Nghi Son oil refinery seeks permission from Vietnamese authorities for oil product exports

Published by Nicholas Woodroof, Editor
Hydrocarbon Engineering, Wednesday, 08 August 2018 11:33

Sources have told Reuters that the Nghi Son oil refinery in Vietnam is seeking approval from the Ministry of Trade and Industry to export oil products. The request has been attributed to high inventories and pre-existing import contracts limiting domestic fuel demand.

If the approval is granted, this would be the first time Vietnam, a net importer of fuel, has allowed oil products produced domestically to be exported. The fuel shipments could also weigh on regional margins at a time when supplies are expected to start flowing from new projects in Malaysia and China.

Nghi Son Refinery and Petrochemical LLC, owner of the 200 000 bpd refinery, has boosted output to over 50% of capacity since starting up earlier this year; this has contributed to high fuel inventories, the sources said.

“We are seeking the approval from the Ministry of Industry and Trade to export our fuel products,” one of the sources told Reuters, declining to be named as he was not authorised to speak with media.

“We have been selling part of our fuel output to the local market, but local traders and consumers are unable to absorb all of our products because they have already placed long-term orders with international suppliers, pending our official commercial production,” the source said.

The Ministry of Industry and Trade did not immediately comment on the export request.

Vietnam’s imports of oil products in July fell to its lowest since January 2016, shipping data from Thomson Reuters Eikon showed.

A Vietnam-based industry source commented that fuel inventories are high as a consequence of poor domestic sales and higher refining output.

Nghi Son, the country’s second refinery, is scheduled to reach full capacity by 4Q18, the first source said. The refinery sold its first cargoes of gasoline and diesel in May and exported its first petrochemical shipment in June.

Together Nghi Son and the 130 000 bpd Dung Quat refinery that started up production in 2009 are expected to satisfy approximately 70% of Vietnam’s refined oil product demand.

The plant is scheduled to import 6 million t of crude oil and churn out 4 million tonnes of refined products this year, the company said in a statement late last month. The refinery is 35.1% owned by Japan’s Idemitsu Kosan Co, 35.1% by Kuwait Petroleum, 25.1% by PetroVietnam and 4.7% by Mitsui Chemicals Inc.

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