The gas price on the domestic market has reached the record high for the last few days due to the world’s price increases. However, experts said that the lack of storage depot is also the reason behind the sharp price increases.
Vietnam does not have enough depots to store LPG, and this pushes the prices up, said the Deputy Director General of PVGas.
He said that even PVGas, the only LPG producer in Vietnam, which provides 40% of total LPG to the market, does not have storage depots.
The current LPG depot of PVGas, which has the biggest containing capacity in Vietnam, can contain up to 7,000 tonnes, the volume which is just enough for two ships to charge gas for several days. This depot just serves the production (containing LPG within one production period), while it is not a commercial depot, nor storage depot.
The official said that the total containing power of the available depots of gas trading firms in Vietnam is 35,000 tonnes, and 2/3 of the capacity is in the south.
According to Hoang Anh, Deputy Director General of Gas Petrolimex, since not having storage depots, companies have to import goods and sell in short time (2-3 times a month), instead of importing in large quantities for longer sale.
As companies cannot buy gas for reserve, they cannot take initiative in their business plan, and they heavily rely on the world’s market price fluctuations.
Enterprises well understand that it is necessary to build storage depots. However this proves to be a difficult job: in order to have a standardized 1,000 tonne depot, they will have to spend at least VND60bil ($3.75mil).
While enterprises keep hesitating with their investment, the lack of storage LPG depots has been causing a lot of difficulties for their business and customers as well.
Every year, the Dinh Co LPG plant in Ba Ria – Vung Tau has to halt production for 20 days for its periodic maintenance work.
If gas trading companies have enough depots, they would reserve LPG for these 20 days, which help avoid the supply shortage and the price increases caused by the shortage.
The Dinh Co Plant has announced to halt production in early October for periodic maintenance. Gas trading companies should raise the import volume to offset the gas deficiency. However, as they do not have many storage depots, they have to purchase gas in small quantity at high prices.
“If we had many storage depots, we would be able to avoid the market price fluctuations,” said Mr Hoang Anh.
Currently, the demand for LPG grows by 8-10% per annum. If Vietnam does not expand production, the locally sourced supply will decrease gradually, which also means that Vietnam will more heavily rely on imports and suffer the world’s price fluctuations.
“However, no big scale project on building LPG storage depots has been kicked off so far,” said Mr Anh.
Via: Tienphong
