Van Phong Energy Complex to bolster Vietnam's energy security and national fuel reserves

Oil and fuel reserves in Vietnam are currently composed of three main sources: national reserves managed by the state, commercial reserves held by leading storage operators, and production reserves held at refineries. The national reserve, funded by the budget, is intended as a security cushion in emergencies, but its scale is limited and mainly supports short-term market interventions rather than smoothing the market during major fluctuations.

Commercial reserves held by major traders account for the largest share and supply the market directly. However, due to cost pressures and price risk, companies tend to optimize inventories rather than maintain long-term stockpiles, particularly when oil prices are volatile.

The third source is production reserves at refineries such as Dung Quat and Nghi Son. These reserves primarily serve plant operations and are not designed as strategic stock.

When the three sources are combined, estimates indicate Vietnam’s total oil reserves are equivalent to about 20-30 days of net imports, which is well below the international safety threshold.

International benchmarks and Vietnam’s gap

The International Energy Agency (IEA) recommends that countries maintain oil reserves at least equal to 90 days of net imports to ensure sufficient room to respond to supply shocks, including geopolitical conflicts or shipping disruptions.

In OECD countries, this standard is effectively mandatory. In several Asian economies, including Japan and Korea, reserves can reach 150-200 days. These countries build strategic stockpiles with large capacities and maintain stable financing mechanisms to sustain long-term stockholding.

In Vietnam, reserves remain small and rely heavily on the private sector, which undermines sustainability.

Infrastructure bottlenecks and the “role challenge”

One core reason behind the limited scale of Vietnam’s oil reserves is the warehouse infrastructure. The current storage system is dispersed, small-scale, and managed by many different operators. Most commercial warehouses are built to meet business objectives with high turnover, rather than to support long-term storage.

Vietnam also has fewer national strategic reserves with large scale comparable to those in developed countries—stockpiles with millions of cubic meters capacity that can ensure supply for months without relying on market purchases.

Expecting the private sector to carry the strategic reserve role is also not considered realistic. Cost pressures, price risk, and financial performance requirements make it difficult for private firms to maintain large inventories for extended periods without government support and guidance. As a result, the state would need to invest in national strategic fuel stockpiles or place orders with private companies to build storage and then lease it back to the state.

Adjusting storage structure toward a long-term approach

To raise reserves to 60-90 days and move closer to international standards, Vietnam would need a comprehensive strategy covering financial resources, infrastructure planning, and operational mechanisms.

Key challenges include not only large investment needs, but also land use, the location of storage sites, and the logistics systems that connect them. Large-scale storage facilities require strategic locations, well connected with ports and distribution networks, which increases both investment and operating costs.

The state can either directly invest in strategic storage or require private companies to build storage and lease it back to serve national storage goals. This approach is intended to leverage private sector resources while reducing budget pressure, without losing energy security objectives.

Raising reserves to 60-90 days would improve the economy’s resilience to supply shocks. It would also provide regulators more room to manage prices flexibly, helping curb inflation and stabilize market sentiment. In addition, when businesses and consumers trust the supply guarantee, speculation and hoarding are expected to decline.

Achieving these targets requires a long-term strategy, from mobilizing financial resources to refining policy instruments. It also calls for studying financial models that combine the state budget and private sector participation to reduce cost pressure while maintaining energy security.

Van Phong Energy Complex as a storage and logistics expansion

One project highlighted in the context of expanding storage capacity is the Van Phong Energy Complex, with total investment of VND 16,956 billion. The project covers nearly 350 hectares in Dong Ninh Hoa ward, within the Van Phong Economic Zone in Khanh Hoa province. It is proposed by the joint venture of INDEL Investment and Development JSC and BB Power Holdings JSC.

The project is planned for 2026-2030 and is designed as a modern energy complex integrating port infrastructure, storage, and energy production components.

Key components include:

• A dedicated port capable of receiving 30,000-150,000 DWT vessels
• An LNG terminal with capacity of 1-3 million tons/year
• An integrated storage facility for petrol, solvents, and basic chemicals with capacity of about 1 million m3
• A green hydrogen production plant with capacity of 24,000 tons/year
• A battery energy storage plant with capacity of 50-80 MW/year

With LNG and large-scale fuel storage systems, the complex is expected to boost national storage capacity, reduce dependence on external supplies, and enhance resilience to fluctuations in the global energy market. The inclusion of a green hydrogen plant and battery energy storage production is also positioned as readiness for the energy transition, supporting carbon emission reductions and sustainable economic development.

Notably, investor representatives stated willingness to participate in a government-ordered storage leasing mechanism, which they said could help raise national reserves from 30 days to 90 days in the long term.

Beyond energy security, the project is expected to become a new growth driver for Khanh Hoa province and support the Van Phong Economic Zone’s development into a national-scale energy and logistics hub.