Petrolimex, PV Oil and Saigon Petro are prompt to draw up the plan to seek petroleum supply sources from Singapore, South Korea and the Middle East after hearing about the unexpected supply interruption from Dung Quat refinery.
After many times of denying the troubles, the managers of the Dung Quat Oil Refinery on August 8 admitted that problems occurred with the RFCC shop of the refinery, which has forced the refinery stop operation since the afternoon of the day.
Tran Ngoc Nam, deputy general director of Petrolimex, which is holding more than 60 percent of the petroleum distribution market share, said Petrolimex expected to receive 2.2 million cubic meters of petroleum finished products every year, or 183,000 cubic meters a month.
Nam also said that after receiving the notice about the possible interruption of the petroleum supply source, Petrolimex has been hurrying up to seek alternative sources to offset the output decrease of Dung Quat.
Also according to Nam, Petrolimex would seek the alternative supply sources not only in Singapore, but also in South Korea, China, Taiwan and the Middle East as well.
In fact, this is not for the first time Dung Quat announces the halt of operation and the supply interruption. However, in the past, the interruption was informed many months in advance, thus giving petroleum companies enough time to arrange alternative supply sources. Meanwhile, the unexpected interruption this time would put them in an embarrassing situation, especially when the world petroleum prices keep rising.
The crude oil prices have been fluctuating in the world market. The oil with deliveries in August was traded at 93.41 dollars per barrel, a 10 US cent higher than the price of the day before. The Brent sea oil has been hovering around 111.58 dollars per barrel and once jumped to 111.82 dollars per barrel.
After falling down to the 87.28 dollars per barrel on August, the oil price has bounced back, keeping rising continuously for the last many days.
In general, petroleum import contracts are mostly futures contracts with deliveries in the future. Nam said Vietnamese companies would be at a disadvantage if they ask for prompt deliveries. Therefore, in order to negotiate for the best prices, Petrolimex would have to draw up the most reasonable additional import schedule.
“In general, the problem settlement is within our reach,” Nam said.
Dung Quat plans to put out 6.9 million cubic meters or tonnes of products this year, which would be mostly distributed to the three enterprises, Petrolimex and the two subsidiaries of PetroVietnam – Petec and PV Oil, which would consume 5 million tonnes. Meanwhile, the Military Petroleum Corporation would consume 140,000 cubic meters or tonnes, Vinapco 300,000 cubic meters, Thanh Le 270,000, Saigon Petro and Dong Thap 560,000 cubic meters.
Prior to that, in the months from May to early July, the Dung Quat oil refinery also stopped operation to fixed technical problems. A manager of PV Oil said it is quite a normal thing that Dung Quat halts operation for maintenance. However, in the current circumstances, when the world prices keep escalating, “people feel stress.”
The first oil refinery in Vietnam satisfies 30 percent of the domestic market. Of this amount, 1.6 cubic meters are sold to PV Oil this year. As such, if the Dung Quat Oil Refinery halts operation for 3-4 weeks, PV oil would have to import 100,000-135,000 tonnes or petroleum products from alternative sources.
Saigon Petro, which expected to buy 300,000 tonnes from Dung Quat, has also affirmed that it has got ready to seek new supplies from foreign sources. An executive of the company said the company has been looking for supplies in South Korea, Malaysia and Indonesia in order to obtain the best prices.