Oil & Gas – In-depth – [NEUTRAL] – 2H25 Outlook: Tailwinds at home, headwinds abroad

Natural gas:

• Natural gas (include LNG) is expected to grow by 11% in 2H25F mainly thanks to the commercial operations of Nhon Trach 3 (from Sept) and Nhon Trach 4 (from Nov).
• We think that LNG demand (of generators) will be higher thanks to (1) a cooled downed LNG spot price (2) domestic gas supply capacity to decline at >30% yoy and (3) government ambitious GDP target would demand a strong electricity generation growth.

E&P:

• Drilling market may still be oversupplied, weighting on drilling day rates.
• Block B – O Mon’s execution is expected to run smoothly, as for high government determination, benefitting firms that are currently work for the project.

Petroleum:

• Short-term challenges: the market recently recorded another layer of premium relating to the Iran-Israel conflicts, that overshadowed the market oversupply stage. We think oversupply concerns could quickly pivot market sentiments when the uncertainties of the conflict unveil, and the war premium is lifted. As a result, we expect high volatility of oil price in 3Q25 which will continue to strongly affect the profit margins of petroleum distributors.
• Long-term opportunities: the 6th draft of the new petroleum decree significant step in liberalizing the petroleum market, more pricing power for the distributors as well as stricter business conditions. We think the new decree could be approved in 2H25.
• Crack spread may still be under pressure due to slow-growing fuel demand.