Located around 200 Km south of Hanoi, the new refinery and petrochemical plant received its inaugural 270,000 tonne cargo, which was discharged through an SBM pipeline from the VLCC ‘Millennium’.
The vessel arrived on 22nd August, shipbroker Gibson reported.
Construction of the new plant started in July, 2013 at a cost of $9.2 bill. It was built to import 10 mill tonnes of Kuwaiti crude annually.
The plant, a joint venture between Kuwait Petroleum International (KPI), Idemitsu Kosan and PetroVietnam, will produce LPG, gasoline, diesel, benzene, kerosene and jet fuel mainly for domestic consumption and will account for about 40% of Vietnam’s demand when it starts distribution in 2018.
Currently, Vietnam’s first refinery, Dung Quat, which commenced operation in February, 2009, meets only 30% of the country’s product demand.
Vietnam is deemed to be a key area for crude oil demand growth, as domestic production from offshore fields is faltering. Thompson Reuters reported that Vietnam’s production peaked in the early 2000s at around 400,000 barrels per day but has since suffered setbacks for several reasons, including disputed ownership of several offshore blocks in the South China Sea.
Many of these offshore fields are small deep water blocks, which in the current oil price environment, are too costly to justify production.
However, Vietnam’s domestic demand continues to grow, as the population increases. Over 90 mill people and 6% annual economic growth will stimulate demand both for crude and products. As a consequence, Vietnam will need to import increasing quantities of crude to sustain the population’s demand and maintain economic growth.
A second cargo loaded in Kuwait on the VLCC ‘VL Prosperity’ and sailed on 12th August destined for Nghi Song and was last week reported to be off the Vietnamese coast. Thompson Reuters reported that a third VLCC was also scheduled for an August loading and that a similar programme for September was being planned.
Vietnam’s imports are insignificant compared with Asia’s top importers - China and India. While these cargoes will send Vietnam’s crude imports soaring to record highs, it must be noted that they are starting from a low base to begin with.
These additional barrels will soak up more VLCC tonnage on another route for a sector presently under pressure to absorb fleet supply. However, it remains to be seen what impact the new refinery will have on product imports into the region, Gibson concluded.