Vietnam is now giving much effort toward the development of petrochemical plants and refineries in accordance with its National Energy Development Strategy for 2020, to upgrade its capacity to process larger volumes of crude oil. Vietnam has the third largest crude oil reserves in the Asia Pacific region, totaling 4.4 billion barrels – in the neighbor of 600 million tons. At present, three such projects have already commenced. Once they are completed, Vietnam's crude oil refining capacity will reach 27 million tons/year, up from 6.5 million tons/year now. Current outputs are hardly adequate for domestic consumption that was around 21.8 million tons/year in 2014.
Those refining and petrochemical plant projects will likely spawn an integrated petrochemical industry which is an upstream business, linked with many other industries within its country. Considering this, KResearch is of the view that rising petroleum refining and petrochemical projects in Vietnam are a watershed for its domestic industrial manufacturing, transitioning from labor-intensive to more sophisticated production capabilities emphasizing greater use of capital and technology. That will no doubt lead to further changes in import/export of oil, petroleum products, plastic resins and plastic products.
When all three of the new plants are commissioned and ready for full operation in 2021, it may not be a good turn for Thai shipments to Vietnam. This is because petroleum products are one of our major goods sent there, accounting for 15 percent of Thailand's total Vietnam-bound exports. In the future, when other related projects are completed, Vietnam's rising potential might turn the country from a key trade partner into an export rival for the above-mentioned products. In view of this, it is advisable for Thai businesses to improve the quality of their exports, especially petrochemical products, ensuring that they respond appropriately to their consumer needs. In that way, we may maintain competitiveness in those product categories amid ever-intensifying competition.
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