Business development strategy of gas source for petrovietnam gas joint stock corporation from 2015 to 2020

HO CHI MINH CITY OPEN UNIVESITY

UNIVERSITÉ LIBRE DE BRUXELLES

SOLVAY BRUSSELS SCHOLL OF
ECONOMICS & MANAGEMENT

HP CHI

MBQPM4
LE THI PHUONG HANH

BUSINESS DEVELOPMENT STRATEGY OF
GAS SOURCE
FOR
PETROVIETNAM GAS JOINT STOCK CORPORATION
FROM 2015 TO 2020

MASTER FINAL PROJECT
MASTER IN BUSINESS QUALITY AND PERFORMANCE MANAGEMENT

Ho Chi Minh
(2014)


STATEMENT OF AUTHENTICATION
I hereby declare that this thesis entirely done by myself. The quotations and datum used in
the thesis are cited detail sources and the highest precision of my knowledge and
understanding. This paper does not necessarily reflect exactly the viewpoints of Solvay
Brussels School and Open University of Ho Chi Minh City, Faculty of Economics &
Management as well as Petrovietnam Gas Joint Stock Corporation.

Written guarantee
LE THI PHUONG HANH


ACKNOWLEDGEMENT
I sincerely thank you all Professors of Solvay Brussels School and Open University of Ho
Chi Minh City, Faculty of Economics & Management had imparted a lot of valuable
knowledge and help me throughout the course, especially for Professor Martin for giving
knowledge in the class, providing guidance and suggestions helped me during preparing
this thesis and valuable baggage for me in life afterward.
I highly appreciate to the Board of Planning Division and Market Development Division
of PV Gas and all their members were helpful and create favorable supporting and
conditions for me to complete this thesis.
We also have special thanks to family, related classmate and first group of MBQMP4
support and help me a lot during this course.


DISCLAIMER
The ownership and copyright to this thesis is held by the author and Solvay Brussels
School and Open University of Ho Chi Minh City, Faculty of Economics & Management.
The information of this thesis to be keep confidentially and not to be used, transferred,
disclosure, reproduction or conversion of this thesis without prior acceptance.


TABLE OF CONTENTS

STATEMENT OF AUTHENTICATION
ACKNOWLEDGEMENT
DISCLAIMER
ABBREVIATIONS

LIST OF GRAPH
LIST OF TABLE
INTRODUCTION
CHAPTER 1 - PRESENTATION OF PV GAS ............................................................... 1
1.1

PV Gas general overview: ...................................................................................... 1

1.2

PV Gas establishment and development overview milestones: .............................. 1

1.3

PV Gas projects in operation: ................................................................................ 2

1.4

PV Gas projects under construction & investment: ............................................... 4

1.5

PV Gas projects in the North: ................................................................................ 5

1.6

Other PV Gas’ investment: ..................................................................................... 6

CHAPTER 2 - INTRODUCTION OF NATURAL GAS .................................................. 7
2.1

Introduction Of Natural Gas .................................................................................... 7

2.1.1

Overview of Natural Gas ......................................................................................... 7

2.1.2

Attractiveness of Natural Gas: ................................................................................. 7

2.1.3

Advantages of Natural Gas ...................................................................................... 7

2.2

Method Supply Of Natural Gas ................................................................................ 8

2.2.1

Pipeline ................................................................................................................... 8

2.2.2

Compressed Natural Gas ("CNG") .......................................................................... 9

2.2.3

Liquefied Natural Gas ("LNG") ............................................................................... 9

CHAPTER 3 - ANALYSIS OF PV GAS ENVIRONMENT BUSINESS .................... 10
3.1

Macro Environment .............................................................................................. 10


3.1.1

Political factors: ................................................................................................... 10

3.1.2

Economic factors: ................................................................................................ 11

3.1.3

Social- Cultural factors: ....................................................................................... 13

3.1.4

Technological factors: .......................................................................................... 14

3.1.5

Environmental factors: ......................................................................................... 14

3.1.6

Legal factors: ....................................................................................................... 15

3.2

Micro- environment .............................................................................................. 20

3.2.1

Demand conditions ............................................................................................... 20

3.2.2

Factor Conditions ................................................................................................ 23

3.2.3

Related and Supporting Industries ....................................................................... 26

3.2.4

Firm Strategy, Structure and Rivalry ................................................................... 29

CHAPTER 4 –STRATEGIC CHOICES AND IMPLEMENTATION PLAN TO 2020 . 36
4.1

The opportunities and challenges of PV Gas: ...................................................... 36

4.1.1

Opportunities: ...................................................................................................... 36

4.1.2

Challenges: ........................................................................................................... 37

4.2

Strategic Choices and Implementation plan to 2020............................................ 43

4.2.1

Ensuring safe, stable and continuous operation of gas system: .......................... 43

4.2.2

Increasing PV Gas’ revenue and profits by enlarging and expanding gas system:43

4.2.3

Increasing investments to ensure PV Gas’ position in international gas industry:48

4.2.4

Re- structure organization to meet PV Gas’ expansion and development: ......... 49

4.2.5

Focusing on research and development: ............................................................. 50

CONCLUSION .................................................................................................................. 52
Summary of PV Gas’ business and development strategy to 2020: .................................... 52

Suggestion main development strategies: ........................................................................... 52
Conclusion: ......................................................................................................................... 52
REFERENCES .................................................................................................................. 54
APPENDIX ........................................................................................................................ 56


ABBREVIATIONS
Petrovietnam Gas Joint Stock Corporation

PV Gas

Liquefied Petroleum Gas

LPG

Power Development Plan 7

PDP 7

Liquefied Natural Gas

LNG

Compressed Natural Gas

CNG

Million standard cubic meter

mmscm

Standard cubic meter

scm

Million standard cubic meter per day

mmscmd

Ba Ria – Vung Tau province

BRVT

Capital Expenditure

CAPEX

United States Dollar

USD

Vietnam Dong

VND

Nam Con Son basin

NCS

LIST OF GRAPH
Graph 1

PV Gas General Overview

Graph 2

PV Gas Overview Milestones

Graph 3

Gas projects in operation

Graph 4

Gas projects under construction & investment

Graph 5

Comparison of Emissions

Graph 6

Summary of Vietnam GDP growth rate from 2005 to 2013

Graph 7

Violation of right of way

Graph 8

Proportional supply gas to Customer up to 2015

Graph 9

Summary of Current Domestic Vietnam Gas Prices

Graph 10

Forecast of delivered gas to South Vietnam power plants

Graph 11

Forecast of low gas pressure demand of South area

Graph 12

Proportional supply gas to Customer up to 2020

Graph 13

Gas shortage forecast (base case)

Graph 14

Forecast of required investment capital


LIST OF TABLE
Table 1

Forecast of Vietnam GDP growth rate

Table 2

The assessment of macro environment of gas industry

Table 3

Vietnam natural gas resources

Table 4

Summary of PV Gas workforce

Table 5

Market share CNG and PV Gas S

Table 6

SWOT analysis of PV Gas

Table 7

Vietnam gas demand by region

Table 8

Forecast of financial factors to 2020

Table 9

Forecast income of PV Gas’ labours


INTRODUCTION
Purpose and objectives of the Thesis:
PV Gas is a monopoly in supplying high pressure gas to end-users (such as gas power
plants, fertilizer plants) and maintains the major low pressure gas supplier to other gas
customers (such as industrial customers, transportation and households) and the biggest
wholesaler of LPG in Vietnam market. Over 20 years of establishment and development,
PV Gas has achieved a certain success and increasingly asserted its position and role in the
development of the Vietnamese economy.
In few years later, PV Gas will face many challenges and difficulties with gas demand
increases rapidly while domestic gas resources dwindle and decline as well as appearing
many LPG competent rivals. To grow and compete with rivals in the market, PV Gas
needs to have the appropriate strategy for the situation, chances and goals to maintain its
position of unique corporation in supplying dry gas to end-users and the biggest wholesale
of LPG.
In this thesis, I would propose to focus on analysing not only the challenges and
difficulties that PV Gas’s facing to but also the implementations, plans and strategies that
PV Gas should carry out to meet its targets in gas market.
Therefore, I have chosen the thesis of "Business strategy development of gas source for
PV Gas from 2015 to 2020" to study the business strategies that PV Gas should perform
in order to meet its targets.
Implementation process:
To carry out this thesis, there are some theories to be applied such as:


PESTL which is a framework or tool used to analyse and monitor PV Gas’ macroenvironmental (external marketing environment) factors that have an impact on PV
Gas’ business, operation and development.



Porter's Five Forces of Competitive Position Analysis which based on the concept
that there are five forces to be determined PV Gas’ competitive intensity and


attractiveness in gas market in order to understand the strength of PV Gas’ current
competitive position, and PV Gas’ position that it is looking to move into.


SWOT analysis (alternatively SWOT matrix) which is a structured planning
method to evaluate PV Gas’ strengths, weaknesses, opportunities, and threats in its
business, operation and development in order to identify the internal and external
factors that are favourable and unfavourable to achieve its target.
The contents of this thesis include following chapters:
Chapter 1: Presentation of PV Gas
Chapter 2: Introduction of Natural gas
Chapter 3: Analysis of PV Gas environment business
Chapter 4: Strategic choices and implementation plan to 2020


1

CHAPTER 1 - PRESENTATION OF PV GAS
1.1

PV Gas general overview:

PVGAS is a dominant gas supplier in nationwide, one of the major members of
Petrovietnam National Oil & Gas Group (PVN) with 96% equity owned, listing in Ho Chi
Minh Stock Exchange from 2011.
PV Gas’ development strategy is to focus on four key business segments as belows:


Dry Gas: operates gas pipeline system including offshore and onshore pipelines to
supply gas to power plants, fertilizer plants, industrial plants, transportations, etc…



LPG: leading producer and importer of LPG, with the market occupation circa
70% market share.



Condensate: leading condensate supplier for gasoline production condensate
produced from gas processing plants.



Services: focus on (i) Gas transmission, maintenance and equipment services, (ii)
Consulting for gas projects, and (iii) Management, operation, maintenance and
repair services for gas related projects.

Graph 1: PV Gas General Overview
Source: PV Gas Potential Investment 2012
1.2

PV Gas establishment and development overview milestones:

PV Gas was established on September 20th, 1990 to engage in gathering, importing,
transporting, storing, processing, distributing and trading of gas and its products in order
to stop flaring gas offshore.