Nghi Son Refinery and Petrochemical (NSRP), one of Vietnam's major refineries, recently requested government permission to import an additional 1.68 million tonnes of crude oil from Kuwait, or around 12,000 tonnes. 3 million barrels. This demand reflects the refinery's ramp-up to meet growing local demand for petroleum products.
Under the agreements in place, Vietnam tax-free imports of Kuwaiti crude oil up to 10 million tonnes per year. However, exceeding this threshold requires specific authorization. NSRP considered importing other sources to meet demand, but this idea was put on hold after Kuwait Petroleum International, which has a 35.1% stake in the refinery, approved the increase in the volume of Kuwaiti oil imported. In addition to Kuwait Petroleum International, the refinery is partially owned by the Vietnamese state (25.1%) as well as the Japanese companies Idemitsu Kosan and Mitsui Chemicals.
Increase in production capacity
To meet this growing demand, the Nghi Son refinery, which has a processing capacity of 200,000 barrels per day, plans to increase its capacity by 15 to 20 percent. This expansion is driven by the dynamics of the local Vietnamese market, which is experiencing strong demand for petroleum products. In the first nine months of the year, Vietnam's imports of Kuwaiti crude oil for the Nghi Son refinery reached 240,773 barrels per day, an increase of 42.4% compared to the same period in 2023.
Energy autonomy and fight against shortages
Vietnam's energy sector faced challenges in 2022, including a fuel shortage due to financing difficulties and rigid retail prices. To avoid further shortages, the country's two main refineries are now operating at full capacity. The Dung Quat refinery, with a capacity of 130,000 barrels per day, is currently operating between 108% and 116% of its capacity, a level which is expected to be maintained until 2028.
The two refineries, Nghi Son and Dung Quat, cover around 70% of Vietnam's demand for petroleum products, with the remainder met by imports. In September, Vietnamese Prime Minister Pham Minh Chinh stressed the importance of maintaining a stable supply of petroleum products in 2024 to avoid a repeat of the 2022 shortages.
Data on hydrocarbon consumption and production
Vietnam's consumption of petroleum products for the first eight months of the year reached 18 million cubic meters, an increase of 4 percent compared to the previous year. During this period, the country produced approximately 13.53 million tonnes of petroleum products, an increase of 20.3% year-on-year. From January to September, Vietnam imported 7.53 million tonnes of petroleum products, mainly from South Korea, Malaysia and Singapore, representing a decrease of 6.1 percent from the previous year.
Efforts to increase national production aim to strengthen the country's energy autonomy, thus limiting its dependence on imports and strengthening its energy security. With 36 Vietnamese companies authorized to supply more than 28.44 million cubic meters of petroleum products for the current year, the government hopes to stabilize the domestic market in the face of global fluctuations.
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