1. Vietnam Offshore Maritime sector
18th June 2012
Tran Hai Anh (MSc., MBA) – Senior Market Adviser

2. Content
1. Cluster Conditions
2. Demand conditions
3. Industry Rivalry
4. Factor conditions
5. SWOT
6. Conclusion and recommendation
2

3. 3
Cluster conditions

4. Main players
4
SHIPBUILDERS:
• Vinashin
• PetroVietnam
• Navy shipyards
• Foreign shipyards
DOMESTRIC
SHIPOWNERS:
• PetroVietnam
• Vietsovpetro
• Vinalines
• Petrolimex
• Au Lac
• Ministry of
National Defense
FOREIGN
SHIPOWNERS:
• DOF
• Farstad shipping
• Densa
• Norden
• Geden
• HMM
• DSL Kumpula
• Ezra Holding
• German Briese

5. Shipbuilding Clusters
• Northern cluster: bulkers, containers, tankers, multi-
purpose vessels, etc. up to 100,000 DWT.
• Center cluster: tankers, bulkers, multi-purpose vessels,
navy vessels, etc. up to 300,000 DWT.
• South cluster: bulkers, offshore vessels, containers, etc.
up to 50,000 DWT.
• Vung Tau offshore shipbuilding sub-cluster: offshore
vessels and rigs.
5

6. Northern shipbuilding cluster
6
The Northern shipbuilding cluster has
no existing offshore shipyard

7. The Centre shipbuilding cluster
7
• Dung Quat shipyard is going to build rig and submersible
• Huyndai-Vinshin shipyard is the most busy shipyard in Vietnam
DUNG QUAT SHIPYARD
400,000 DWT TANKER
SONG THU SHIPYARD FOR LIGHT VESSEL
HYUNDAI VINASHIN
CAM RANH SHIPYARD
30,000 DWT VESSEL

8. The South shipbuilding cluster (excl. Vung Tau)
8
• PTSC shipyard is going to build offshore vessels for PTSC
• Saigon Shipyard (Triyard) builds offshore vessels for Ezra Holding
CA MAU SHIPYARD FOR
HANDYSIZE
76 SHIPYARD FOR
HANDYSIZE
SHIPMARINE SHIPYARD FOR
HANDYSIZE
SAI GON SHIPYARD FOR
HANDYSIZE
PTSC SHIPYARD FOR
HANDYSIZE
SOAI RAP SHIPYARD FOR
HANDYSIZE
CAN THO SHIPYARD FOR
HANDYSIZE
HAU GIANG SHIPYARD
FOR HANDYMAX

9. Vung Tau offshore shipbuilding cluster
9
Offshore
shipbuilding:
STXovs, Strategic
marine,Sofel, PV
shipyards, Vinalines
shipyard.
Oil and Gas
industry:
VietsoPetro,
PVN, Farstad,
DOV, PVD
Subcontrac
tors:
Goltens,
Rolls Royce,
PTSC
Suppliers:
PTSC, Brodrene
Dahl, Maritime
Interior
Finance,
banking
service:
BIDV, HSBC,
VCB.
Ship
classification
services:
DNV, Loyd,
NYK
Logistics:
Palnalpina,
DHL, AGILTY,
Shanker,
Brokers:
PVFC,
Wihemsen.
Safety
service:
Mermaid
safety.
Insurance:
PVI, Loyd,
Dloite.
Education &
training: PV
training centre,
Maritime
university, DNV,
BV, URS.
Offshore
Ship&rig
owners:
Vietsopetro,
PVD, Petronas,
KNOC, BP,
Chervon
HR service:
IZ, Navigos,
Net Viet, Erns
Young, KPMG,
DNV.
Ship
management:
SBM, Modec
Ports: Cai
Mep-Thi Vai,
Ben Dinh- Sao
Mai, My Xuan,
Go Dau, PTSC,
Vietsopetro
Source: Tran Hai Anh - Do Anh Tuan,
Innovation Norway Hanoi

10. 10
Demand conditions

11. Vietnam Order Book up to Mar. 2011
11
Unit: No of vessel
Source: Tran Hai Anh - Innovation Norway Hanoi

12. Status by kind of vessel (up to Mar. 2011)
12
Unit: No of vessel
Source: Tran Hai Anh - Innovation Norway Hanoi
 None of offshore service vessels was cancelled or on hold
 43% of bulker and 67% of tanker were cancelled or on hold

13. 13

14. PTSC’s AHTS Development Plan
14
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
• 2012-2025: build/purchase 30 AHTS
• 7,000 HP – 10,000 HP;
• Prefer to build these AHTS at PTSC
shipyards;
• Seeks for foreign investor(s) to develop
PTSC shipyard.
• Seeks for foreign expertise to build AHTS;
• Further information: www.ptsc.com.vn
Source: Nguyen Hoang Hai Minh, Deputy Director,
PTSC shipyard

15. PV Shipyard Projects
15
Source: www.pvshipyard.com.vn
• Assist tender barge for PVD,
(250 meters water depth).
• 400ft Jack-up for VietsoPetro
• 90 meter jack-up rig for
VietsoPetro.
• 60 meter drilling jack-up rig
project for PetroVietnam.
• Semi-submersible for
Vietsopetro (?)

16. Vietsopetro Project
16
• Re-tender for the construction of a semi-submersible
drilling unit.
• Seeking to buy or build heavy lift construction vessels of
up to 3,000 tonne.
• The 60-metre Warstilla-designed DSV under construction
at a shipyard in Batam is due for delivery
• Investing in more rigs to replace the drilling units it has
on charter from third-party contractors
• Teamed up with Bumi Armada to develop and operate a
floating production, storage and offloading vessel

17. Triyard projects
17
• H0705 self propelled jack-up rig
• H0706A self propelled jack-up rig
• H0706B self propelled jack-up rig
• H09026000 T oil tankers
• H1002 178 m sub-sea pipe laying vessel DP3
• H1007 29m ASD Tug boat
• H1008 29 m ASD Tug boat
Source: www.triyards.com

18. STX Projects
• Six Aker DOF AHTSs were handed over
• Three Farstad ships, Platform Supply under construction
• Coming project?
18

19. 19

20. 20
Vietnam
Shipbuilding Rivalry

21. Existing Shipbuilders
 Hyundai –Vinasin shipyard: Procurement done in Korea
 Damen:
 Partnership with Song Thu shipyard to outsource
new-building works plus total solution package.
 Partnership with Song Cam shipyard (under
Vinashin) to outsource new-building tub-boat plus
total solution package.
 Provide total solution package for PTSC on building
tugboat
 Use Helmers for interior package
21

22. Existing Shipbuilders (cont. 1)
 Triyards:
 Built ships for its mother company (Ezra Holding)
and start to look for external order;
 Quality and price-driven procurement;
 Marc-Plan is used for supplying interior package.
 STX OV
 Quality and price-driven procurement;
 STX Accommodation Vietnam is used for interior
package.
 Oshima’s shipyard is under construction in Khanh Hoa
province.
22

23. Existing Shipbuilders (cont. 2)
 PTSC shipyard
 Under construction;
 Ambition of building ship for its mother company;
 Price-driven procurement (under law of
tendering).
 PVshipyard
 Build rigs/platform for its mother company:
PetroVietnam/Vietsopetro;
 Price-driven procurement (under law of
tendering).
 Dung Quat shipyard: Price-driven procurement (under
law of tendering).
23

24. Existing Shipbuilders (cont. 3)
 Navy shipyards: trust,
quality and price-driven
procurement.
 Vinashin shipyards:
price-driven procurement
(under law of tendering).
24
NME’s group at STX OV, Vung Tau –
Photo: Eivind Petershagen,
Innovation Norway Oslo

25. Offshore Ship Owners
• PVD: Price-driven procurement (under law of tendering).
• Vietsopetro: Price-driven procurement (under law of
tendering).
• PTSC: Price-driven procurement (under law of tendering).
• Foreign operators: Trust, quality and price –driven
procurement.
25
Cat Lai Port – Photo: Innovation Norway Hanoi

26. Tanker Shipowners
 Petrolimex: Price-driven procurement (under law of
tendering).
 PVTrans: Price-driven procurement (under law of
tendering).
 PV oil shipping: Price-driven procurement (under law of
tendering).
 Au Lac: private ship-owner, price and quality-driven
procurement.
 Gas shipping: Price-driven procurement (under law of
tendering).
26

27. Other Shipowners
 Vinalines: Price-driven procurement (under law of
tendering).
 Navy ship-owners: trust, quality and price-driven
procurement.
27
STX OV Opening Ceremony –
Photo: Kjell Arne, Innovation
Norway Hanoi

28. Market analysis
28
 Market has low entry barrier and low exit barrier
 Customer holds the power
 High customer’s possibility of switching from placing new order
inside Vietnam by shopping ready-made/under construction
products in the global market

29.  Set up long term partnership with ship-owner(s)?
 Set up long term partnership with shipyard(s)?
 Set up local production facility?
 Use agent(s) in Vietnam?
 Use agent(s) in Singapore to cover Vietnam market?
 Partnership with PetroVietnam’s subsidiaries to provide
services in Vietnam and in the region?
 Outsourcing for local constructors?
 M&A?
Possible Entry modes
29

30. 30
Factor conditions

31. Country at glance
31
Source: www.adb.org

32. 0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
1/1/2009
2/1/2009
3/1/2009
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1/1/2011
2/1/2011
3/1/2011
Base rate Refinancing rate Discount rate
Economy Outlook
32
Source: www.adb.org
Interest rate (%)

33. Investment Related Costs
Hanoi Da Nang Hochiminh City
Wage (manufacturing)
Full time worker (basic montly salary) 104 $ 87 $ 100 $
Full time engineer (basic montly salary) 287 $ 180 $ 293 $
Full time manager (basic montly salary) 822 $ 221 $ 670 $
Legal minimum wage 95 $ 95 $ 95 $
Social security burden
Employer burden rate
- Social insurance 16% 16% 16%
- Health insurance 3% 3% 3%
- Unemployment insurance 1% 1% 1%
- Trade union fee 1% 1% 1%
Employee burden rate
- Social insurance 6% 6% 6%
- Health insurance 1.50% 1.50% 1.50%
- Unemployement insurance 1% 1% 1%
Energy cost
- 95 Petrol 1.1 $/L 1.1 $/L 1.1 $/L
- Diesel 1.009 $/L 1.009 $/L 1.009 $/L
- Electricity price (average) Uscent 9.5 Uscent 9.6 Uscent 9.7
A Graded Office rent 30-35 $/m2/month 17-19 $/m2/month 25-30 $/m2/month
33Source: Tran Hai Anh, Innovation Norway Hanoi

34. 34

35. 35
Unit: $ billion
Source: Vietnam economic times

36. 36

37. Strong government ownership
o Vinashin is 100% owned by the government
o PetroVietnam is 100% owned by the government
o Vinalines is 100% owned by the government
o 51% of Vietsopetro is owned by PetroVietnam
o Ministry of National Defence owns navy shipyards
37
Government shows its strong commitment
and provides significant support to Vietnam
maritime sector

38. Strong Development of Oil & Gas activities
38
Unit: 103 barrels
Source: BP Statistical Review 2011
 Third ranked in Asia – Pacific by Oil reserves
 Third ranked in SEA region by production of oil and liquid

39. DISCOVERED
YET TO FIND
Oil & Gas – E&P situation
39
 Major oil productions from Cuu Long basin
 Major gas production from Nam Con Son basin
 Offshore water depth: 30m-150m

40. 40

41. 41
Vietnam Business Culture

42. 42
Vietnam Business Culture

43. 43

44. 44

45. 45

46. 46

47. 47
?

48. 48
SWOT -Norwegian
Maritime Companies
and Vietnam Offshore
Shipbuilding

49. Norwegian Maritime Companies - Strengths
Strengths • Unique technology
• Unique combination (owns the whole
value chain?)
• Unique competence?
• High accessibility to R&D
achievements
• High accessibility to financial sources
• Good reputation (good quality and
good attitude)
49

50. Norwegian Maritime Companies Weakness
50
Weaknesses • High cost?
• More focus on technology than
business?
• Sufficient resources to cover Vietnam
market?
• Sales/marketing efforts?
• Flexibility?

51. Opportunities
51
Opportunities • Political stability
• Member of international organizations (WTO,
ASEAN, IMO, COSPAS-SARSAT, etc.)
• EFTA Trade Agreement is under negotiation
• Existing domestic demand as the result of
strong oil & gas industry development
• Young population with competitive labor cost
• Favorable geographical location
• Tax incentives for export products
• Presents of Norwegian players

52. Threats
52
Threats • Economic depression
• High bureaucracy
• Raw materials needs to be imported
• High competition from neighbor countries
(China, Singapore, Malaysia, Korean)

53. 53
Conclusion and
Recommendation

54. Conclusions
 Vietnam offshore shipbuilding is driven by both domestic
demands and external demands.
 Strong presents of international players, including
Norwegian players, in Vietnam offshore maritime sector.
 Norwegian offshore-maritime expertise and technologies
are needed.
 Coming together make you shaper and stronger
 Now is right time to come and see?
54

55. Recommendations
55
We are here for help!

56. 56