Vietnam's Petrolimex eyes hike in domestic oil product sales from 2016-21

Platts | Wed, Jun 15, 2016 01:44:38 PM Share this on

Vietnam's Petrolimex plans to sell 8.752 million cubic meters/year of oil products in the domestic market over 2016-2021, up 11.1% from 2015 levels, the country's largest oil importer and retailer said in a draft report that is to be presented at its annual shareholders' meeting on June 23.

Vietnam does not publish data on its oil demand. According to Japan's JX Nippon Oil & Energy, which has an 8% stake in Petrolimex, current oil products demand in Vietnam is approximately 350,000 b/d.

In 2016, Petrolimex expects domestic sales to reach 8.161 million cu m, up 3.6% from 7.881 million cu m in 2015. The target takes into account the country's growing economy with GDP growth of 6.7% this year, according to Petrolimex. But the domestic market was also becoming more competitive as there were 24 oil importers as of early June, compared with barely 10 a few years ago, the company warned.

Petrolimex said it would try to balance its purchases from Vietnam's sole Dung Quat refinery with imports from South Korea and ASEAN members to maximize benefits.

Binh Son Refining and Petrochemical, operator of the 130,000 b/d Dung Quat refinery, has said that it found it tough to sell oil products as importers, including Petrolimex, opt to buy gasoline and other products from South Korea, ASEAN nations and China to take advantage of low import taxes. 

From January to late March, Petrolimex imported 20,000-30,000 mt of gasoline per month, a government source said, without, however, saying what the import volumes were previously.

In March, Petrolimex and other domestic oil companies asked BSR to reduce the prices of gasoline and other oil products, the source added. Dung Quat meets around 30% of Vietnam's oil products demand.

In 2015, 90% of Petrolimex's oil product imports was under form D, a certificate of origin that allows importers to enjoy preferential tariffs under free trade agreements. Between 62% and 83% of the total imports were brought in under Form D last year, the source said.

Under the FTA with South Korea, Vietnam cut the tax on gasoline imports to 10% from December 20, 2015, from 20% previously. The new rate will remain in place until 2018. Meanwhile, the tax on fuel oil imports has been abolished. The import tax on gasoil, kerosene and jet fuel will be maintained at 5% till 2017 and removed from 2018 onwards.

Under the ASEAN Trade in Goods Agreement, Vietnam will maintain the 20% import duty on gasoline from ASEAN countries until 2018. 

The 200,000 b/d Nghi Son refinery in the central province of Thanh Hoa is scheduled to begin commercial operations in 2017, which will affect Vietnam's oil product imports. State-owned PetroVietnam owns 25.1 % stake in Nghi Son with Kuwait Petroleum International Ltd. and Japan's Idemitsu each holding 35.1%, and Mitsui Chemicals 4.7%.

Petrolimex will "evaluate the implications of the startup of Nghi Son to the company's purchase of oil products in order to prepare reasonable responsive measures, from investment to transport schemes," the company said.

Petrolimex and JX Nippon Oil & Energy plan to carry out a joint feasibility study for a new refinery in the Van Phong economic zone within a year, a JX Nippon Oil & Energy official said in April.

Source: Platts