JX Nippon Oil & Energy will pay around 20 billion yen ($177 million) to buy a roughly 10% stake in Vietnam National Petroleum Group (Petrolimex
), which sells more than half of oil products in the country, Nikkei Asian Review reported.
The two parties have been in exclusive negotiations on a business tie-up since December 2014.
JX will supply its partner with expertise in business matters, including gas station management and payment systems.
JX will decide in fiscal 2016 whether to join a Petrolimex oil refinery project in Van Phong Economic Zone in Vietnam’s southern province of Khanh Hoa to tap the rising fuel demand in the country.
The facility is slated to have a processing capacity of around 200,000 barrels of oil a day, making gasoline and diesel fuel for the domestic market.
Dung Quat refinery, Vietnam’s sole operational oil refinery, processes some 150,000 barrels of crude oil per day, but meets only 30-40% of domestic demand.
JX looks to team up with Petrolimex as well as Middle Eastern oil interests on future projects in the country, turning the market into a key revenue source as Japan’s oil demand shrinks, according to Nikkei.
Idemitsu Kosan, another Japanese energy company, holds a 35.1% stake in a $9-billion refinery in Nghi Son Economic Zone in north central Vietnam. The refinery is set to begin commercial operation in mid-2017.
Petrolimex went public in 2011 and has been seeking investors to sell a minority stake. The state ownership in the firm is poised to be reduced to as low as 65% from around 95% currently.
Petrolimex earned a net profit of 2.14 trillion dong ($94.88 million) in the first three quarters of 2015, up 85.8% year-on-year. The firm has a registered capital of 10.7 trillion dong ($475.55 million).