Vietnam Produces First Commercial-Grade Petrol at Dung Quat Oil Refinery

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Researched by Industrial Info Resources (Sugar Land, Texas)--Vietnam produced its first batch of commercial-grade petrol at its Dung Quat oil refinery this month. On July 1, a batch of 92- and 95-octane petrol was successfully mixed in a residue fluid continuous cracking (RFCC) unit at the refinery.

The refinery, located in Quang Ngai, midway between the commercial center of Ho Chi Minh City and the capital city of Hanoi, is operated by the state-owned monopoly The Vietnam Oil and Gas Group (Hanoi, Vietnam), also known as Petro Vietnam. The facility was commissioned in February of this year and required an estimated investment of $2.5 billion. It is designed to process about 140,000 barrels per day (BBL/d) of crude oil each year. Until the startup of the refinery, Vietnam exported all of the crude produced at its southern offshore oilfields and relied on imports of refined oil products to meet domestic requirements.

Production of oil products at the refinery is expected to reach 2.7 million tons this year, which will be sufficient to cover almost one third of the country's needs for gasoline, liquefied petroleum gas (LPG), aviation fuel and diesel. Up until 2010, the refinery will only process Vietnamese light crude oil (known as Batch Ho, or White Tiger), after which foreign firms such as British Petroleum plc (NYSE:BP) (London, United Kingdom) will supply crude oil to the refinery under deals signed with Petro Vietnam.

Operating at just 70% of full capacity, the RFCC unit has up to now managed to produce LPG, light cycle oil for use as diesel-production feed and diluted crude oil for fuel-oil feed. Operations are scheduled to reach 85% of full capacity by July 25 and 100% by August 25 of this year.

Meanwhile, another oil refinery is to be built at Long Son in Ba Ria Vung Tau province, about 100 kilometers east of Ho Chi Minh City. The Long Son refinery is expected to have a production capacity of approximately 200,800 BBL/d when it becomes fully operational in 2014. Output from this refinery is expected to include LPG, jet fuel, diesel, unleaded petrol and kerosene.

A number of foreign companies have shown an interest in joining the construction project, which has an estimated value of $8 billion. In September of this year, Petro Vietnam will sign agreements with interested parties to begin construction of the refinery complex.

Among the companies known to be interested in the Long Son refinery are state-owned Abu Dhabi International Petroleum Investment Company (Abu Dhabi, United Arab Emirates), Petronas International Corporation Limited--a subsidiary of the Malaysian state owned Petroliam Nasional Berhad (Kuala Lumpur, Malaysia), commodity trading company Trafigura Private Limited (Singapore), and GS Group (Seoul, South Korea).

The Long Son refinery is the third refinery planned in Vietnam, following the Dung Quat refinery and the $6.2 billion Nghi Son refinery, construction of which commenced in May 2008. The Nghi Son refinery will have a processing capacity of approximately 214,000 BBL/d of crude oil sourced from Kuwait when it becomes operational in 2013.

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