Vietnam is finalizing procedures to build an oil refinery, the third of its kind, to ensure domestic supply amid global fluctuations.

Vietnam's Deputy Prime Minister Le Van Thanh speaks at the interpellation on Mar 16 at the ongoing session of the National Assembly's Standing Committee. Photo: Quochoi

The Vietnam Oil and Gas Group (PetroVietnam) has undertaken an oil refinery with a capacity of 10 million tons/year in the southern province of Ba Ria-Vung Tau, Deputy Prime Minister Le Van Thanh said at an interpellation held on March 16 of the National Assembly’s Standing Committee.

It will take 10 months to complete the investment procedures, he said, noting that the additional capacity will raise the country’s oil refinery capacity to 23 million tons/year, meeting the domestic demand.

Thanh affirmed that building the third plant is a long-term solution for oil security.

In addition, PetroVietnam will increase oil drilling and crude oil extraction to serve the domestic need as well as stop exporting to increase self-sufficiency of raw materials as the domestic production currently meets only 50% of the demand.

In a related move, Prime Minister Pham Minh Chinh on March 16 worked with PetroVietnam to check the national group’s operations and its capacity to meet the local demand. He requested PetroVietnam to boost exploitation and flexibly handle problems, contributing to balancing supply and demand.

He asked the group to have scenarios for fluctuations to ensure self-reliance in energy and avoid dependence on outside sources.

Dung Quat Oil Refinery. Photo: Nguyen Dang Lam

Oil refineries help improve the value of domestic oil and gas resources, save foreign currency and contribute to ensuring energy security, promoting industrialization and modernization.

Vietnam currently has two oil refineries ensuring 70% of the local demand. Dung Quat Oil Refinery, Vietnam’s first oil refinery located in the Central Province of Quang Ngai and put into operations in 2009, has the capacity of 8.5 million tons/year.

Meanwhile, Nghi Son Oil Refinery and Petrochemical LLC (NSRP) in the Northern Province of Thanh Hoa capacity 10 million tons/year but it’s a joint venture in which PetroVietnam holds only 25% of stake, the remaining are owned by Kuwait Petroleum Europe B.V. (KPE) from Kuwait 35.1%, Japan’s Idemitsu Kosan Co., Ltd 35.1%, and Japanese Mitsui Chemical Inc. 4.7%.

NSRP continues reporting losses and   debts of about a billion dollars since its operations in 2018. It triggers the government’s concerns about oil security and consideration of building the third plant.