Government hails nation’s 1st oil refinery

Photo: Reuters

Though the country’s first oil refinery was completed nine years behind schedule, its cost was eventually lower than estimated and it remains a breakthrough for the oil industry, a government report to the National Assembly said.

The Dung Quat Refinery only cost VND40 trillion (US$2.05 billion at current value) when it was built this year, VND10 trillion less than estimated, said the report.

But according to a report released by the House Committee of Science, Technology and Environment, the refinery’s cost was estimated at $1.5 billion in 1997, raised more than once, and finally ended at $3.05 billion (VND51.7 trillion) in 2009.

The government attributed the difference of around $1 billion between the two reports to the fact that the committee report included revenue expenses like salaries and taxes.

Regarding the criticism that the plant’s capacity is too low at 6.5 million tons a year compared to 10-12 million tons for other refineries worldwide, the government said the project was executed at a time when there were no strategy or planning for oil refineries making it difficult to make a decision on the capacity.

The report admitted that PetroVietnam, which built the refinery, did not have a long-term vision for refining and therefore had to amend the design two times to add two more workshops. Meanwhile, official agencies had been slow in issuing legal documents on quality.

The government said PetroVietnam is considering importing crude oil of better quality to replace the oil from its offshore Bach Ho field, and expanding the refinery to increase its capacity to 8-10 million tons.

Many legislators questioned the competitiveness of the plant’s products and the economic benefits to the country.

Vietnam’s first refinery - an overview

It took 13 years for the Dung Quat Refinery to be built. Work began in 1997 and the plant was initially expected to go on stream in 2001, but it took until January 2010 for it to be actually completed.

Around 75 percent of the work was carried out by Vietnamese sub-contractors.

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Dung Quat refinery faces year-end surplus

PetroVietnam, the nation's state-owned oil and gas group, has said that its Dung Quat refinery will face a surplus of around 157,200 cubic meters this year even if local fuel traders try their best to purchase its products.

Petrolimex, a subsidiary of PetroVietnam that owns more than a 50 percent share of the domestic fuel market, plans to buy 273,100 cubic meters this month and at least another 407,300 cubic meters in the next two months, VnExpress reported Monday.

Other traders, including PV Oil, Petec and the jet fuel firm Vinapco, also announced plans to purchase Dung Quat’s products.

PetroVietnam said that, by the end of December, fuel companies will not be able to use up all of their inventory.

On October 4, the group announced that Dung Quat, Vietnam’s first oil refinery, had 750,000 tons of oil and gasoline products in stock and not enough space to store them.

The plant has been running at full capacity, or 30 percent higher than the plan for this year.

The Ministry of Industry and Trade has ordered PetroVietnam to balance supply and demand in the domestic market next year.

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Dung Quat oil refinery operates effectively

The Dung Quat Oil Refinery in the central province of Quang Ngai
is running effectively, helping ensure national energy security, a
conference was told on Oct. 18.

A report presented by
Minister of Industry and Trade Vu Huy Hoang at the event showed that the
plant now can meet about 30 percent of the domestic demand for
petroleum and that it has created a breakthrough in economic development
in Quang Ngai, helping boost economic growth in the central region and
the country.

Dung Quat Oil Refinery started its operation in February 2009, becoming the first petrochemical complex in Vietnam .

In a draft report on the implementation of the National Assembly
resolution on the first refinery, the NA’s Committee on Science,
Technology and Environment proposed the NA to recognise the completion
of the project at its upcoming 8th session.

The
committee also proposed that the Government map out plans to raise the
refinery’s capacity in order to develop the petrochemical industry in
conformity with the schemes to develop the Dung Quat Industrial Zone and
the central economy./.

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Business briefs

* Vietnam National Coal-Mineral Industries Group, known as Vinacomin, hired Australia & New Zealand Banking Group Ltd., Credit Agricole CIB and Citigroup Inc. to help advise it on a possible dollar bond sale, according to two people familiar with the matter. Vinacomin has been seeking approval from the government to sell US$500 million of bonds overseas this year.

* Overseas remittances to Ho Chi Minh City from January to September reached $3.04 billion, up 17.94 percent from the same period last year and nearing $3.15 billion for the whole of 2009, Nguyen Hoang Minh, deputy director of the central bank branch in the city, was quoted by Dau Tu (Investment) newspaper as saying. The value for the whole of 2010 is forecast to rise 20 percent, he said.

* Power prices in Vietnam will be adjusted four times a year in accordance with changes in input prices and the exchange rate starting from March 1 next year, the Vietnam Economic Times reported, citing an Industry and Trade Ministry document on implementing a market-oriented mechanism for power prices.

* Vietnam increased its rice export forecast for this year to 6.1 million tons, higher than a previous estimate of 5.9 million tons, according to the Ministry of Agriculture and Rural Development. Shipments from the world’s second-biggest producer may be more than 1 million tons in the fourth quarter, according to the document, which was posted on the ministry’s website.

* Vietnam National Petroleum Corp., known as Petrolimex, will buy 140,000 cubic meters of gasoline and diesel from Dung Quat Oil Refinery this month, said Nguyen Hoai Giang, general director of Binh Son Refinery & PetroChemical Co., which runs the refinery. Previously a Dung Quat official said domestic petrol distributors may not be able to use up the refinery’s inventory by the end of this year and it may face an inventory of more than 720,000 tons of products.

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Vietnam’s only refinery to auction oil

Photo: Reuters

Oil produced at the Dung Quat refinery will be auctioned out to reputed buyers, an official told Tuoi Tre Monday, adding that necessary paperwork is being done for it.

Nguyen Hoai Giang, general director of the Binh Son Oil Refining and Petrochemical Company Limited, which operates the refinery, said it should not be difficult to restrict the auction to reputed distributors.

Binh Son’s state-run holding company PetroVietnam (PVN) has held a similar auction for one of its subsidiaries, he said.

Last week a top PVN executive said poor forecast of supply and demand had left Vietnam’s sole oil refinery saddled with huge volumes of unsold products.

Domestic demand was 10 percent lower than forecast and the plant’s output was 25 percent higher, he said.

One wholesaler said Dung Quat’s products cost more than imported fuel but are still preferable because of the exchange rate risks involved in importing.

Three state-owned companies have the right to distribute Dung Quat products -- PV Oil, Petec, and Petrolimex.

Petrolimex was added to the list after it complained that it was unfair to allow just two of PVN’s affiliates to buy directly from the refinery.

Petrolimex is set to finalize a deal to buy 140,000 cubic meters of A92 and A95 gasoline and diesel oil with Binh Son this month.

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State urges petrol dealers: ‘buy local'

The Ministry of Industry and Trade has asked PetroVietnam and the Dung
Quat Oil Refinery to work directly with domestic petrol dealers,
particularly Petrol-imex, to reduce reliance on imports.

The Vietnam National Oil and Gas Group (PetroVietnam) and the refinery
must report preliminary plans for production, consumption and stock of
Dung Quat's products by Friday, the ministry said.

PetroVietnam and the refinery should also work out a detailed plan for
production in 2011, the ministry said. It also called on the firms to
boost consumption of the refinery's products, including petrol for
airplanes, on the domestic market as early as possible.

So
far, nine out of 11 petrol importers in Vietnam buy the refinery's
products. In the first nine months of this year, the refinery's petrol
and oil sold on the domestic market accounted for 35 percent of the
total volume sold.

The Vietnam National Petroleum
Corporation (Petrolimex), which has a 50 percent share of the domestic
petrol and oil market, consumed 28 percent of the refinery's total
output of petrol and oil.

However, domestic petrol
consumption is 10 percent lower than predictions for this year, while
production at the refinery was now exceeding the year's plan by 25
percent, Pham Dinh Thuc, PetroVietnam's general director, said.

In the fourth quarter of this year, the refinery is expected to produce
about 1.9 million tonnes of petrol, while domestic petrol distributors
such as PVOil, Petec and Petrolimex have registered to buy just 430,000
tonnes from the refinery.

As a result, stockpiles have reached 75,000 tonnes and are predicted to reach 727,000 tonnes by the end of the year.

Domestic importers should revise their signed contracts to import fuel and buy up the difference from Dung Quat, Thuc said./.

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State urges petrol dealers: ‘buy local'

HA NOI — The Ministry of Industry and Trade has asked PetroVietnam and the Dung Quat Oil Refinery to work directly with domestic petrol dealers, particularly Petrol-imex, to reduce reliance on imports.

Viet Nam National Oil and Gas Group (Petro-Vietnam) and the refinery must report preliminary plans for production, consumption and stock of Dung Quat's products by Friday, the ministry said.

PetroVietnam and the refinery should also work out a detailed plan for production in 2011, the ministry said. It also called on the firms to boost consumption of the refinery's products, including petrol for airplanes, on the domestic market as early as possible.

Nine out of 11

So far, nine out of 11 petrol importers in Viet Nam buy the refinery's products. In the first nine months of this year, the refinery's petrol and oil sold on the domestic market accounted for 35 per cent of the total volume sold.

Viet Nam National Petroleum Corporation (Petrol-imex), which has a 50 per cent share of the domestic petrol and oil market, consumed 28 per cent of the refinery's total output of petrol and oil.

However, domestic petrol consumption is 10 per cent lower than predictions for this year, while production at the refinery was now exceeding the year's plan by 25 per cent, Pham Dinh Thuc, PetroVietnam's general director, said.

Fourth quarter

In the fourth quarter of this year, the refinery is expected to produce about 1.9 million tonnes of petrol, while domestic petrol distributors such as PVOil, Petec and Petrolimex have registered to buy just 430,000 tonnes from the refinery.

As a result, stockpiles have reached 75,000 tonnes and are predicted to reach 727,000 tonnes by the end of the year.

Domestic importers should revise their signed contracts to import fuel and buy up the difference from Dung Quat, Thuc said. — VNS

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Oil products pile up, no storage space

Vietnam’s first oil refinery is facing the problem of having huge stockpiles of products that it has no place to store.

The Dung Quat oil refinery has 750,000 tons of oil and gasoline products in stock and not enough space to store them, said Vu Quang Nam, deputy chief executive of state-owned oil and gas group

PetroVietnam. He told a Monday conference in Hanoi that the plant has been running at full capacity, or 30 percent higher than the plan for this year.

According to Petrolimex, a subsidiary of PetroVietnam that has more than a 50 percent share of the domestic fuel market, the refinery was not able to project its output accurately at the beginning of this year.

Petrolimex therefore had to sign contracts to import 70 percent of the fuel it needed and only planned to buy the remaining 30 percent from Dung Quat. These import contracts could not be canceled, the company said.

Deputy Minister of Industry and Trade Nguyen Cam Tu said fuel traders had placed import orders early this year to ensure sufficient supply for the market. But the refinery’s output was higher than expected, leaving the ministry with a difficult logistical problem on its hands, he added.

The ministry has ordered PetroVietnam and Petrolimex to work together and balance demand with domestic production and imports.

The Dung Quat refinery, which cost US$3 billion to build, is designed to supply about one-third of the country’s fuel demand this year. The government in August approved a plan to increase its annual capacity from 6.5 to 10 million tons.

Vietnam spent $4.9 billion on petroleum product imports in the first nine months, a 4 percent rise, while earning $3.7 billion from the sale of crude oil, down 22 percent year-on-year, according to the General Statistics Office.

Nguyen Hoai Giang, general director of PetroVietnam subsidiary Binh Son Petrochemical Refinery Co., the operator of the 140,000-bpd refinery, said Dung Quat has supplied 5.5 million tons of fuel products to the market since it began commercial production in February last year.

Giang admitted that the plant was having a problem with slow sales right now. However, it will continue purchasing crude oil and maintain its production schedule, he said.

In the long term local fuel traders should build more storage facilities with a total capacity of 800,000 to one million tons, then “there will be no problem,” he said.

Vietnam plans to build two more refineries, aiming at self-sufficiency in oil products by 2015. Previously, the country had to import all of its fuel products.

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Petrol stockpiled as imports continue

Photo: Tuoi Tre

The quickest way to help lower stockpiles of refined petroleum products produced by the Dung Quat Oil Refinery would be to minimize petrol imports, PetroVietnam general director Pham Dinh Thuc said on Thursday.

Domestic petrol consumption has ended up 10 percent lower than predictions for this year, while production at the Dung Quat Oil Refinery was now exceeding the year's plan by 25 percent, Thuc said.

In the fourth quarter of this year, the refinery was expected to produce about 1.9 million tons of petrol, while domestic petrol distributors such as PVOil, Petec and Petrolimex have registered to buy only 430,000 tons from the refinery.

As a result, stockpiles have reached 75,000 tons and are predicted to mount to 727,000 tonnes by the end of the year.

Domestic importers could revise their signed contracts to import fuel and buy up the difference from Dung Quat, Thuc suggested.

However, Petrolimex deputy director Dam Thi Huyen said PetroVietnam should anticipate petrol consumption needs in light of import contracts already signed by domestic distributors, who would have to pay heavy damages if the breached the agreements.

Thuc suggested these importers might be able to re-export products to other buyers, even if they can't break their contracts.

The Dung Quat Oil Refinery faced difficulties during its first period of operation, and it had been expected to operate at only 80 percent of initial capacity this year. PetroVietnam has urged importers to prepare to receive locally-produced petrol in the near future.

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Petrol stockpiled as imports continue

The quickest way to help lower stockpiles of refined petroleum products
produced by the Dung Quat Oil Refinery would be to minimise petrol
imports, PetroVietnam general director Pham Dinh Thuc said on Oct. 7.

Domestic petrol consumption has ended up 10 percent lower than
predictions for this year, while production at the Dung Quat Oil
Refinery was now exceeding the year's plan by 25 percent, Thuc said.

In the fourth quarter of this year, the refinery was expected to
produce about 1.9 million tonnes of petrol, while domestic petrol
distributors such as PVOil, Petec and Petrolimex have registered to buy
only 430,000 tonnes from the refinery.

As a result, stockpiles have reached 75,000 tonnes and are predicted to mount to 727,000 tonnes by the end of the year.

Domestic importers could revise their signed contracts to import fuel
and buy up the difference from Dung Quat, Thuc suggested.

However, Petrolimex deputy director Dam Thi Huyen said PetroVietnam
should anticipate petrol consumption needs in light of import contracts
already signed by domestic distributors, who would have to pay heavy
damages if the breached the agreements.

Thuc suggested these importers might be able to re-export products to other buyers, even if they can't break their contracts.

The Dung Quat Oil Refinery faced difficulties during its first period
of operation, and it had been expected to operate at only 80 percent of
initial capacity this year. PetroVietnam has urged importers to prepare
to receive locally-produced petrol in the near future./.

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Oil refinery slips up on poor market forecast

Photo: Tuoi Tre

Failure to precisely forecast demand and supply has left Vietnam’s sole oil refinery with huge volumes of unsold stocks, the state-owned Vietnam National Oil and Gas Group, its operator, said.

The Dung Quat refinery has 750,000 tons of gasoline/oil and 2 million cubic meters of liquefied petroleum gas in stock since domestic demand is 10 percent lower than forecast and the plant’s output is 25 percent higher, Phung Dinh Thuc, general director of PetroVietnam – as the firm is known -- told the media Thursday.

But he did not provide the actual demand and supply figures.

The most practical solution now is to boost demand rather than reduce capacity since the country faces a trade deficit, he said.

At a meeting between PetroVietnam and the Ministry of Industry and Trade earlier this week, the company warned that if measures are not taken to boost exports and domestic consumption, the plant has to cut production due to lack of storage space.

Last month it had asked Quang Ngai Province, where the refinery is located, for permission to expand the plant by 134 hectares to increase its annual capacity from 6.54 million tons to 10 million tons.

But the problem with excess supply dates back to the construction of the plant last year.

It was much delayed and the exact date of its handover by French contractor Technip was not decided until early this year, forcing local oil distributors to sign import contracts.

Thus, while the plant supplies nine out of the 11 petroleum firms in the country but they only buy 30 percent of its output.

In the January-September period, imports of oil products were worth US$4.87 billion, an increase of 4 percent year on year.

The state-run Vietnam Petroleum Corp (Petrolimex), which has a 60 percent retail market share, also has contracts with foreign suppliers and buys only 19 percent of the plant’s output.

It recently became the third distributor to buy directly from the pant after PetroVietnam subsidiaries PV Oil and Petec.

This followed recent complaints by the company that it is illogical for PetroVietnam to require all oil firms to buy Dung Quat’s products through PV Oil instead of directly.

PV Oil charged a high intermediary fee, it also complained.

The Dung Quat refinery has a monthly capacity of 150,000 tons of gasoline, 240,000 tons of diesel oil, 23,000 tons of LPG and others, enough to meet 33 percent of current domestic demand.

It had produced around 5 million tons of products as of last month after reaching full capacity in May.

It has been unable to sell large quantities of jet fuel to local airlines due to red tape.

Last month it shipped 4,500 tons of jet fuel to BP Singapore.

The plant produces six items -- gasoline, diesel, LPG, polypropylene, jet fuel, and fuel oil.

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Poor fuel management costs millions

Poor fuel forecasting and lack of communication had caused Vietnam to spend valuable foreign currency on importing petrol while domestic petrol was in oversupply, the Ministry of Industry and Trade said this week.

It has also contributed to Vietnam National Petroleum Corporation (Petrolimex) losing US$41 million in exchange rates so far this year.

Deputy Minister Nguyen Cam Tu said only 9 out of 11 petrol enterprises had bought petrol produced by Dung Quat Oil Refinery this year, using only 30-40 percent of its production capacity.

Petrolimex, which accounted for 60 percent of the country's market share of petrol, had been expected to buy 28 percent of Dung Quat's output, but had only bought 19 percent.

Tu explained that the reason for the high imports was a shortfall last year when the new refinery had failed to reach its production target due to teething problems and as a result petrol traders had had to import petrol in order to ensure supply.

This year, traders had again signed contracts to import fuel, hedging against the same thing happening again at the refinery, but the plant had ironed out its problems.

Since August it had been producing to its design capacity, which was equal to 6.5 million tonnes a year, or 30 percent of the country's needs, exceeding its own yearly plan by 25 percent.

Thus while local production was up, local demand was down as domestic traders would suffer heavy losses if they cancelled their import contracts.

The differences in exchange rates had already caused Petrolimex a loss of VND800 billion ($41 million) since the beginning of the year.

To address the problem, PetroVietnam would plan and work with petrol traders to limit stockpiled petrol and restrict imports.

In the meantime, Petrolimex had targeted to double petrol consumption from the refinery in the next three months and six out of 11 petrol importers had sought to reduce their imports to 700,000cu. m.

To date, the plant had processed 4.98 million tonnes and sold 4.74 million tonnes; in particular 4,500 tonnes of aviation fuel Jet A1 fuel was sold to PB Singapore Petroleum Company.

The country had imported 7.84 million tonnes in the first nine months, or 67.6 percent of its forecast consumption for the year.

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Poor fuel management costs millions

Poor fuel forecasting and lack of communication had caused Vietnam to
spend valuable foreign currency on importing petrol while domestic
petrol was in oversupply, the Ministry of Industry and Trade said this
week.

It has also contributed to Vietnam National
Petroleum Corporation (Petrolimex) losing 41 million USD in exchange
rates so far this year.

Deputy Minister Nguyen Cam Tu said
only 9 out of 11 petrol enterprises had bought petrol produced by Dung
Quat Oil Refinery this year, using only 30-40 percent of its production
capacity.

Petrolimex, which accounted for 60 percent of
the country's market share of petrol, had been expected to buy 28
percent of Dung Quat's output, but had only bought 19 percent.

Tu explained that the reason for the high imports was a shortfall last
year when the new refinery had failed to reach its production target due
to teething problems and as a result petrol traders had had to import
petrol in order to ensure supply.

This year, traders had
again signed contracts to import fuel, hedging against the same thing
happening again at the refinery, but the plant had ironed out its
problems.

Since August it had been producing to its design
capacity, which was equal to 6.5 million tonnes a year, or 30 percent
of the country's needs, exceeding its own yearly plan by 25 percent.

Thus while local production was up, local demand was down as domestic
traders would suffer heavy losses if they cancelled their import
contracts.

The differences in exchange rates had already
caused Petrolimex a loss of 800 billion VND (41 million USD) since the
beginning of the year.

To address the problem, PetroVietnam would plan and work with petrol traders to limit stockpiled petrol and restrict imports.

In the meantime, Petrolimex had targeted to double petrol consumption
from the refinery in the next three months and six out of 11 petrol
importers had sought to reduce their imports to 700,000cu. m.

To date, the plant had processed 4.98 million tonnes and sold 4.74
million tonnes; in particular 4,500 tonnes of aviation fuel Jet A1 fuel
was sold to PB Singapore Petroleum Company.

The country
had imported 7.84 million tonnes in the first nine months, or 67.6
percent of its forecast consumption for the year./.

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Poor fuel management costs millions

HA NOI — Poor fuel forecasting and lack of communication had caused Viet Nam to spend valuable foreign currency on importing petrol while domestic petrol was in oversupply, the Ministry of Industry and Trade said this week.

It has also contributed to Viet Nam National Petroleum Corporation (Petrolimex) losing US$41 million in exchange rates so far this year.

Deputy Minister Nguyen Cam Tu said only 9 out of 11 petrol enterprises had bought petrol produced by Dung Quat Oil Refinery this year, using only 30-40 per cent of its production capacity.

Petrolimex, which accounted for 60 per cent of the country's market share of petrol, had been expected to buy 28 per cent of Dung Quat's output, but had only bought 19 per cent.

Tu explained that the reason for the high imports was a shortfall last year when the new refinery had failed to reach its production target due to teething problems and as a result petrol traders had had to import petrol in order to ensure supply.

This year, traders had again signed contracts to import fuel, hedging against the same thing happening again at the refinery, but the plant had ironed out its problems.

Since August it had been producing to its design capacity, which was equal to 6.5 million tonnes a year, or 30 per cent of the country's needs, exceeding its own yearly plan by 25 per cent.

Thus while local production was up, local demand was down as domestic traders would suffer heavy losses if they cancelled their import contracts.

The differences in exchange rates had already caused Petrolimex a loss of VND800 billion (US$41 million) since the beginning of the year.

To address the problem, PetroVietnam would plan and work with petrol traders to limit stockpiled petrol and restrict imports.

In the meantime, Petrolimex had targeted to double petrol consumption from the refinery in the next three months and six out of 11 petrol importers had sought to reduce their imports to 700,000cu. m.

To date, the plant had processed 4.98 million tonnes and sold 4.74 million tonnes; in particular 4,500 tonnes of aviation fuel Jet A1 fuel was sold to PB Singapore Petroleum Company.

The country had imported 7.84 million tonnes in the first nine months, or 67.6 per cent of its forecast consumption for the year. — VNS

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Mounting inventory puts refinery under tenterhooks

A view of Dung Quat Oil Refinery in Quang Ngai Province. The facility is facing huge inventory of oil products at the moment - Photo: Van Nam

HCMC, HANOI – Mounting inventory at Dung Quat Oil Refinery is threatening to cripple production at the facility as local distributors have signed irrevocable import contracts earlier and cannot shift to local products at the moment, sources said.

Minister of Industry and Trade Vu Huy Hoang said at a regular meeting of the ministry on Monday that the country’s first oil refinery was having a backlog of two million cubic meters of liquefied petroleum gas (LPG) plus over 700,000 tons of oil products.

Meanwhile, local oil traders refused to buy products from the refinery based in the central province of Quang Ngai despite rising demand.

Dung Quat, if running at full capacity, can turn out 150,000 tons of petrol, 240,000 tons of diesel oil, 23,000 tons of LPG and others, which is enough to meet one-third of local demand.

Vu Quang Nam, deputy general director of PetroVietnam as the parent firm of the refinery operator, told the meeting that if consumption of its finished oil products continues to go slow, the refinery will have to scale down production due to the lack of storage facilities.

“So I suggest the Ministry of Industry and Trade instruct all oil and petrol traders in the country to quickly increase their purchases of our products,” Nam said. He noted imports were still increasing while local products were piling up.

Figures at the meeting show the country in the January-September period imported US$4.87 billion worth of oil products, an increase of 4% year-on-year.

However, traders have pointed an accusing finger at the oil refinery operated by Binh Son Oil Refinery and Petrochemical Co., a subsidiary of PetroVietnam.

Pham Thi Huyen, deputy general director of the country’s biggest oil trader Petrolimex, explained that oil traders were still importing oil products from foreign suppliers since production at Dung Quat was not stable.

Due to the unstable production at Dung Quat plant since 2009, several oil traders have since early this year signed contracts to import enough petrol for local demand until the year-end, Huyen said.

She added that domestic oil traders could not stop importing oil products under the signed contracts by this time, otherwise they will have to pay compensations.

So, she said, the reasonable thing now is that Binh Son Oil Refinery and Petrochemical Co. to secure more tanks for storing its products to avoid disrupting the Dung Quat refinery’s production plan.

The Petrolimex executive also traded barbs with PetroVietnam over what she termed as an illogical trading mode when the oil and gas group demanded that all local oil traders buy Dung Quat’s products via PV Oil. Huyen said her company wanted to buy products directly from Binh Son Oil Refinery and Petrochemical Co. to cut cost as PV Oil imposed a high intermediary fee.

Minister Hoang agreed to her point, asking PetroVietnam to allow oil traders to have direct access to Binh Son Oil Refinery and Petrochemical Co.

Nguyen Cam Tu, deputy minister of industry and trade, remarked that the operator of Dung Quat refinery was not serious in complying with production schemes that had been announced, posing difficulties for oil traders in selling its products.

Tu also requested that oil traders to purchase more from the oil refinery. “In the coming time, petroleum traders should limit imports and increase purchases from Dung Quat.”   

It is not known after the meeting whether oil traders would buy more from the oil refinery, or whether the facility would have to limit production.

The US$3 billion refinery has plans to process some 5.2 million tons of crude oil to turn out some 4.1 million tons of oil products this year.

The refinery is also expected to have a total processing capacity of 6.5 million tons by 2011 to meet 30% of the country’s demand.

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Vietnam seeks term crude imports for Dung Quat refinery

Photo: Reuters

SINGAPORE/HANOI - Vietnam is seeking to import crude from various sources for its domestic refinery to produce more diesel and free up local supply from Bach Ho and Nam Rong-Doi Moi fields for exports, industry sources said on Tuesday.

State oil company PetroVietnam inked on Monday a framework agreement with BP's joint venture in Russia, TNK-BP, to buy Russian ESPO crude oil blend.

The first cargo of 100,000 tons will load in November in the Pacific Ocean port of Kozmino, the outlet for the blend, as a part of the deal.

One source said Vietnam is looking at securing a 100,000-tonne cargo of the medium-heavy sweet ESPO each month for a year under the framework deal which is being finalized.

Vietnamese officials are likely to meet TNK-BP next week to discuss details, the sources said.

"ESPO's diesel yield is quite high so there's more incentive to process ESPO," Sam Saw, a Singapore-based analyst at FACTS Global Energy said.

The move will allow better quality light sweet Bach Ho to be exported to Japan and South Korea, he said.

PV Oil, a subsidiary of the state oil group, signed in June a contract with Dung Quat to supply 300,000 tons of crude, including Ca Ngu Vang, Doi Moi and Bach Ho, by the year end.

Vietnam's crude oil exports between January and August plunged 44.2 percent from the same period last year to an estimated 5.49 million tons, or 165,600 barrels per day, the government said last month.

ESPO will be blended with local sweet grades to reduce its sulphur content, the sources said.

Vietnam's 140,000-bpd refinery can only process sweet crude.

PetroVietnam is evaluating different grades of crude oil for its Dung Quat refinery and has used light sweets such as Azeri Light and Malaysia's Miri and Kikeh, the sources said.

It has signed earlier another framework agreement with BP to buy term crude, one source said.

Negotiations are under way to finalize the grades and other contract details, he said, adding that the five-year term deal may start next year.

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Plans accelerated for refinery projects

Photo: Tuoi Tre

The State Steering Committee on Key Oil and Gas Projects has reviewed their work concerning the first oil refinery in Dung Quat and other projects, and developed plans and timelines for their completion.

The National Oil and Gas Group was assigned to take measures to effectively manage and operate the US$3 billion Dung Quat Oil Refinery.

The ministries of Construction and Finance were asked to help with measures to quickly reach a balanced budget. The committee asked provincial authorities in Quang Ngai to focus on management support for resettlement and compensation.

The Dung Quat refinery has a designed capacity of 6.5 million tonnes of crude oil annually, or more than 140,000 barrels per day. Capacity is expected to expand to 10 million tonnes per year by 2013-14.

The refinery project began in the 1980s and came into operation in early 2009. As of last month, the refinery is operating at its full designated capacity. More than 5.7 million tonnes of crude oil have been imported for the refinery to produce 4.98 million tonnes of high-quality products.

However, investors and contractors still had to work to fix technical problems and strike a balanced budget, said Deputy Prime Minister Hoang Trung Hai, who chaired the meeting.

The meeting also discussed measures to complete the investment mechanism for the Nghi Son Petrochemical Refinery in Tinh Gia District, in the central province of Thanh Hoa. The procedures for ground clearance and infrastructure construction are also being sped up for the project.

Construction of Nghi Son Refinery, Vietnam's second planned refinery, is expected to start this year and become operational by 2013. More than 90 percent of the required area for the $6 billion project have been cleared.

Authorised bodies are conducting the necessary negotiations and evaluating the project's environmental impact report.

The refinery has a designed capacity of 10 million tons of crude oil per year with possibility to expand to 20 million tons.

Preparation activities for initial investment in the Southern Petrochemical Refinery complex, the third of its kind in the country, have also discussed. The national steering committee asked relevant bodies to boost their management of completed projects and to review completion plans for others.

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Plans accelerated for refinery projects

The State Steering Committee on Key Oil and Gas Projects on Sept. 13
reviewed their work concerning the first oil refinery in Dung Quat and
other projects, and developed plans and timelines for their completion.

The National Oil and Gas Group was assigned to take measures to
effectively manage and operate the 3 billion USD Dung Quat Oil Refinery.
The ministries of Construction and Finance were asked to help with
measures to quickly reach a balanced budget. The committee asked
provincial authorities in Quang Ngai to focus on management support for
resettlement and compensation.

The Dung Quat
refinery has a designed capacity of 6.5 million tonnes of crude oil
annually, or more than 140,000 barrels per day. Capacity is expected to
expand to 10 million tonnes per year by 2013-14.

The refinery project began in the 1980s and came into operation in early
2009. As of last month, the refinery is operating at its full
designated capacity. More than 5.7 million tonnes of crude oil have been
imported for the refinery to produce 4.98 million tonnes of
high-quality products.

However, investors and
contractors still had to work to fix technical problems and strike a
balanced budget, said Deputy Prime Minister Hoang Trung Hai, who chaired
the meeting.

The meeting also discussed measures
to complete the investment mechanism for the Nghi Son Petrochemical
Refinery in Tinh Gia District, in the central province of Thanh Hoa. The
procedures for ground clearance and infrastructure construction are
also being sped up for the project.

Construction of
Nghi Son Refinery, Vietnam's second planned refinery, is expected to
start this year and become operational by 2013. More than 90 percent of
the required area for the 6 billion USD project have been cleared.
Authorised bodies are conducting the necessary negotiations and
evaluating the project's environmental impact report.

The refinery has a designed capacity of 10 million tonnes of crude oil
per year with possibility to expand to 20 million tonnes.

Preparation activities for initial investment in the Southern
Petrochemical Refinery complex, the third of its kind in the country,
were also discussed yesterday. The national steering committee asked
relevant bodies to boost their management of completed projects and to
review completion plans for others./.

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Plans accelerated for refinery projects

Dung Quat Oil Refinery operates at full capacity. Measures to speed up implementation and upgrades of key oil and gas projects is being discussed by the government. — VNA/VNS Photo Thanh Long

HA NOI — The State Steering Committee on Key Oil and Gas Projects yesterday reviewed their work concerning the first oil refinery in Dung Quat and other projects, and developed plans and timelines for their completion.

The national petroleum group was assigned to take measures to effectively manage and operate the US$3 billion Dung Quat Oil Refinery. The ministries of Construction and Finance were asked to help with measures to quickly reach a balanced budget. The committee asked provincial authorities in Quang Ngai to focus on management support for resettlement and compensation.

The Dung Quat refinery has a designed capacity of 6.5 million tonnes of crude oil annually, or more than 140,000 barrels per day. Capacity is expected to expand to 10 million tonnes per year by 2013-14.

The refinery project began in the 1980s and came into operation in early 2009. As of last month, the refinery is operating at its full designated capacity. More than 5.7 million tonnes of crude oil have been imported for the refinery to produce 4.98 million tonnes of high-quality products.

However, investors and contractors still had to work to fix technical problems and strike a balanced budget, said Deputy Prime Minister Hoang Trung Hai, who chaired the meeting.

The meeting yesterday also discussed measures to complete the investment mechanism for the Nghi Son Petrochemical Refinery in Tinh Gia District, central Thanh Hoa Province. The procedures for ground clearance and infrastructure construction are also being sped up for the project.

Construction of Nghi Son Refinery, Viet Nam's second planned refinery, is expected to start this year and become operational by 2013. More than 90 per cent of the required area for the $6 billion project have been cleared. Authorised bodies are conducting the necessary negotiations and evaluating the project's environmental impact report.

The refinery has a designed capacity of 10 million tonnes of crude oil per year with possibility to expand to 20 million tonnes.

Preparation activities for initial investment in the Southern Petrochemical Refinery complex, the third of its kind in the country, were also discussed yesterday. The national steering committee asked relevant bodies to boost their management of completed projects and to review completion plans for others. — VNS

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Gov’t orders check on Guang Lian steel project

HCMC – Deputy Prime Minister Hoang Trung Hai has told the Ministry of Industry and Trade to check the ability of mobilizing investment capital for Guang Lian Dung Quat steel project.

The order comes after the project developer proposed expanding the designed production capacity from five million to seven million tons a year.

According to a document issued by the Government Office, Hai also required the industry and trade ministry to check the product lines of this large project and report the results to the Government within this month.

An official of the Vietnam Steel Association (VSA) told the Daily on Monday that it was necessary to carefully scrutinize whether the project developer could raise as sufficient capital as needed to ensure the viability of the long-delayed project.

The project has been underway for over four years but has turned out no steel products.  

Guang Lian Steel Vietnam Limited Company as developer of the project in the central province of Quang Ngai has asked the Government and relevant ministries to allow it to raise the production capacity.

The output adjustment will send the total cost of the project in Dung Quat Economic Zone rising to US$5 billion from the previous US$3.5 billion, the official of VSA said. “The project has changed hands four times so far.”

The steel association official said the proposal for scaling up the capacity of the project could be seen as a time-buying tactic as the investor had difficulty mobilizing enough capital for the project.

The official, who declined to be named, said the association also petitioned the Government to ask Quang Ngai Province to set a deadline for the developer to finish the whole project; otherwise, the investment license would be revoked.

The official described the proposal of Guang Lian Steel Vietnam Limited Company as irrational. The investor wanted to increase steel production by two million tons a year, but they suggested boosting their annual processing capacity by only 500,000 tons of cast iron as the main material.

Dung Quat Economic Zone Authority says on its website that while waiting for approval for expanding the production capacity at the steel mill, piling work is still taking place so that factory construction can start early next year.

The authority said Guang Lian steel project was licensed in 2006 and that the groundbreaking ceremony took place a year later.

According to the newly-proposed plan of Guang Lian Steel Vietnam, construction of the first phase is scheduled to finish in late 2013 and the steel mill would be up and running after that.

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