Proposal to transfer management of petroleum reserve to finance ministry

A petroleum warehouse in Quảng Ninh Province. The legal framework for the management of the national petroleum reserve remains inadequate and lacks consistency and appropriateness to the real situation, according to the Ministry of Industry and Trade. — Photo petrolimex.com.vn

HÀ NỘI — The Ministry of Industry and Trade has proposed the Government allow it to transfer the task of managing the national petroleum reserve to the Ministry of Finance in order to unify the management of reserves of essential goods into a single ministry.

The proposal was raised in the ministry’s report to the Government about the national petroleum reserve.

Under the Law on National Reserve, the Ministry of Finance is directly in charge of managing reserves of essential goods, such as rice.

As petroleum is also an essential good, the Ministry of Industry and Trade said that the management should be transferred to the finance ministry in the 2024-25 period.

In Việt Nam, petroleum reserves are kept in two forms: reserve by businesses and the national reserve.

However, in fact, it was difficult to separate the national petroleum reserve from the reserve of enterprises because the State did not have the infrastructure for petroleum reserves and must rent from enterprises.

Four enterprises which lease the infrastructure for the national reserve storage include Việt Nam National Petroleum Group (Petrolimex), PetroVietnam Oil Corporation (PVOil), Đồng Tháp Petroleum Trading Import Export Company Limited and Petrolimex Aviation.

The industry and trade ministry said that there are a number of difficulties in the management of the national petroleum reserve, including low maintenance cost norms, at VNĐ14,900 (US$0.62) per cu.m, which has been kept unchanged for the past two decades.

Meanwhile, the actual cost is around VNĐ75,000-150,000 per cu.m.

This has caused a shortage of resources for investing in infrastructure for petroleum reserve, the industry and trade ministry said.

In addition, the Ministry of Finance has not issued the criteria for the national reserve of petroleum products, which has caused difficulties in management.

The legal framework for the management of the national petroleum reserve remains inadequate and lacks consistency and appropriateness to the real situation, the ministry said.

By the end of 2022, the national petroleum reserve was at 361,125cu.m, 55 per cent of which was diesel, 27 per cent petrol RON 92, and the rest mazut oil and Jet A1, equivalent to seven days of net import.

Việt Nam’s total petroleum reserve is estimated at around 65 days of net import, much lower than demand.

The ministry proposed the national petroleum reserve be raised to 20 days of net import by 2030, including crude oil, or at least 15 days of net import.

The ministry proposed the national petroleum reserve be raised from nine days of net import to 15 days and 30 days in the 2026-30 period, in the context of global uncertainty affecting the energy market.

To achieve the goal, the ministry said that it is necessary to issue technical standards and cost norms for the national petroleum reserve. In addition, investment in storage infrastructure should be sped up.

It was previously estimated that Việt Nam would need around VNĐ4.1 trillion per year to increase the national petroleum reserve. — VNS