Friday, January 18, 2008

PetroVietnam May Import Oil for First Refinery, Chairman Says

Vietnam, Southeast Asia's third- largest oil producer, may import crude this year for trial runs once the nation's first refinery is completed at Dung Quat Bay, the head of the state oil company said.

Vietnam Oil & Gas Corp. may process lower-quality oil from overseas instead of local crude, Dinh La Thang, chairman of PetroVietnam, as the company is known, said today. Vietnamese oil, which fetches premium prices in Asian markets, is more expensive because it contains less pollutants such as sulfur.

``Vietnam may import crude oil for its refineries because of economic effectiveness,'' Thang said in a phone interview, declining to say where or when the oil will be bought.

Vietnam's government has requested that the Dung Quat refinery start operations by the end of the year, Thanh Nien newspaper said Jan. 9, citing Deputy Prime Minister Hoang Trung Hai. The plant in Quang Ngai province is due to begin full operations in 2009.

Record economic growth is spurring fuel demand, prompting increased purchases of diesel and gasoline from refiners in China, Taiwan, Singapore and other countries.

Ho Chi Minh City-based PetroVietnam Trading Co., known as Petechim, a unit of state-owned PetroVietnam, may import 1.2 million barrels of crude oil this year for trial runs at the Dung Quat, Lao Dong newspaper reported yesterday, citing Nguyen Xuan Thang, general director at PetroVietnam Trading Co.

Bach Ho

Petechim sells a portion of the state oil company's Bach Ho crude variety through long-term contracts at a premium of $6.15 a barrel to the price of Indonesian grade Minas crude oil, a benchmark for medium-gravity, low sulfur crude in Asia, as assessed by two oil-pricing services, the Asian Petroleum Price Index and Platts.

Trafigura Beheer BV, an energy and commodities trader, on Sept. 7 signed an agreement to supply crude oil to Vietnam's refineries for 30 years, starting in 2009 when the first plant is set to be completed.

Under the accord signed on Sept. 7 in Ho Chi Minh City, Trafigura will provide crude oil to Vietnam's first and future refineries, said Ho Tung Vu, deputy director general of PetroVietnam Trading.

In 2006, Vietnam produced 367,000 barrels a day of oil, according to BP Plc's Statistical Review of World Energy. Indonesia and Malaysia are the two biggest crude oil producers in Southeast Asia. (Bloomberg)