Competition between PV Oil and Petrolimex toughly attributed to Japanese strategic partners' participation

In 2016, JXTG Nippon Oil & Energy spent nearly $176 million to own eight percent of Petrolimex, which was marked as one of the largest investment deals of state-owned enterprises through equitization process.

The dominant position of Petrolimex in the domestic market, besides owing to strategic locations of its retail stores, which are mainly located in the crowded residential areas, it is also attributed to the support of JXTG Nippon Oil & Energy in strategic planning and logistics consulting to save costs.

In the first year of cooperation with JXTG Nippon Oil & Energy, Petrolimex gained huge revenue of $5.4 billion and a pretax profit of $275 million, an increase of 68 percent compared to the previous year.

In the first four months of 2018, while PV Oil was busy reeling with the IPO, Petrolimex has just opened another 100 stores.

Recognizing the roles of JXTG Nippon Oil & Energy in reviving Petrolimex, making it more successful over the years, PV Oil did not hesitate to accept the offer of Idemitsu Kosan to become one of PV OiL shareholders.

Besides from being a supporting partner of Petrolimex, JXTG Nippon Oil & Energy is also the number one company in the field of energy in Japan, which makes it the major rival of Idemitsu Kosan.

This also explains why Idemitsu Kosan chose to cooperate with PV Oil instead of Petrolimex. Clearly, Idemitsu Kosan is indirectly competing with JXTG Nippon Oil & Energy through PV Oil in Vietnam’s petroleum market.

According Cao Hoai Duong, President & CEO of PV Oil, after becoming a joint stock company in the future, together with the support of strategic partners, such as Idemitsu Kosan, PV Oil expects to take a big leap in their development.

Nevertheless, things are not going well with PV Oil in improving its productivity. Since then they only opened 40 more stores.

Despite PV Oil’s efforts to increase its output, the growth rate of PV Oil in 2017 still remained at four percent, while the growth rate of Petrolimex is eight percent.

Duong explained that due to the nature of PV Oil as a state-owned company, there are many procedural and mechanism obstacles occurred during the process of M&A with its strategic partners making PV Oil’s growth process more unpredictable.

PV Oil held 22 percent of the petrol market share, with 540 petrol stations and 3,000 agencies, by the end of 2017. PV Oil aims to increase its market share from 22 percent to 35 percent over the next five years through merging and acquisition (M&A) activities.

On the contrary, Petrolimex accounts for over 48 percent of Vietnam's petrol market with currently up to 2,500 affiliated petrol stations and also 3,000 agencies. 

However, instead of expanding its market share, Petrolimex wishes to maintain a market share of less than 50 percent and focuses on extending their retail stores across the country.