Wednesday , February 28 2024

Vietnam could face gasoline shortage amid refinery’s financial woes

A gasoline shortage looms since the Nghi Son Oil Refinery, Vietnam’s biggest, has cut production by 20 percent due to financial problems and seems likely to shut down.

The refinery in the central province of Thanh Hoa has no funds to import crude oil and might have to suspend operations starting February if the issue is not resolved.

It has a market share of over 35 percent.

State-owned fuel distributor Petrolimex plans to buy 235,000 – 265,000 cubic meters of fuels a month from Nghi Son this year, and the refinery’s problems mean Petrolimex might be unable to supply enough petrol and oil in the coming weeks, including during the Lunar New Year festival (Tet) when demand surges. The Lunar New Year, Vietnam’s biggest and most important holiday, is a nine-day holiday, starting Feb. 1 this year.

Other distributors too are worried about the potential shortage, and some are planning to buy from other local firms or even import.

“We will increase fuel imports, but the approach of Tet is affecting negotiations and signing of new contracts with foreign partners,” a manager at a fuel distribution company said.

A gas station on Hai Ba Trung Street, District 1, HCMC. Photo by VnExpress/Nhu Quynh

A gas station on Hai Ba Trung Street, District 1, HCMC. Photo by Nhu Quynh

Global petrol and oil are rising rapidly. Since December a barrel of gasoline has been at over US$90 and showing no signs of falling.

According to the Ministry of Industry and Trade, on Jan. 20 in Singapore the prices of RON 92 and RON 95 petrol were $97.99 a barrel and $99.79.

Kerosene and diesel were selling at $98.10 and $100.64.

Tran Duy Dong, director of the ministry’s domestic markets department, told VnExpress that is mandatory for businesses to have import plans and ensure adequate supply of fuels.

Nghi Son has a capacity of 10 million tons a year, twice that of the country’s other refinery, Dung Quat in Quang Ngai Province.

State-owned Petrovietnam has a 25.1 percent stake in it, while the rest is owned by three foreign firms, Kuwait Petroleum International (35.1 percent) and Japan’s Idemitsu Kosan (35.1 percent) and Mitsui Chemicals (4.7 percent).

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