Vietnam crude oil imports to hit record as refinery gets ready to start

Vietnam crude oil imports to hit record as refinery gets ready to start

Vietnam's crude oil imports will soar to record highs in August as the
country ramps up fuel refining at a time when local crude output is
dwindling.

August will mark the first month on record in which Vietnam is a net
importer of crude oil, according to shipping data in Thomson Reuters Eikon,
with the trend set to continue in coming months as the Southeast Asian
nation's refinery capacity grows.

The surge in overseas orders comes as Vietnam's 200,000 bpd Nghi Son
refinery, its second such facility, prepares to produce liquefied petroleum
gas, gasoline, diesel, kerosene and jet fuel, mainly for the domestic
market, likely starting later this year or in early 2018.

With local oil production stalling, traders said the country of over 90 MM
people and 6% annual economic growth would gradually increase its crude
imports.

"We expect to send bigger and more frequent volumes of crude to Vietnam in
the future. Vietnam is one of the key new centers of oil demand growth, and
we wouldn't want to miss this opportunity," said a senior oil trading
manager. He asked not to be identified as he was not allowed to discuss
trading strategies.

Shipping data in Thomson Reuters Eikon shows that Vietnam will import around
100,000 bpd of crude in August, on three tankers, versus exports of 70,000
bpd. September tanker imports are scheduled at similar levels.

Vietnam's orders are still small compared with Asian's top buyers, China and
India, which import around 8 MMbpd and 4 MMbpd of crude respectively.

"But in an environment of oversupply, this incremental new demand is very
welcome for crude suppliers," the trading manager said.

KUWAIT, BRUNEI, AZERBAIJAN

Kuwait Petroleum International and Japan's Idemitsu Kosan each own 35.1% of
the Nghi Son refinery, while state-owned PetroVietnam holds a 25.1 percent
stake and Japan's Mitsui Chemicals 4.7%.

Kuwait was the first supplier of crude oil to the new facility, sending 2
MMbbl in August on a supertanker, with its oil minister saying in July that
it expected to send regular shipments to Vietnam.

The small Southeast Asian country of Brunei sent 500,000 bbl of its crude to
Vietnam this month on two tankers, shipping data shows.

Three tankers carrying a million barrels of Azeri crude each are scheduled
to head to Vietnam in September

Vietnam's oil production peaked in the early 2000s at around 400,000 bpd.
The country is exploring new oil fields in several areas of the South China
Sea, but this has seen several delays as the country clashes with its bigger
neighbor China.

Drilling at Vietnam's Block 136/3 was suspended in July after pressure from
China, which says the concession operated by Spain's Repsol overlaps the
vast majority of a waterway that it claims as its own.

Despite its rising refining capacity, analysts said that Vietnam's
demand-growth for fuel would still require refined fuel imports.

"Vietnam will not be free of imports of refined fuels, (although) combined
diesel and gasoline imports will halve from about 200,000 bpd in 2016," said
Suresh Sivanandam, analyst at energy consultancy Wood Mackenzie.

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Link to Original Article:
http://www.hydrocarbonprocessing.com/news/2017/08/vietnam-crude-oil-imports-
to-hit-record-as-refinery-gets-ready-to-start

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com