Petroleum exchange model

In fact, the model of a petroleum exchange has been proposed by many experts and businesses during previous revisions of the decree on petroleum business. The reasoning is that, although still a state monopoly, the Vietnamese petroleum market has fundamentally seen the participation of the private sector, specifically in retail. Decree 80/2023/ND-CP on petroleum business allows a retail business to purchase goods from multiple suppliers. There are now proposals to allow distribution businesses and primary traders to purchase goods from each other according to market principles.

These are considered important prerequisites for the establishment of a petroleum exchange in Vietnam. However, concerns about the implementation and effectiveness of this model remain significant.

First and foremost is the significant challenge of high initial investment costs. Establishing a petroleum exchange requires significant investment in infrastructure, technology, and human resources.

Secondly, a strict management and supervision mechanism is needed to ensure the openness and transparency of the Exchange, preventing market manipulation.

Thirdly, there is the risk of continuous, even unpredictable, market fluctuations because the petroleum business is very sensitive to price changes. Therefore, the operation of the Exchange must also be compatible with international regulations.

There are still many other questions that are not easy to answer, such as what role the State should play in the petroleum market to both ensure market principles, create room for businesses to operate and compete fairly, and fulfill its responsibility to stabilize this particular market. Or the question of whether to build a separate petroleum exchange or to list on a commodity exchange as some countries are doing?...

Discussing the effectiveness of the petroleum exchange model, some National Assembly representatives frankly stated that the success of the exchange largely depends on whether distributors are allowed to buy and sell freely; if the regulatory agency continues to fix prices and limit the scope of buying and selling, then establishing a petroleum exchange is meaningless.

Around the world, many countries are also struggling to find a suitable model for a petroleum exchange. Currently, there are two petroleum exchanges considered to be quite successful: the Chicago Exchange (USA) for WTI crude oil and the London Exchange for Brent crude oil. These two exchanges are successful because they have created a sufficiently large playing field, with a large enough volume of petroleum products, and buyers and sellers…

In Vietnam, trading of products such as crude oil and natural gas was allowed on a pilot basis at the Vietnam Commodity Exchange (MXV) from May 2020 to May 2024. However, MXV leaders acknowledge that not many businesses participated because the policy was not stable, and the decision to allow pilot trading on MXV was only on an annual basis, meaning that renewal had to be applied for upon expiration.

The pilot program was halted on May 27, 2024, due to the Ministry of Industry and Trade revising Decree 80/2023/ND-CP on petroleum business and amending Decrees 158/2026/ND-CP and 151/2018/ND-CP guiding the Commercial Law on the trading of goods through the Commodity Exchange. The proposed solution is to continue allowing trading of energy and petroleum products at the Vietnam Commodity Exchange as before to meet the insurance and investment needs of businesses, potentially linking additional products such as E5 RON 92 and RON 95 gasoline. This also serves as the basis for proposing research and consideration of establishing a petroleum exchange suitable to the Vietnamese context.

Clearly, establishing a petroleum exchange is necessary, but to manage and operate it effectively and achieve its objectives, more time is needed for thorough research and evaluation. This requires the consensus and determination of the Government and relevant agencies.