plants, fertilizer factories, industrial

customers (plants in industrial zones); - LPG: LPG trading companies (wholesales);

industrial, commercial, residential customers (retail);

- Condensate: Condensate processing plants;

Stock Code: GAS (HOSE)

Current ownership: PVN (96.7%), other investors (3.3%)


USD Million 2009 2010 2011

Total asset 1,234 1,442 2,209

Net revenue 1,592 2,233 3,110

Profi t before tax 214 290 372

ROE 16% 22% 27%

ROA 15% 17% 14%

-

1,000

2,000

3,000

4,000

-

100

200

300

400

2011 2012 2013 2014 2015

US

D m

illi

on

Financial performance, 2011-2015

Profit before tax Net revenue

Key Investment Highlights

Market potential: The demand for gas is expected to continue to rise by 12.1% per year during the period 2011 – 2020, reaching 24.8 bcm in 2020.

Competitive advantages:• Government/PVN supports: PVGas has exclusive

rights to collect and distribute gas products from the oil and gas fi elds owned by PVN and its joint ventures;

• Market share: Dominate the gas supply to power plants. PVGas supplies gas to produce 40% of the country’s electricity production;

• Competitive positioning: Dominance in LPG market. PVGas is the largest LPG distributor in Vietnam and the only one with up-stream integration; In 2010, PVGas’s LPG production reached 1 million tons meeting 70% of the nation’s total demand;

• Performance prospect: Achieved revenue growth rate of 18 - 20% per year.

Equity ownership offering: 21.7%

Key Historical Milestones and Strategic Initiatives

Historical milestones:• 1995: First gas from 1st gas project – Cuu Long basin;• 2002: First gas from 2nd gas project – Nam Con son

basin;• 2007: First gas from 3rd gas project – PM3 block;• 2010: IPO;• 2011: Offi cially becoming a joint stock company.

Major strategic objectives:• To intensify gas collection and promote LNG import

to meet domestic demand;• To invest in national gas pipeline network and

connections with regional network;• To invest in LPG storage to achieve 70% of LPG

wholesale market and develop LPG distribution chain to cover 30% of retail market;

• To become the leading gas services provider (especially in transportation, maintenance, pipe production and coating, storage);

• To invest in research and development of new products originated from gas, exploiting and processing technology for high CO2 content gas.


Petrovietnam Petrochemical & Textile Fiber Joint Stock Company (PVTex)

Company Overview

Establishment: 2008

Key business activities: Produce and trade polyester fi ber, and chemicals, and related services

Key customers: large textile and garment producers located across the country including Vinatex group, Phong Phu Corporation, Hanoi Textile Company, and NhaTrang Textile Company;

Subsidiaries:• PVTex Nam Dinh• PVTex Phu Bai• PVTex Kinh Bac

Current ownership: PVN (56%), PVFCCo (25%), Vinatex (14%), Phong Phu Corp.(5%)


Historical milestones:• 3/2008: Co-operation agreement between Vietnam

National Oil and Gas Group (PVN) and Vietnam National Textile and Garment Group (Vinatex) which led to the establishment of Petrochemical and Textile Fiber Joint Stock Company (PVTEX JSC);

• 8/2008: Long-term purchasing contract signed between PVTex and Vinatex; 3-year feedstock supply contracts with Siam Mitsui PTA Co., Ltd (Thailand), Marubeni Corp (Japan), Misubishi Corp (Japan), and Sojitz Corp (Japan);

• 7/2009: Construction of Dinh Vu polyester fi ber plant - Vietnam’s fi rst polyester plant, total investment capital of 324.85 million USD;

• 8/2009: Signing credit agreement of US$225 million between PVTex and Bank For Investment And Development of Vietnam (BIDV);

• 2012: commercial operation at the Dinh Vu plant (exp.)


Market potential: Vietnam’s domestic demand for fi ber and textile has been growing at 10%-15% per year. At present demand is mainly served by imported materials.

Competitive advantages:• Strong support from PVN and PVTex for gaining

access to foreign markets;• Advanced technology and modern equipment:

Imported the most advanced technology in the world for Dinh Vu polyester plant. Therefore, the plant can produce various types of PSF and Filament products;

• Market share: 30% (estimated);• Customer base: Large and stable customer base of

Vinatex and Phong Phu;• Performance prospect: PVTex has the potential

to meet 90% of PSF products and 50% Filament products of domestic demand.



Million USD 2012 2013 2014 2015 2016

Net revenue 227 287 355 355 355

Profi t after tax 2 12 13 13 14

* Note: Expected operating revenue fi rst recognized in Q3/2012 when Dinh Vu factory started commercial operation


3. Power Industry

Power Industry Overview

Vietnam’s power market suffers from ongoing electricity shortages. Continued demand increases call for a large scale expansion of the generation capacity in an increasingly liberalized power sector. PVN offers a large number of participation opportunities to foreign investors in this sector.

Power Demand Exceeds Supply16

The Vietnamese economy has been growing at a rate of c.7% historically and is forecast to continue its impressive growth in the future. The country’s ongoing industrial transformation and the increasing income per capita have led to a disproportionate growth in electricity demand. The period 2008 – 2011 witnessed a 14.4% per annum increase of electricity consumption from 62.6 TWh in 2008 to 93.6 TWh in 2011. In the same period the country’s electricity generation capacity increased by only 13.7% per annum.

0

100

200

300

-

1,000

2,000

3,000

200

8

200

9

2010

2011

2012

f

2013

f

2014

f

2015

f

2016

f

2017

f

2018

f

2019

f

2020

f

2021

f

Ne

t co

nsu

mp

tio

n T

Wh

Ne

t co

nsu

mp

tio

n p

er

cap

ita

KW

h

Vietnam's electricty consumption

Net consumption TWh Net consumption per capita KWh


The country’s power generation and grid system is already strained. Its generation resources consist of thermal generation and hydropower plants. Thermal

generation accounts for 73% of generation and includes natural gas generation (44%), coal generation (27%) and oil generation (2%). Hydropower accounts for the remaining 27% of generation capacity and is prone to weather induced fl uctuations. Grid losses are calculated at 10% of generated power and power users suffer from regular power outages. Shortages are reported to amount up to 7 TWh in 2010. Power imports from China have been marginal at less than 1 TWh per annum and have thus not contributed to an improvement in the situation.

Continued Demand Increases Call for Expansion of Generation Capacity

Electricity consumption is expected to reach 246 TWh in 2021, which corresponds to a 10.1% average annual growth rate between 2011 and 2021. To meet this demand and restore reserve margins to levels of at least 25-30% of generation capacity needs to be increased from 20 thousand MW in 2011 to over 62 thousand MW by 2020 by constructing thermal, hydro and nuclear power plants.

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

-

5

10

15

20

25

200

8

200

9

2010

2011

2012

f

2013

f

2014

f

2015

f

2016

f

2017

f

2018

f

2019

f

2020

f

2021

f

Ne

t ca

pa

city

MW

y-o

-y g

row

th %

Total Vietnam's capacityelectricity generation

Net capacity MW Total generation growth y-o-y %


The expansion program is envisioned to also diversify the sources for power generation. The share of coal generated power is expected to increase strongly to 46%, whereas

-----------------------------------------------------------------------------------------------------(16) BMI Q4 2011

53Chapter 3: Partnership by Sector - Power Industry

the shares generated by natural gas and hydropower are forecast to decrease to 29% and 23% respectively. According to the master plan, the share of renewable energy (i.e. wind power, solar power and biomass power) should increase from virtually zero to 4.5% in 2020 and 6% in 2030. The authors of Vietnam’s power development master plan17 estimate that the total investment required to improve and develop power generation plants and electricity transmission and distribution networks between 2011 and 2030 will be US$ 123.8 billion.

Liberalisation of the Power Sector should Encourage Investment

The Vietnamese power industry has three main participants. Electricity of Vietnam (EVN) is one of three players operating in electricity generation and holds a monopoly position in transmission and distribution. PVN and Vietnam National Coal and Minerals Industry Group (Vinacomin) represent the remaining two parties operating in the power generation segment. Private investors including both domestic and foreign are playing a growing role in the power generation. Two new foreign invested BOT Power Plants have been licensed in 2011 and a number of other BOT Power Plants with foreign ownership are in the process of negotiation. The EVN’s share in the power generation has reduced gradually and accounts for only 53% in 2011.

53%

12%

5%

10%5% 1%

Contribution to electricity output in 2011

EVN

PVN

Vinacomin

Domestic private sectorForeign investors

Import

Others

14%

Source: PVN marker research

To support Vietnam’s transition to a market economy and to encourage investment the government assigned the Ministry of Industry and Trade (MoIT) to implement a three stage scheme to liberalise the power market from 2005 to 2024:

• Stage 1 from 2005-2014: Establish a competitive power generation market and eliminate subsidies

• Stage 2 from 2015-2022: Establish a competitive wholesale market

• Stage 3 from 2022 onwards: Establish a competitive retail market

As part of its efforts to implement the liberalization roadmap the MoIT introduced a framework for electricity wholesale prices and Power Purchase Agreements (PPA) in 2011. This measure represents an important step towards a more competitive market. Another move towards privatising the power sector was the issuing of PPP regulations at the beginning of 2011.

Generation Competitive Market (Single Buyer)

Wholesale Competitive Market

Retail Market

2005 2009 2014 2016 2022 2024

Preparing for SingleBuyer Market

Preparing forWholesale

Market

Preparing for Retail Market

Retail C

omp

etitive Market

Pilot R

etail Market

Wh

olesale Com

petitive

Market

Pilot W

holesale M

arket

Gen

eration C

ompetitive M

arket (Sin

gle Buyer) ie.E

VN

Intern

al Market (Sin

gle B

uyer)

Decision by Prime Minister for the roadmap of Vietnam electricity development

Further to these developments the MoIT agreed to increase the retail price by 7% in March 2011. Electricity prices now stand at 5.54 US cent/kWh. While the government’s ongoing efforts to control infl ation make further immediate price increases unlikely, market participants expect further retail price increases in the near future. On the input price side the Government has established a favourable tax policy which brings advantages to power operators. Power producers could be entitled to highest corporate income tax incentives, favourable land rental, and import duty exemption on certain goods. Import duty on coal is now reduced to 0%. Other fi nancial and non-fi nancial supports are also available.

-----------------------------------------------------------------------------------------------------(17) Vietnam’s power development master plan (2011 – 2030)


PVN Offers Attractive Opportunities to Participate in the Power Sector

PVN strives to cement its position as the number 2 power generation company after EVN with the aim to achieve a market share of 20% in the power production by 2015. By the end of 2011, PVN has fi ve power projects which supply 13.1 billion KWh to the national grid, and accounts for approximately 14% of the total country’s power production.

To achieve the goal of producing 20% of the country’s electricity output by 2015, PVN will focus on:

• Gas power projects using its existing and new gas fi elds;

• Coal-fi red power plants using imported coals. Pvn also considers acquiring offshore coal mine to secure the coal supply for its power projects;

• Profi table hydro-power plants;• Wind power and renewable energy projects

0

2000

4000

6000

8000

10000

12000

2015 2020 2025 2030

Projected power generation by PVN 2015-2030 (MW/annum)

Gas

Coal - fired

Hydro and renewable

Source: PVN market research

PVN invites foreign investors to jointly participate in Vietnam’s power sector’s growth. In total 09 projects are available for foreign participation (see table below)

Partnership with PVN in Power Industry

Planning Stage License stage Construction stage Operational stage

Song Hau 1 Coal-fired Power Plant

Hoa Thang 1 Wind Power Plant

Thai Binh 2 Coal-fired Power Plant

Vung Ang 1 Coal-fired Power Plant

Quang Trach 1 Coal-fired Power Plant

Long Phu 1 Coal-fired Power Plant

DakDrinh Hydro Power Plant

Hua Na Hydro Power Plant

Nhon Trach 1 Thermal Power Plant

The opportunities are described in detail on the following pages.


Hoa Thang Wind Power Plant Owner: PVN

Nhon Trach 1 Thermal Power Plant Owner: PV Power

Dak Drink Hydro Power PlantOwner: PVN

Song Hau 1 Power Plant Owner: PVN

Long Phu 1 Power Plant Owner: PVN

Thai Binh 2 Power PlantOwner: PVN

Hua Na Hydro Power Plant Owner: PV Power

Vung Ang 1 Power Plant Owner: PVN

Quang Trach 1 Power Plant Owner: PVN

Petrovietnam Power Projects Map


Song Hau 1 Coal-fi red Power Plant

Project Overview

Key business activities: power generation

Location: Phu Huu A commune, Chau Thanh district, Hau Giang province

Capacity: 1200 MW (2 units of 600 MW)

Total area: 115,2 ha

Main parameters:• Rated unit output (raw): 600 MW (RO);• Unit confi guration: 1 supercritical boiler, 1 turbine, 1

generator;• Maximum average operation hours: 6,500 hours/

year;• Auxiliary power rate: ≤6.4%;• Total coal consumption: 3.2 million tons/ year ;• Total oil consumption: ~6,000 tons/ year (2 units); • Main fuel: Coal imported from Indonesia/ Australia,

having low heating value of around 5,725 Kcal/ Kg and ash content of around 15%;

• Secondary fuel: oil No.2B (Vietnam’s standard 6239-2002).

Technology: Conventional technology combined with advanced combustion technology (low NOx).

Project life and PPA: 30 years



Schedule:• COD Unit 1: June 2017• COD Unit 2: Dec 2018

Completed works:• Site clearance• Water and electric for construction• FS

On-going works:• FEED


Fuel supply agreement: Signed Coal Off - take Framework Agreement (COFA).

Competitive advantages: • Government support:

- The Ministry of Finance is expected to provide guarantee for foreign loans for PVN’s participating interest;

- Tax incentives: Expected to be entitled to highest tax incentives applicable to special encouraged projects including:

+ CIT: □ 10% for fi rst 15 years from commencement of operation;


□ 50% reduction for the following 9 years; + Tax exemption on sales of CERs; + Import duty exemption for construction materials, machineries, equipment, tools and spare parts which cannot be produced locally to form fi xed assets;

- Low land-clearance costs; - Reduced land rental.

• Advantageous location: Easy access to port and national road;



Investment Capital: US$ 1,633 million

Financing source: PVN, ECAs, commercial loans

NPV: US$ 250 million (FS)

IRR: 12% (FS)



Hoa Thang 1 Wind Power Project

Project Overview

Key business activity: Wind power generation

Location: Hoa Thang commune, Bac Binh district, Binh Thuan province

Capacity: 49.5 MW (33 units of 1.5 MW)

Total area: 18 ha

Main parameters:• Expected production: 121,818.6 MWh/year;• Capacity factor: 28.1%; • Total coal consumption: 3 – 3.5 million tons/year;• Implementation works include• Turbine with tower of approximately 82.9 meter

height;• Internal 22 KV network;• 2 step-up substation: 22/110 KV;• 110 KV transmission line connecting the 22/110 KV

step-up substation with EVN’s grid;• Transportation road for construction and operation;• Operation house.


Current ownership: PVPower (100%)


Schedule:• FS approval: 2012• EPC contract: 2013• COD: Q4 2013

Completed works:• Pre-FS establishment

On-going works:• Geologic, geographical investigation • FS development



- Entitled to the benefi ts stipulated in Decision No. 37/2011/QD-TTg of the Prime Minister regarding support in mechanisms for wind power projects in Vietnam. The entire electrical output is prioritized to be transmitted to the grid;

- Tax incentives: Expected to be entitled to highest tax incentives applicable to special encouraged projects including:

+ CIT: □ 10% for fi rst 15 years from commencement of operation;


□ 50% reduction for the following 9 years + Tax exemption on sales of CERs; + Import duty exemption for construction materials, machineries, equipment, tools and spare parts which cannot be produced locally to form fi xed assets;

- Low land-clearance costs; - Reduced land rental.

• Advantageous location: Suitable location for wind power generation. The plant is located in the coastal area where wind velocity is 6-8 m/s;

• Access to low cost credit: The project might be able to receive ECA loans or other loans at low interest rate available to renewable energy project.



Investment capital: US$ 83 million


IRR: 10% (pre-FS)

Payback period: 17 years (pre-FS)


Thai Binh 2 Coal-fi red Power Plant

Project Overview

Key business activities: Power generation

Location: My Loc commune, Thai Thuy district, Thai Binh province

Capacity: 1,200 MW (2 units of 600 MW)

Total area: 254.22 ha• Main parameters:• Unit confi guration: 1 sub-critical boiler, 1 turbine, 1

generator;• Tmax: 6,500h;• Grid connection: Via 220kV switchyard to the

National Grid;• Main transformer: 220/21 kV, 3 phase, 750 MVA;• Total coal consumption coal: Around 3 million tons/

year, heating value of around 5,300 Kcal/Kg and ash content of 25% - 30%;

• Total oil consumption: Around 10,800 tons/year.

Technology: Sub-critical technology combined with advanced combustion technology (low NOx)




Investment license: No. 08121000230 issued on 12/01/2012 by Thai Binh Provincial People’s Committee

Schedule:• COD Unit 1: September 2015 • COD Unit 2: March 2016

Completed works:• FEED• Site clearance• EPC contractor selection• Main equipment supply contractor selection

On-going works: • Coal supply/coal handling agreement fi nalization• Construction• PPA in negotiation with EVN


Fuel supply agreement: Local coal supplied by Vinacomin





□ 50% reduction for the following 9 years; + Tax exemption on sales of CERs; + Import duty exemption;

- Low land - clearance cost; - Reduced land rental and land-use fee; - Other incentives applicable for special encouraged

projects;• Advantageous location: Good access to port and

national road.



Investment capital: US$ 1,656 million

Financing source: PVN, ECA source (up to 85% of the value of the foreign portion under the EPC Contract) and commercial loan

NPV: US$ 301.8 million (FS)

IRR: 12% (FS)



Vung Ang 1 Coal-fi red Power Plant

Project Overview


Location: Ky Loi commune, Ky Anh district, Ha Tinh province


Total area: 183 ha

Main parameters:• Rated output of unit (raw): 600MW(RO);• Unit confi guration: 1 sub-critical boiler, 1 turbine, 1

generator;• Maximum average operation hours: 6,500 hour/

year;• Auxiliary power rate: ≤ 7.8 %;• Total coal consumption: 3.2 million tons/year,

heating value of around 5,050 Kcal/Kg and ash content of 25%;

• Main fuel: Domestic coal (No 5, Vietnam’s standard);• Secondary fuel: The plant secondary fuel during

start-up and support fi ring will be fuel oil.

Technology: Sub-critical technology




Investment license: No. 28221000009 fi rst issued on 12/2/2008, amended on 2/4/2010 by management board of Vung Ang Economic Zone, Ha Tinh Province;

Schedule:• PAC Unit 1: 6/2013; • PAC Unit 2: 12/2013;

Completed works:• FS, FEED and cost estimate• Site clearance for main plant area• Water and electricity for construction

On-going works: • Coal supply/coal handling agreement fi nalization• Construction• PPA in negotiation with EVN


Fuel supply agreement: Local coal supplied by Vinacomin;





□ 50% reduction for the following 9 years; + Personal Income tax: 50% reduction + Import duty exemption for raw materials, machineries, equipment, tools and spare parts which cannot be produced locally to form fi xed assets;

+ Tax exemption on sales of CER; - Land-use fee, site clearance, human resources

training and advertisement cost; - 100% loan guarantee.






IRR: 12% (FS)



Quang Trach 1 Coal-fi red Power Plant

Project Overview

Key business: Power generation

Location: Quang Dong commune, Quang Trach district, Quang Binh province


Total area: 344 ha

Main parameters:• Rated output of unit (net): 600 MW; • Unit confi guration: 1 super-critical boiler, 1 turbine,

1 generator;• Maximum operation hours: 6,500 hours/ year• Auxiliary power rate ≤ 7.8%;• Total coal consumption: 3.1 million tons/ year,

heating value of around 5,900 Kcal/Kg and ash content of 11%;

• Main fuel: imported coal from Australia or Indonesia• Secondary fuel during start-up and support fi ring will

be fuel oil - Total DO consumption: ~ 4,218 tons/ year

Technology: Super critical technology




Investment license: No. 29221000021 issued on 06/04/2011 by management board of Quang Binh Economic Zone, Quang Binh Province

Schedule:• COD Unit 1: Jan 2016• COD Unit 2: June 2016

Completed works:• FS, FEED & cost estimate• Land clearance and settlement for main plant area

On-going works:• EPC contract


Fuel supply agreement: Signed Coal Off - take Framework Agreement (COFA)





□ 50% reduction for the following 9 years; + Tax exemption on sales of CERs; + Personal income tax: 50% reduction; + Import duty exemption for raw materials, machineries, equipment, tools and spare parts which cannot be produced locally to form fi xed assets;

- Other incentives provided by Quang Binh province;• Advanced technology: Super critical technology

combined with advantaged combustion technology (low SOx), ESP, FGD equipments, this project will not only meet environmental requirements but also reduce electricity price.



Investment Capital: US$ 1,778 million



IRR: 12% (FS)



Long Phu 1 Coal-fi red Power Plant

Project Overview


Location: Long Duc commune, Long Phu district, Soc Trang province, Vietnam

Capacity: 1200 MW (2 units of 600 MW)

Total area: 115,2 ha

Main parameters:• Rated output of unit (raw): 600 MW (RO);• Unit confi guration: 1 supercritical boiler & 1 turbine

& 1 generator;• Total coal consumption: 3.2 million tons/ year;• Main fuel: Coal imported from Indonesia/ Australia,

having low heating value of around 5,725 Kcal/ Kg and ash content of around 15% (max)

• Secondary fuel during start-up and support fi ring load of < 40% rated load will be fuel oil.

Technology: Conventional technology combined with advanced combustion technology (low NOx)




Investment license: No. 59121000059 issued on 08/05/2009 by Soc Trang Provincial People’s Committee;

Schedule:• COD Unit 1: 2015• COD Unit 2: 2016

Completed works:• FS, FEED & cost estimate• Land clearance and settlement for main plant area

On-going works:• EPC contract


Fuel supply agreement: Signed Coal Off - take Framework Agreement (COFA).





□ 50% reduction for the following 9 years; + Tax exemption on sales of CERs; + Import duty exemption for raw materials, machineries, equipment, tools and spare parts which cannot be produced locally to form fi xed assets.

- Low land clearance cost; - Expected to obtain guaranteed overseas fi nancing

loans for Petrovietnam’s participating interest by the Ministry of Finance;

• Advantageous location: Coal, oil, limestone, equipment and materials for project during construction could be transported without diffi culties.






IRR: 12% (FS)



DakDrinh Hydro Power Plant

Project Overview


Location: Located 70 km from Quang Ngai city, on catchment area of the Dakdrinh River

Capacity: 125 MW (2 units)

Capability:Annual production: 540,246 million KWh

Main parameters:• Total area: 2,293 ha;• Tunnel: 10,325 km;• Average fl ow per year: 31.89 m3/s;• Total discharge fl ow per year: 1,005.7 x 106 m3;• Total volume: 248.51 x 106 m3;• Useful volume : 205.18 x 106 m3;

Technology: In conformity with Vietnamese and American designing standards


Current ownership: PV Power (93.32%), BIDV (2.8%), Licogi (1.48%), SongDa Group (1.4%), DHC’s employees (1%)t


Investment license: No. 34121000029 issued on 25/6/2008 by Quang Ngai Provincial People’s Committee

Schedule:• Commencement: April 2009• COD of Unit 1: Q3 2013• COD of Unit 2: Q4 2013

Completed works:• Site clearance and settlement (factory area, dam area,

water supply tunnel area, etc.)

On-going works:• Site clearance (catchment area)• Construction of main work items of plants• PPA in negotiation with EVN






□ 50% reduction for the following 9 years; + Import duty exemption for raw materials, machineries, equipment, tools and spare parts which cannot be produced locally to form fi xed assets;

- Reduced land rental.• Favourable topology: 15-20 metre wide channel with

slope of 25%;• Advantageous location: Located in region with

geological stability, favourable for building the dam and other structures of the power system;

• Access to fi nance: Guaranteed loans by NEXI organizations (Japan) at a low interest rate.



Investment capital: US$238 million

Financing source: PVPower, BIDV, Licogi, SongDa Group, DHC’s employees, Credit Agricole, NEXI


IRR: 11.68% (FS)



Hua Na Hydro Power Plant

Project Overview


Location: Dong Van commune, Que Phong district, Nghe An province

Capacity: 180 MW (2 units x 90 MW)

Capability: Annual production: 717.6 million KWh per year

Main parameters:• Total area: 2,412 ha;• Catchment area: 5,345 km2;• Mean fl ow: 94.63 m3/s;• Full supply level: 240 m;• Minimum operating level: 215 m;• Gross storage: 569.35 million m3;• Active storage: 390.99 million m3;• Dead storage: 178.36 million m3;• Surface area at full supply level: 21.3 km2.


Current ownership: PV Power (82.2%); Lilama, BIDV, and MB (17.8%)


Investment license: No. 271110000013 issued on 26/3/2008 by Nghe An Provincial People’s Committee

Schedule:• Project commencement: Mar 2008• River damping: Jan 2010• COD unit 1 & 2: Q4 2012

Completed works:• PPA for the 1st year was signed and served as the

framework for a long- term PPA

On-going works:• Site clearance • Construction of main work items of plants• PPA in negotiation with EVN




□ 10% for fi rst 15 years from commencement of operation:

□ Exemption for 4 years from fi rst year of making profi ts;

□ 50% reduction for the following 9 years; + Import duty exemption for construction materials, machineries, equipment, tools and spare parts which cannot be produced locally to form fi xed assets;

- Reduced land rental; - The project is given priority to feed 100% of

produced power into the national grid.• Project fi nancing: Loans from BIDV with favorable

rate.



Investment capital: US$ 288 million

Financing source: PV Power HHC’s equity (USD 97 million), VDB (USD 128 million), commercial loans (USD 35 million)


IRR: 9.69% (FS)



Nhon Trach 1 Thermal Power Plant

Project Overview


Location: Phuoc Khanh commune, Nhon Trach district, Dong Nai province

Capacity: 450 MW

Facilities: 2 gas turbines and steam turbines

Total investment: US$ 322 million


Current ownership: PV Power (100%)

na

Financial Performance


USD million 2009 2010

Revenue 50.0 147.4

Gross profi t -2.5 10.4

Profi t before tax -5.6 4.6

Profi t after tax -5.6 4.6

Forecast for 2012 – 2015

USD million 2012 2013 2014 2015

Revenue 128.9 154.7 151.7 118.9

Profi t before tax 9.4 13.6 13.3 8.6

Electricity output (billion) KWh)

2.5 3.1 3.1 2.5


PPA signed with EVN

Fuel supply agreement: Long-term contract with PV Gas (until 2031)





□ 50% reduction for the following 9 years; + Tax exemption on sales of CERs. + Import duty exemption for construction materials, machineries, equipment, tools and spare parts which cannot be produced locally to form fi xed assets.

• Good location and well - developed infrastructure: Established in Dong Nai - the most dynamic developing Southeast Province;


Key Historical Milestones

• 26/03/2007: Started construction of Nhon Trach 1 • 05/2008: First turbine GT11 came into operation• 07/2008: The turbine GT12 came into operation• 04/2009: The turbine ST18 came into operation• 08/2009: Commercial operation date

65Chapter 3: Partnership by Sector - Services

4. Services

Partnership with PVN in Services

Planning Stage License stage Construction stage Operational stage

Petrovietnam Oil Stockpile

Company Limited (PVOS)

Phuoc An Port

Dung Quat Shipyard

Petrovietnam Construction Joint

Stock Company (PVC)

Petrovietnam Finance

Corporation (PVFC)

Petrovietnam Transportation

Corporation (PVTrans)

Petrovietnam Tower

-----------------------------------------------------------------------------------------------------(20) Vietnam GSO

(21) The Organisational structure of Dong Nai industry promotion centre (www.khuyencongdongnai.org.vn)


Petrovietnam Tower Owner: PVC

Petrovietnam Construction Joint Stock Company (PVC)Owner: PVN, VanEck Association Corp.,Vietwealth Corp., others

Petrovietnam Finance Corporation (PVFC)Owner: PVN, Morgan Stanley, others

Dung Quat Shipyard Owner: PVN

Petrovietnam Oil Stockpile Company Limited (PVOS)Owner: PVOil, Binh Son Petrochemical Company Ltd. (BSR), SEK

Petrovietnam Transportation Corporation (PVTrans) Owner: PVN, PVFC, ACB, others

Phuoc An Port Owners: PVN, Sonadezi Corp., others

Petrovietnam Service Projects Map


Seaport

The Phuoc An Port project, located in Dong Nai province, is a deep-water international port with a total capacity of 2.5 Million teus/year or 6.5 Million tons/year. The port will mainly handle goods exports and imports for the industrial zones in the province.

Sea Trade Growth has Led to Over - Utilisation of Ports

Vietnam’s total trade value stood at US$ 191 billion in 2011 and is expected to increase by 16% per annum between 2011 and 201618, reaching US$ 402 billion in 2016. Sea trade cargo throughput and container throughput in the 54 ports which are members of the Vietnam Seaports Association reached 172 million tons and 5.4 million TEUs in 2009 respectively. Meanwhile, average annual growth in the period from 2000-2009 was 16% for cargo and 20% for containers (see chart below). This strong growth in trade volume has led to the over - utilisation of many ports, as the port infrastructure could not be expanded at the same pace. Overutilization is most pronounced around the country’s economic hubs such as Ho Chi Minh City. Its biggest port, Saigon New Port, witnessed increases in general cargo throughput of 24% and container throughput of 22% in the period from 2000 to 200919

-

2

4

6

-

50

100

150

200

Con

tain

er

thro

ugh

pu

t (t

hou

san

d T

EU

s)

Car

go t

hro

ugh

pu

t (m

illi

on t

ons)

Vietnam's sea trade volume*

Container throughout (TEUs)Cargo throughput ('000 Tons)

20002001

20022003

20042005

20062007

20082009

Source: Vietnam Seaports Association (VPA)(*)Note: This data is of 54 port members of VPA only

The country plans to develop a seaport system that can handle a total cargo volume throughput of 500 – 600 million tons per year by 2015, 900 – 1,100 million tons per year by 2020 and up to 2,100 million tons per year

by 2030. The Government needs total investment of VND 360 – 440 trillion (US$ 19 – 23 billion) to develop its sea port infrastructure between 2010 and 2020. The country’s strategy is focused on developing deep-water seaports that meet international standards. One of the main investment methods on which the Government is focusing is Public Private Partnerships (PPP), especially for large scale seaport projects, which will attract foreign investors and encourage them to provide fi nancing.

Industrial Activities Make Dong Nai Province an Attractive Port Location

Dong Nai province, one of the main target markets for Phuoc An Port, is located in Southeast Vietnam. Dong Nai is an industrial province which has seen heavy investment from domestic and foreign investors in shipping and manufacturing. The province achieved nearly US$ 4 billion nominal GDP in 2010 or 4% of Vietnam’s GDP and grew by 21% per annum during the period of 2007 – 2010. Its gross industrial output was over US$ 13 billion in 2009, representing an increase of 22.7% per annum between 2005 and 200920.

Currently, Dong Nai has more than 30 industrial parks with over 1,200 companies. One of the biggest industrial zones is Nhon Trach Concentrated Industrial Park which covers a total area of 3,340 ha. The province’s volume of -----------------------------------------------------------------------------------------------------

(18) BMI Shipping report, Q1 2012 (19) Vietnam Seaports Association


export and import container and general cargo in 2010 was approximately 31.75 million tons while that of Nhon Trach industrial park itself in 2010 was 11.72 million tons, representing 37% of total Dong Nai’s volume.

At this time, there are only three ports operating on the Dong Nai River: Dong Nai general cargo port, which can handle 5,000 DWT ships, and SCT Gas and VT Gas specialised ports, which can handle 1,000 DWT ships only. These ports with a total capacity of over 600,000 tons per year21 can only support a minor part of Dong Nai’s trade volume. The remaining cargo volume of over 31 million tons for Dong Nai province and over 11 million tons for Nhon Trach is shipped to different provinces by truck or container or by ship through other ports in Ho Chi Minh City and other provinces, which is costly and time consuming.

The Phuoc An Port project is planned to become one of the biggest ports in Vietnam able to handle vessels up to 60,000 tons and provide a cargo capacity of 2.4 million tons per year in Phase 1. However, Phuoc An Port’s capacity in Phase 1 will only support 8% of Dong Nai’s total trade volume and 20% of Nhon Trach Industrial Park’s trade volume. Consequently, there is huge potential for increasing support of the province’s trade volume by expanding the port’s capacity in the future.


Phuoc An Port Project (PAP)

Project Overview

Key business activities: Build and operate a deep water seaport

Location: On the right bank of Thi Vai river in Phuoc An commune, Nhon Trach district, Dong Nai province

Capabilities: This port is designed to handle up to 60,000 DWT vessels

Capacity: 2.5 million TEUs/year or 6.5 million tons/year

Technology: Modern, high-tech design, equipment and operating model

Facilities:• Total port area: 183 ha;• Total berth area: 3,050 metres with 6 container and 4

general cargo berths (60,000 DWT/ berth);• Water depth: 15 m;• Logistics zone: 5 km away from the port with a total

area of 555 ha, including warehouses, oil and gas service area, railway station, repair facility, container yard, liquid storage area, etc.


Current ownership: PVN (80%), Sonadezi Corp. (15%), other investors (5%)

a


Investment license: No. 47121000233 (For 5 phases)

Completed works:• Detailed planning for construction • Report for environmental impact assessment• Handover of port land and part of logistics zone land• FS and basic design

On-going works:• Handover of the remaining land• Phase 1 detailed design• Phase 1 construction

Project period: 2010 – 2020• Phase 1 construction: 2012 – 2014


Market potential: Huge cargo volume. The cargo volume of companies located in Nhon Trach Industrial Park was about 11 million tons in 2010; and expected a strong growth.

Fuel supply agreement: Long-term contract with PV Gas (until 2031)


- PAP is an important project and therefore received good fi nancial and non-fi nancial supports from the Government and Dong Nai province;




□ 50% reduction for the following 9 years; + Import tax: Exempt for the fi rst 5 years.

• Huge land area: Land area is about 800 ha of which the logistic zone is 555 ha – larger than other ports in Thi Vai area;

• Good location: The port is nearby many important and large industrial parks of Dong Nai and is expected to meet their increasing demand;

• Convenient connection: Advantage of completed and synchronous traffi c system with connecting to industrial zones in Dong Nai, Binh Duong, and Ho Chi Minh city, Mekong Delta through national road 51; HCM-Long Thanh-Dau Giay highway, Ben Luc-Long Thanh highway. The only project has a railway through the logistic zone and connects with nation railway. The distance from “0” buoy to PAP is only 40 km, in comparison to 90 km of Saigon port.


Key Historical Milestones

Investment capital: US$ 979 million for 5 phases as follow:• Phase 1: US$ 100 million • Phase 2: US$ 234 million • Phase 3: US$ 191 million • Phase 4: US$ 227 million • Phase 5: US$ 177 million

NPV: US$ 119 million (FS, for 5 phases)

IRR: 19% (FS, for 5 phases)

Payback period: 18 years (FS, for 5 phases)


Shipyard

Dung Quat Shipyard, located in Quang Ngai province in central Vietnam, is one of the biggest shipyards in Vietnam and is capable of building ships of up to 300,000 DWT.

High Demand for New Ships and Repair Services

Vietnam’s shipbuilding industry ranked fi fth in the world and accounted for 0.9% of the world’s market share in 2010, compared with 0.4% in 200422. The country’s shipbuilding production achieved an output increase of 25% per annum between 2004 and 2010, receiving 252 new shipbuilding orders with gross tonnage of 2.5 million tons in 2010.

It is estimated that more than 800 new ships with total tonnage of over 4 million tons will be needed by 2015 and 1,100 ships with total tonnage of almost 4 million tons will be needed by 2020 to replace old vessels and expand Vietnam’s fl eet. With respect to ship types crude oil tankers, oil tankers, container ships, general cargo ships and vessels are required. The country will also require on average 609 repairing turns per year by 2015 and 699 repairing turns per year by 2020 for domestic fl eet.

In 2010, Vietnam had 120 shipyards that were able to build and repair ships of over 1,000 DWT. Only four shipyards can repair ships of over 6,500 tons and build ships of 300,000 DWT and over. Dung Quat Shipyard is one of the biggest shipyards in Vietnam and can build ships up to 300,000 DWT and repair large vessels up to 50,000 DWT and oil tankers up to 150,000 DWT. Its annual shipbuilding capacity is 1.1 million D WT.

Vietnam’s shipyards fulfi l around 46% of the total domestic repair demand. In 2010, costs of about US$ 75 million were incurred from transferring domestic ships abroad for repair, as the Vietnamese shipyard capacity and capability was insuffi cient to meet domestic demand.

Quang Ngai as a Competitive Location

Vietnam’s shipbuilding master plan identifi ed four shipyards that will be prioritised for development in the central region. Three of them are located in Khanh Hoa province, and Dung Quat Shipyard alone is located in Quang Ngai province. Quang Ngai is known as one of the most attractive investment environments in

central Vietnam as it was ranked the 18th post in the Vietnam Provincial Competitiveness Index Report 2011, signifi cantly higher than the 34th Position of Khanh Hoa. From the point of view of investors, Quang Ngai is more competitive in terms of legal institutions, market entry costs, access to land, transparency and access to information, time costs of regulatory compliance and informal charges in comparison with Khanh Hoa, making it an area that has high potential to develop in the future.

Labour training

Legal institutions

Market entry cost

Access to land

Transparency and access to information

Time costs of regulatory compliance

Informal charges

Proactivity of provincial leadership

Business support service

Provincial competitiveness, 2011

Quang NgaiKhanh Hoa

Source: The Vietnam PCI 2011

Based on growing demand Dung Quat Shipyard plans to expand its operations. In addition to that the company is working on turn around measures to improve its profi tability.

-----------------------------------------------------------------------------------------------------(22) The shipbuilders’ Association of Japan report


Dung Quat Shipyard (DQS)

Project Overview

Key business activities: Ship building and repairing, offshore rigs and fl oating equipment

Location: Tan Hy commune, Binh Son district, Quang Ngai province

Capabilities: DQS is capable of building ships up to 300,000 DWT

Facilities:• Total DQS area: 118 ha;• Manufacturing workshop area: 40,000 m²;• Pipe workshop area: 10,000 m²;• Assembling workshop area: 16,500 m²;• Mechanical workshop area: 4,000 m²;• Area of stock yard: in use Dry dock No.1 (308 x 86 x

14 m) and under construction Dry dock No.2 (520 x 110 x 14 m).

Current ownership: Dung Quat Shipbuilding Industry Company Limited being 100% owned by PVN (100%)


Investment license: No. 4300338693, issued by Dung Quat Economic Zone Authority of Quang Ngai province

Project Schedule:• Stage 1: Calling for investment of US$ 54 million for

the capacity expansion of stage 1• Stage 2: 2015 – 2020 – calling for investment of US$

471 million


Total investment capital: US$ 749.15 million

NPV for stage 1 expansion: US$ 7.79 million (FS)

Payback period stage 1: 16 years and 10 months


Market potential: • The country’s shipbuilding production achieved an

output increase of 25% per annum between 2004 and 2010. It is estimated that more than 800 new ships with total tonnage of over 4 million tons will be needed by 2015 and 1,100 ships with total tonnage of almost 4 million tons will be needed by 2020 to replace old vessels and expand Vietnam’s fl eet;

• Vietnam’s shipyards fulfi ll around 46% of the total domestic repair demand. The country will require on average 609 repairing turns per year by 2015 and 699 repairing turns per year by 2020 for domestic fl eet.


- Enjoy various other fi nancial and non fi nancial incentives granted by the government for national priority projects as well as strong support from Quang Ngai People’s Committee;




□ 50% reduction for the following 9 years; + Import duty exemption for construction materials, machineries, equipment, tools and spare parts to form fi xed assets;

- Exemption from land rental from 2003-2018. • Advantageous location: DQS is located in a deep-

water multi-functional port and can repair cargo ships of up to 50,000 DWT and oil tankers of 150,000 DWT; build ships up to 105,000 DWT.



Construction

Petrovietnam Construction Joint Stock Corporation (PVC), is striving to become a full service construction and investment group, a leader in vietnam’s construction industry by 2015. Besides its traditional projects in the petroleum industry it has expanded into the residential, commercial industrial and infrastructure construction sectors .

The Construction Market is Booming at Double-Digit Growth Rates

The overall construction market has been booming in Vietnam. The market is split into residential, commercial and industrial sector as well as the infrastructure sector. The residential, commercial and industrial construction sector has increased rapidly by nearly 13% every year between 2008 and 2011. It is expected to grow by 17% per annum over the next 10 years, from US$ 4.6 billion in 2011 to US$ 21.5 billion in 202123.

-

5

10

15

20

25

Vietnam's residential, industrial and commercial construction value* (US$ billion)

20082009

20102011

2012f

2013f

2014f

2015f

2016f

2017f

2018f

2019f

2020f

2021f

Vietnam’s economic growth, rising income, large population and rapid urbanisation drive the demand for housing and commercial construction projects. According to the government’s housing development master plan, Vietnam will need an additional residential area of one billion m2 by 2020 to satisfy demand, making this a highly attractive sector. CBRE Vietnam identifi ed nearly 2,000 residential and commercial projects were planned and scheduled to be fi nished over the next 10 years in big cities such as Ho Chi Minh, Hanoi, Da Nang, Can Tho, Nha Trang, Hai Phong, and Vung Tau. In the industrial sector the government plans to establish 115 new industrial parks and expand 27 existing industrial

parks to enlarge the available area by 32,000 ha by 2015.

In the infrastructure sector PVN has its main activities in the power plant and pipeline sector. As outlined in the Power industry overview, Vietnam faces a shortage of electricity and will embark on an ambitious power plant construction programme. The construction value in the power sector increased by 4% in 2008 – 2011 and it is expected to grow at a higher rate of 14% between 2011 and 2016. Oil and gas pipelines have developed recently and only accounted for a minimal share 0.4% of Vietnam’s total construction value in 2011. However with the envisioned growth in the gas sector new pipelines will be built. As the average value of pipeline construction contracts in Vietnam is estimated at USD 1 billion every new pipeline project offers a signifi cant revenue potential.

0.0

0.5

1.0

1.5

2.0

2008 2009 2010 2011 2012f 2013f 2014f 2015f 2016f

Vietnam's power plant construction value (US$ billion)

PVC is the Second Largest Player in the Industry with the Strongest Revenue Growth

The top 10 construction companies accounted for approximately 29% of the construction market in 2010. After state-owned Group construction company Vinaconex with a 10.7% market share, PVC is the second largest player with a 5.2% market share. Coteccons Group appears to be the largest local private construction company having a 2.4% share of the construction industry in 2010. PVC strong performance is not only refl ected in its market share but also in its strong revenue growth. With a growth rate of 144% PVC achieved the fastest growth in the industry between 2008 and 2010. Besides professional work, PVC major strength is its links to the PVN group, which gives it priority access to the group’s construction projects. Moreover the government link helps in dealing with local authorities.

Among those projects, PVC has executed 287 construction -----------------------------------------------------------------------------------------------------(23) Source: BMI, Q1 2012 (*) Note: Vietnam’s real estate value includes residential (housing, residential areas), industrial (industrial parks, factories) and commercial (offi ce buildings, hotels, hospitals) construction


projects in which residential and commercial projects contribute 14% in value term, power 62%, infrastructure and industrial 8%, petroleum 16%. The corporation is accounted for 17% shares of total power construction market.

In the oil& gas sector the company has grown from being a subcontractor at fi rst to become a major EPC contractor that can execute large scale project with complicated technical requirement. These skills are exemplifi ed by an impressive track record for projects such by selected projects such as oil and gas transporting and storage system for Vung Ang Thermal Power Plant, General Ashore Service in Vung Tau district, Petro pipeline from Long Hai to Phu My industrial zone, Dung Quat refi nery.


Petrovietnam Construction Joint Stock Corporation (PVC)

Company Overview

Key business activities:• Petroleum specialized construction• Power plant construction• Industrial construction• Civil construction

Key construction projects implemented:• Power plants: Nhon Trach 2 Power Plant, Vung Ang 1

Thermal Power Plant, Bio Ethanol Energy Plant • Industrial project: Dinh Vu Polyester Plant in Hai

Phong• Commercial projects: Vietnam Petroleum Institute,

Offi ce of Ministry of Interiors and Ministry of Natural Resources and Environment

Stock Code: PVX (HNX)

Current ownership: PVN (53.26%), VanEck Association Corp. (4%), Vietwealth Corp. (2%), other investors (40.74%)


Historical milestones:• 1983: Established as Oil and Gas Construction

Conjugate Factory.• 2009: Equitized and offer shares to public and

become Petrovietnam Construction Joint Stock Company (PVC)

• 2012: Increase charter capital to 5,000 billion (app. USD 242 million)

Major strategic initiatives: PVC has expanded to industrial production, mechanical engineering and real estate with some signifi cant projects such as Tien Giang oil and gas industrial park, Petroleum steel pipe production project, Tan Vien eco-tourism zone, etc.


Market potential: Double digit market growth. The residential, commercial and industrial construction and the power plant sectors are forecast to grow at 17% (2011-2021) and 14% (2011-2015) respectively. The build-up of the domestic petroleum industry offers several large project opportunities in excess of USD 1 billion.

Competitive advantages:• Strong connection with Government and PVN: Has

privileged access to projects of the Government and PVN;

• Strong competitive positioning: PVC is the second largest player in the overall construction market and the biggest construction company specialized in oil and gas industry, with a strong track record;

• Customer base: Serving not only PVN entities but also other companies

• Performance prospect: Due to the expansion of EPC activities, the revenue growth rate of PVC is expected to increase by 20% per year up to 2015.




USD million 2009 2010 2011

Chartered capital 84.3 130.7 121.1

Profi t before tax 15.6 49.3 18.4

Profi t after tax 12.9 38.8 14.5

ROE 13% 25% 10%

ROA 4.05% 5.94% 1.77%

Financial forecast 2012 - 2015

USD million 2012 2013 2014 2015

Chartered capital 234.4 272.2 355.8 432.4

Turnover 586.1 680.6 800.5 934.0



Petrovietnam Tower

Project Overview

Key business activities: Operating a complex consisting of offi ce, hotel, luxurious service apartments and trade center

Location: Me Tri commune, Tu Liem district, Hanoi

Main parameters:• Total land areas: 64,964 m2;• Construction areas: 12,133 m2;• Construction density: 18.68%;• Gross Floor areas: 337,276 m2 (excluding basements);• Basements areas: 78,000 m2;• Land use coeffi cient: 5.19 times;• Number of fl oors: 79 fl oors (excluding basements);• Number of basements: 2 fl oors;• Building height: 360 m.


Current ownership: PVC (100%)a


Project Schedule: • Construction : 3 years• Operation: 47 years

Completed works: Conceptual design ( Pelli Clarke Pelli Architects – USA)

On-going works: • FS: in the process of selecting the consultant• Site clearance: Work with the Me Tri People

Committee and Tu Liem land development center to build the plan of site clearance


Competitive advantages:• Government support: Expected good tax incentives

including preferential CIT rate, tax holiday, exemption, import duty exemption, land cost reduction, etc.;

• Advantageous location: in the new business center of Hanoi and is the transportation hub of the surrounding urban area. There are many important projects in the area such as the National Convention Center, My Dinh National Stadium, etc.



Total investment capital: USD 571 million (Pre-FS)

NPV: US$ 15.05 million

IRR: 15.74%

Payback: 10 years and 2 months


Finance Company

Petrovietnam Finance Corporation (PVFC) has grown to become an important financial institution mainly serving oil and gas industry with corporate finance products and services.

Largest Finance Company in Vietnam

In Vietnam, there are 18 fi nance companies24 registered with total chapter capital of 954 million dollars. They can be loosely classifi ed into two main groups based on their business models: consumer fi nance companies (CFCs) and business fi nance companies (BFCs). All CFCs are foreign-invested fi rms while BFCs are subsidiaries or affi liates of state-owned economic groups. Currently, twelve of fi nance companies operating in Vietnam are local companies with state owned economic groups as major shareholders and six are foreign-invested companies. BFCs are typically industry focused companies, who mainly provide business fi nance services to their shareholders and businesses in certain industries where they have connections and industry knowledge.

- 100 200 300

PVFC

EVN Finance

Vietnam Shippbuilding Finance

Rubber Finance Co., Ltd.

Vinaconex-Viettel Finance

Vinacomin Finance

Song Da Finance

Top 7 financial companies' chartered capital (US$ million)

Source: State Bank of Vietnam

All of the top seven fi nance companies in terms of chartered capital are Vietnamese companies. Petrovietnam Finance (PVFC) is the largest in terms of chartered capital with VND 6,000 billion25 (US$ 291 million) in 2011, followed by EVN Finance and Vietnam Shipping Finance. In addition, PVFC achieved the highest revenue with more than VND 6,400 billion (US$ 335 million) in 2010, which was 3 times higher than that of the second biggest company EVN Finance26.

- 100 200 300 400

PVFC

EVN Finance

Song Da Finance

Prudential Vietnam Finance

Handico Finance

Vietnam Chemical Finance

Vinaconex-Viettel Finance

Top 7 Finance companies' revenue, 2010 (US$ million)

Source: Companies’ websites

Strong Relationships and Expertise

PVFC provides the most comprehensive range of products for corporate customers among fi nance companies in Vietnam, including corporate loans, project fi nancing, guarantee and factoring, corporate funding arrangement, mergers and acquisition, etc.

PVFC serves a large customer base consisting of PVN’s core oil and gas businesses and related industries as well as non PVN clients. As of 2009 approximately 50% of PVFC’s corporate customers were companies which are not affi liated with PVN.

Key to winning business is the company’s strong expertise in the oil and gas sector and its privileged access to PVN’s projects and businesses.

As a listed and leading fi nance company with the backing of PVN and its strategic partner Morgan Stanley, the company has successfully tapped international fi nancial markets.

-----------------------------------------------------------------------------------------------------(24) A fi nance company is a company who makes loans to individuals and/or businesses(25) State Bank of Vietnam(26) The companies’ websites and site visits:


Petrovietnam Finance Corporation (PVFC)

Company Overview

Key business activities:• Corporate Finance products & services (corporate

loans, project fi nance, guarantees & factoring); • Corporate Financial Advisory Services (fi nancing

arrangement, mergers & acquisitions, general corporate advisory services, corporate restructuring

• Money Market & Foreign Exchange Services; Investment;

Stock Code: PVF (HOSE)

Current ownership: PVN (78%), Morgan Stanley (10%), other investors (12%)


Key historical milestone:• June 2000: Establishment as a fi nance company;• 2005: Increased charter capital to VND 300 billion,

opened Vung Tau branch and transaction offi ce No. 21 and No. 22;

• 2006: Increased charter capital to VND 1,000 billion; successfully issued PVFC’s bonds of VND 690 billion; open branch in Da Nang;

• 2007: Increased charter capital to VND 3,000 VND; successfully issued PVFC’s bonds of VND 1,500 billion; successfully IPO; open branches in Hai Phong, Nam Dinh, Can Tho, Saigon and Thang Long;

• 2008: Offi cially transformed into a JSC and increased charter capital to VND 5,000 billion. Sold 10% interest to Morgan Stanley; listed on Ho Chi Minh City Stock Exchange (HOSE); open Thanh Hoa branch and Long Bien Transaction Offi ce;

• 2009: Open Representative Offi ce in Quang Ngai.


Competitive advantages:• Competitive positioning: Largest non-bank fi nancial fi rm in Vietnam;

• Government/PVN support: Priority access to PVN and government projects

• Customer base: Provides fi nancial services not only to PVN entities but also to other companies.

• Performance prospects: - Strong funding position: Listed in HOSE and

SGX-ST; - In-depth knowledge of the oil and gas industry:

Experienced in arranging and providing fi nancing to oil and gas projects;

- Strong relationships: PVFC has close relationship with state agencies and regulatory authorities in Vietnam and leading banks in the region and the world;

- Strategic partnership with Morgan Stanley: Morgan Stanley provides expertise in certain functional areas including risk management, technical employee training and corporate governance;

- Strong risk management: PVFC was the fi rst company to develop and receive SBV’s approval for credit rating system.




USD million 2008 2009 2010 2011

Total revenue 46.4 112.5 109.4 263.4

Profi t before tax -4.3 37.8 30.0 26.8

Net profi t -1.5 31.8 25.8 23.2


USD million 2012 2013 2014 2015

Turnover 426.7 521.8 652.9 778.3


Profi t after tax 64.0 86.8 110.6 145.1


Petrovietnam Transportation Corporation (PVTrans)

Company Overview

Establishment: May, 2002

Key business activities:• Crude oil and refi ned oil product, gas and chemical

product transportation from and to Vietnam as well as on select routes from Middle East to Asia-Pacifi c for petroleum

• Offshore petroleum technical services• Logistics services

Stock Code: PVT (HOSE)

Current ownership: PVN (58.4%), PVFC (8.3%), ACB (3.9%), other investors (29.4%)



USD million 2008 2009 2010 2011

Gross profi t 12.4 8.4 19.1 18.9


Profi t after tax 4.2 0.5 3.9 2.1

ROA 1.17% 0.14% 0.97% 0.54%

ROE 1.46% 0.16% 3.20% 1.89%


USD million 2012 2013 2014 2015

Net revenue 192.9 247.7 315.8 399.1


Profi t after tax 3.9 14.4 21.1 29.7

Key Historical Milestone

Market potential:• Strong growth of Vietnamese oil and gas transport

volumes: The oil and gas volume is expected to reach 37.8 million tons in 2015 and 68.5 million tons in 2020;

• Growth oil & gas services markets: Access to growing number of oil & gas projects to be developed by PVN; Growth of international petroleum transport market.

Competitive advantages:• Government/PVN support: As a subsidiary of

Petrovietnam specializing in providing transportation services, PV Trans have been strongly supported by PVN;

• Competitive positioning: Largest transporter in Vietnam’s oil and gas industry with a modern fl eet with 17 ships and total tonnage of 442.6 thousand DWT, accounting for 28% of the Vietnamese oil and gas fl eet’s total tonnage, crude oil tankers, product tankers, LPG carriers, offshore support vessels, FSO and FPSO vessels;

• Customer base: - Exclusive contracts with Dung Quat refi nery:

The company has exclusive transportation right of crude oil for Dung Quat oil refi nery and about 30% of output;

- Strong international customer base: Strong and stable international customer base , including Shell, Exxon Mobil, BP, LG, Caltex;

- Offi cial provider of FSO/FPSO in Vietnam: Providing service for several oil fi elds such as Dai Hung, Chim Sao and Dua (US$ 1 billion package);

• Performance prospect: has huge opportunity to provide transportation services for the new refi neries (Nghi Son, Long Son); coals for PVN’s power plants and others cargo for PVN’s subsidiaries.



Petrovietnam Oil Stockpile Company Limited (PVOS)

Company Overview

Key business activities: Build up and operate underground terminals for storage and supply of crude oil and product oil which are mainly used for oil refi nery

Current ownership: PVOil (19%), Binh Son Petrochemical Company Ltd (BSR) (10%), SEK (71%)

Key Historical Milestone

• 2008: Received investment certifi cate for Long Son underground oil storage terminal project;

• 2009: Signed consulting contract with GeoStock for detailed feasibility study of Long Son underground oil storage terminal project;

• 2010: Received investment certifi cate for Dung Quat underground oil storage terminal project;


Market potential: • The national crude oil reserve is expected to reach

1.1 million cubic meters in 2020 and 3.1 million cubic meters in 2022;

• Growth oil & gas services markets: Access to growing number of refi nery projects to be developed by PVN;

Competitive advantages:• Competitive positioning: First mover advantage

- the fi rst company in constructing, operating and supplying storage leasing services in Viet Nam.

• Customer base: Clients are members of the PVN group (Long Son and Dung Quat refi nery); and other clients (National Stockpile Agent, oil trading companies)

• Shareholders’ experience in oil storage business: - PV Oil: Oil trading company - Binh Son Petrochemical Company Ltd:

Constructing and operating Dung Quat refi nery - SEK: Constructing and operating hydrocarbon

underground cavern in Korea.


Major project #1 - Long Son underground oil storage terminal

Location: Long Son Petroleum Industrial Zone, Long Son commune, Vung Tau city, Ba Ria - Vung Tau province, Vietnam.


Facilities: • Underground cavern: capacity of 2,050 thousand m3,

storage of crude and product oil;• SPM: 250,000 – 300,000 DWT;• Crude oil pipeline: 1.1km length, 38-inch diameter, fl ow rate: 6,000m3/h, working pressure: 10 kg/cm2.

Current status: Finalization of basic design;

Economic performance (Pre FS):• NPV: US$ 135.6 million• IRR: 14.87%

Major project #2 – Dung Quat underground oil storage terminal

Location: Dung Quat Economic Zone, Binh Thuan commune, Binh Son district, Quang Ngai province, Vietnam;


Facilities: • Underground cavern: capacity of 1,600 thousand m3,

storage of crude and product oil;• Jetty/SPM: SPM: 110,000 DWT; new SPM:

250,000DWT; Jetty: 15,000 DWT to 30,000 DWT, with expandable to 50,000 DWT;

• Pipeline system: crude oil pipeline of 2km length to new SPM, of 7km length to refi nery.

Current status:• Completion of pre-feasibility study;• Negotiation of upon storage leasing contract between

PVOS and BSR is in progress;

Economic performance (Pre FS):• NPV: US$ 144.6 million• IRR: 14.76%• Payback period: 9 years


Appendix 1 - Current Relevant Regulation List of Selected Key Legal Documents

1. Regulations on Investment

No. Description Issuance date

1. Law 59/2005/QH11 on Investment 12/12/2005

2. Decree 108/2006/ND-CP providing detailed provisions and guidance for the implementation of a number of articles of the Law on Investment

22/09/2006

3. Decree 78/2007/ND-CP on Investment in the form of Build-Operate-Transfer (BOT), Build- Transfer – Operate (BTO) and Build – Transfer (BT)

11/5/2007

2. Regulations on Enterprises


1. Law 60/2005/QH11 on Enterprises 12/12/2005

2. Decree 102/2010/ND-CP providing detailed guidance for implementation of a number of articles of the Law on Enterprises

01/10/2010

3. Decree 43/2010/ND-CP regarding enterprise registration 15/04/2010

4.Decision 88/2009/QD-TTg providing Regulations on purchase of shares by foreign investors in Vietnamese companies

18/6/2009

5.Circular 131/2010/TT-BTC providing implementation guidelines on the purchase of shares by foreign investors in Vietnamese companies

06/9/2010

3. Regulations on Petroleum


1. Law 10/2008/QH12 on Petroleum 12/06/2008

2. Decree 13/2011/ND-CP on safety of petroleum construction on land 11/02/2011

3. Decree 139/2005/ND-CP on petroleum production sharing contract - Standard Form 11/11/2005

4.Circular 105/2010/TT-BTC providing guidance for Decree 50/2010/NĐ-CP on Tax regime for Natural resources

23/07/2010

5.Circular 32/2009/TT-BTC providing guidelines for implementation of regulations on taxes in respect of organizations and individuals undertaking petroleum exploration and exploitation operations in accordance with the Law on Petroleum

19/02/2009

81Appendix 1 - Current Relevant Regulation List of Selected Key Legal Documents

4. Regulations on Foreign Exchange


1. Ordinance 28/2005/PL-UBTVQH on Foreign exchange 13/12/2005

2. Decree 160/2006/ND-CP on Foreign exchange management 28/12/2006

3. Circular 04/2001/TT-NHNN on Foreign exchange management 18/05/2001

5. Regulations on Energy


1. Law 50/2010/QH12: Law on economical and effective use of energy 28/6/2010

2. Circular 41/2010/TT-BCT providing guidance on the determination of power purchase price; process, procedures and issuance of power purchase price framework; approval of power purchase agreements (PPA).

14/12/2010

3. Circular 45/2011/TT-BCT regulating operation of competitive power generation market 30/12/2011

4. Circular 18/2010/TT-BCT regulating operation of competitive power generation market 10/05/2010

6. Regulations on Securities


1. Law 70/2006/QH11: Law on Securities 29/6/2006

2. Law 62/2010/QH12: Amending and replacing some articles of Law 70/2006 on Securities 24/11/2010

3.Decree 84/2010/ND-CP providing detailed guidelines for the implementation of the Law on Securities

2/8/2010

4.Decree 14/2007/ND-CP providing detailed guidelines for the implementation of the Law on Securities

19/1/2007

5. Decree 144/2003/ND-CP on Securities & Securities Markets 28/11/2003

6. Decision 55/2009/QD-TTg on participation of foreign investors in securities market of Vietnam 15/04/2009

7. Regulations on Credit Institutions (“CIs”) And Finance Companies


1. Law 47/2010/QH12 on Credit Institutions 29/06/2010

2.Decree 10/2011/ND-CP amending Decree 141-2006-ND- on the minimum level of legal capital applicable to credit institutions

26/01/2011

3. Decree 79/2002/ND-CP on organization and operation of fi nance companies 4/10/2002

4. Decree 81/2008/ND-CP amending and supplementing Decree 79/2002 29/7/2008

5.Decree 69/2007/ND-CP on purchase of shares by foreign investors in Vietnamese commercial banks

20/04/2007

6. Decree 146/2005/ND-CP on fi nancial regime applicable to credit institutions 23/11/2005

7. Decree 74/2005/ND-CP on Anti-Money Laundering 7/06/2005


8. Labour Regulations


1. Labour code 35-L/CTN 5/7/1994

2. Law 35/2002/QH10 amending a number of articles of the Labour code 19/4/2002



5. Labour code 2012 (replace Labour Code 35 and will come into effective from 1/5/2013) 18/06/2012

6. Decree 196-CP on Collective Labour Agreements 31/12/1994

7. Decree 93-2002-ND-CP amending and supplementing Decree 196-CP 11/11/2002

8. Decree 70/2011/ND-CP on minimum area wage rates applicable from 1 October 2011 22/08/2011

9. Decree 47/2010/ND-CP on administrative penalties for breach of law on labour 6/05/2010

10.Decree 133/2007/ND-CP providing detailed regulations and guidelines on the laws amending the Labour Code regarding labour dispute resolution

8/08/2007

11. Decree 44/2003/ND-CP on labour contracts 9/5/2003

12. Decree 109/2002/ND-CP on working hours & rest breaks 27/12/2002

13.Decree 41/CP on Internal Labour Rules - Responsibility for Damage [Note: partially amended by Decree 33/2003/ND-CP dated 2 April 2003.]

6/07/1995

14.Decree 196/CP on Collective Labour Agreements [Note: partially amended by Decree 93/2002/ND-CP of the Government dated 11 November 2002, effective as of 1 January 2003.

31/12/1994

9. Regulations on Social, Health, And Umemployment Insurance


1. Law 71/2006/QH11 on Social Insurance 29/06/2006

2. Law 25/2008/QH12 on Health Insurance 14/11/2008

3.Decree 127/2008/ND-CP providing detailed regulations and implementing guidelines on a number of articles of the Law on Social Insurance regarding unemployment insurance

22/08/2011

4.Decree 62/2009/ND-CP providing detailed regulations and implementing guidelines on a number of articles of the Law on Health Insurance

27/7/2009

5.Circular 09/2009/TTLT-BYT-BTC providing guidelines for implementation of Health Insurance regime

9/5/2003

83Appendix 1 - Current Relevant Regulation List of Selected Key Legal Documents

10. Regulations on Technology Transfer


1. Law 80/2006/QH11 on Technology Transfer 12/12/2006

2. Decree 133/2008/ND-CP regulating detailed provisions for implementation of the Law on Technology Transfer

15/11/2011

3. Circular 10/2009/TT-BKHCN guiding technology appraisal of investment projects 24/04/2009

4.Circular 31/2011/TT-BKHCN guiding the contents and modes of operation of technology evaluation and assessment organizations

15/11/2011

5.Circular 04/2010/TT-BKHCN guiding the implementation of a number of articles of Decree No. 49/2009/ND-CP

21/06/2010

11. Regulations on Intellectual Property


1. Law 50/2005/QH11 on Intellectual Property 12/12/2005

2. Law 36/2009/QH12 amending the Law on Intellectual Property 29/06/2009

3.Decree 105/2006/ND-CP regarding guidance for Implementation of a Number of Articles of Law on Intellectual Property with Respect to Protection of Intellectual Property Rights and State Administration of Intellectual Property Rights

22/09/2006

4.Decree 119/2010/ND-CP amending and supplementing a number of articles the Government’s Decree No. 105/2006/ND-CP

30/12/2010

12. Regulations on Taxes


A Corporate Income Tax

Law 14/2008/QH12 on Corporate Income Tax 12/06/2008

Decree 124/2008/ND-CP on providing guidance on the implementation of the Law on Corporate Income Tax

11/12/2008

Decree 122/2011/ND-CP revising and supplementing some contents in Decree 124/2008/ND-CP dated 11 December 2008

27/12/2011

Circular 130/2008/TT-BTC providing detailed guidance on the implementation of the Law on Corporate Income Tax and Decree 124

26/12/2008

Circular 18/2011/TT-BTC amending and supplementing CIT Circular 130/2008/TT-BTC 10/02/2011

B Value Added Tax

Law 13/2008/QH12 on Value Added Tax 12/06/2008

Decree 123/2008/ND-CP providing guidance on the implementation of the Law on Value Added Tax

23/12/2008

Decree 121/2011/ND-CP revising and supplementing some content in Decree 123/2008/ND-CP

27/12/2011

Circular 06/2012/TT-BTC providing detailed guidance on the implementation of the Law on Value Added Tax and Decree 121 and Decree 123

11/01/2012


C Natural Resource Tax

Law 45/2009/QH12 on Natural Resource Tax 25/11/2009

Decree 50/2010/ND-CP providing guidance on the implementation of the Law on Natural Resource Tax

14/05/2010

Circular 105/2010/TT-BTC providing detailed guidance on the implementation of the Law on Natural Resources Tax and Decree 50.

23/07/2010

D Import / Export Duties

Law 45/2005/QH11 on Import and Export Duties 14/06/2005

Decree 87/2010/ND-CP providing guidance on some articles of the Law on Import and Export Duties

13/08/2010

Circular 194/2010/TT-BTC providing guidance on customs procedures; customs inspection, supervision; ED/ID and tax administration for exported & imported goods

06/12/2010

E Special Sales Tax

Law 27/2008/QH12 on Special Sales Tax 14/11/2008

Decree 26/2009/ND-CP providing guidance on the implementation of the Law on Special Sales Tax

16/03/2009

Decree 113/2011/ND-CP amending and supplementing a number of Articles of Decree 26/2009/ND-CP dated 16 March 2009

08/12/2011

Circular 05/2012/TT-BTC providing detailed guidance on the implementation of the Law on Special Sales Tax and Decree 113

05/01/2012

F Personal Income Tax

Law 04/2007/QH12 on Personal Income Tax 21/11/2006

Decree 100/2008/ND-CP providing guidance on the implementation of the Law on PIT 08/09/2008

Decree 106/2010/ND-CP amending and supplementing Decree 100/2008/ND-CP 28/10/2010

Circular No. 84/2008/TT-BTC providing detailed guidance on the implementation of the Law on PIT and Decree 100

30/09/2008

Circular 62/2009/TT-BTC amending and supplementing Circular 84/2008/TT-BTC of MoF

27/03/2009

Circular 02/2010/TT-BTC amending Circular 84/2008/TT-BTC on PIT 11/01/2010

Circular 113/2011/TT-BTC partly amending Circular 62/2009/TT-BTC, Circular 02/2010/TT-BTC and Circular 12/2011/TT-BTC

04/08/2011

85Appendix 2 - Abbreviations

Appendix 2 - Abbreviations

Term Meaning

ASEAN Association of Southeast Asian Nations

b/d Barrels Per Day

BCC Business Corporation Contract

bcm Billion Cubic Metre

BOT Build-Operate-Transfer

BPD Barrels Per Day

BPSD Barrels per Stream Day

BSR Binh Son Petrochemical Company Limited Company

BT Build-Transfer

BTO Build-Transfer-Operate

c. Circa (approximation)

CAGR Compound Annual Growth Rate

CBM Coal Bed Methane

CER Carbon Emission Reduction

CIT Corporate Income Tax

CNG Compressed Natural Gas

COD Commercial Operation Date

CPV Communist Party of Vietnam

DQS Dung Quat Shipyard

DWT Dead Weight Ton

E&P Exploration and Production

EIA Environmental Impact Assessment

EPC Engineering Procurement and Construction

ESP Electrostatic Precipitator

EU European Union

EVN Vietnam Electricity Corporation

FDI Foreign Direct Investment

FEED Front End Engineering Design

FGD Flue-gas Desulfurization

FO Fuel Oil

FPSO Floating Production Storage And Offl oading

FS Feasibility Study

FSO Floating Storage and Offl oading

FTA Free Trade Agreement


GDP Gross Domestic Product

GPP General Purpose Processor

GSO General Statistics Offi ce

HNX Hanoi Stock Exchange

HOSE Ho Chi Minh City Stock Exchange

IRR Internal Rate of Return

ITB Invitation To Bid

KBDP Thousand Barrels Per Day

KMTA Thousand Metric Tons per Annum

LPG Liquefi ed Petroleum Gas

MoIT Ministry of Industry and Trade

NA Not Available

NOCs National Oil Corporations

NOx Nitrogen Oxide

NPV Net Present Value

PAC Provisional Acceptance Certifi cate

PAP Phuoc An Port Project

PPA Power Purchase Agreement

PPP Public Private Partnership

PVC Petrovietnam Construction Joint Stock Company

PVFC Petrovietnam Financial Company

PVGas Petrovietnam Gas Corporation

PVN Petrovietnam Oil and Gas Group

PVOS Petrovietnam Oil Stockpile Company Limited

PVTex Petrovietnam Petrochemcical & Textile Fiber Joint Stock Company

PVTrans Petrovietnam Transportation Corporation

ROA Return on Assets

ROE Return on Equity

RPR Reserves-to-production ratio

SME Small and Medium sized Enterprise

SOE State-Owned Enterprise

SOx Sulfur Oxide

SPM Single Point Moorning

tcm Trillion Cubic Metres

TEU Twenty-Foot Equivalent Unit

TPP Trans-Pacifi c Strategic Economic Partnership

USD United States Dollars

VAT Value-Added Tax

VND Vietnam Dong

WTO World Trade Organization

87Appendix 2 - Abbreviations

Contact Person

Ms. Le Thi Thu HuongDeputy General Manager

Investment & Development DivisionTel: +84 4 3772 5891Fax: +84 4 3826 5942

Email: [email protected]

VIETNAM OIL & GAS GROUP18 Lang Ha Street, Ba Dinh, Hanoi, Viet NamTel: +844 3825 2526 - Fax: +844 3826 5942

http://www.pvn.vn - http://english.pvn.vn/invest/

partnership with petrovietnam 2012

Documents

petrovietnam pvn

gas group petrovietnam

thermal power plant

power industry56 song

son basin

pricewaterhousecoopers

wind power project58

gas resources