Dung Quat refinery faces stockpile

PetroVietnam general director Phung Dinh Thuc said if urgent measures were not implemented the Dung Quat oil refinery would face a stockpile of more than 727,000 tonnes of products this year, or 30 per cent above the annual plan.

Especially with the current capacity of 20,000 cubic metres of production per day, the current refinery’s storage can only keep consecutive production for 18 days as maximum.

If the stockpile is not addressed, the refinery’s capacity must be down or stop operations.

Thuc blamed the stockpile on the demand in Vietnam 10 per cent lower than estimated,  while output inside the country was 25 per cent higher than expected.

Thuc said the reason for high imports was a shortfall last year when the Dung Quat refinery had failed to reach its production target due to teething problems.

This year, traders had again signed contracts to import fuel, hedging against the same thing happening again at the refinery, but the plant had ironed out its problems.

To address the problem, Thuc said PetroVietnam would plan and work with petrol traders to limit stockpiled petrol and restrict imports.

“For contracts which have been signed to import production in the coming time, I think it would be not difficult to re-sell to other partners in the coming time, to reduce importing,” Thuc said.

Deputy Minister of Trade and Industry Nguyen Cam Tu said 9 out of 11 petrol enterprises had bought petrol produced by Dung Quat Oil Refinery this year, using only 30-40 per cent of its production capacity.

Petrolimex, which accounted for 60 per cent of the country's market share of petrol, had been expected to buy 28 per cent of Dung Quat's output, but had only bought 19 per cent.

In the meantime, Petrolimex had targeted to double petrol consumption from the refinery in the next three months and six out of 11 petrol importers had sought to reduce their imports to 700,000cu.m.

Since starting operating in May last year, the refinery is almost running at 100 per cent of capacity, which was equal to 6.5 million tonnes a year.

To date, it had processed 4.98 million tonnes and sold 4.74 million tonnes, in particular 4,500 tonnes of aviation fuel Jet A1 fuel was sold to PB Singapore Petroleum Company.

The country had imported 7.84 million tonnes in the first nine months, or 67.6 per cent of its forecast consumption for the year.