Ensuring cash flow top priority for refinery: shareholder

The surge of crude oil prices from $60 per barrel to $90 and then $120 caused difficulties in ensuring profit for the refinery, which accounts for 35% of domestic fuel supply, said Hideaki Egashira, investment director of Japan’s Idemitsu Kosan, which holds a 35.1% stake in the plant.

A cash crunch earlier this year forced Nghi Son to cut production from 105% to 80%, creating a partial shortage in the market.

“There were times earlier this year when we did not have enough cash to buy raw materials,” Hideaki said.

The situation improved when other foreign shareholders and state-owned Petrovietnam agreed to restructure the plant to lend it a short-term financial booster.

To ensure the plant operates sustainably, more assistance is needed from donors, investors and the government of Vietnam, Hideaki said.

“The shareholders have different views. We are trying to resolve this to ensure cash flow.”

Both of Vietnam’s refinery plants, Nghi Son and Dung Quat, plan to produce 3.9 million cubic meters in the third quarter, or 72% of domestic demand.

They plan to increase this ratio to 80% by the last quarter.

Nghi Son, located in the central province of Thanh Hoa, has an investment price tag of $9 billion.

Apart from Idemitsu Kosan, other shareholders include PetroVietnam, Kuwait KPI and Japan’s Mitsui Chemicals.