Vietnam to secure 4 mln oil barrels from Japan's Idemitsu

Japanese petroleum giant Idemitsu Kosan will provide Vietnam with about four million barrels of crude oil procured through routes that do not transit the Strait of Hormuz, Nikkei reported on Monday.

The crude oil comes from the Middle East, Nikkei cited a person familiar with the situation as saying. The four million barrels represent about 10 days of Vietnam’s daily crude consumption.

The oil will be refined into fuel and feedstock for plastic products. Large volumes of petroleum products produced at Vietnamese refineries are exported to Japan, meaning that the move will help support cross-border supply chains.

Idemitsu Kosan holds a 35.1% stake in the $9 billion Nghi Son Refinery and Petrochemicals complex, located in Nghi Son Economic Zone in the central province of Thanh Hoa. Other shareholders are Kuwait Petroleum Europe (35.1%), Petrovietnam (25.1%), and Mitsui Chemicals (4.7%).

The refinery processes 200,000 barrels of crude per day, meeting 30-40% of Vietnam's domestic petroleum needs. Idemitsu plays a critical role in operating the facility and ensuring its crude supply.

Nghi Son Refinery and Petrochemical, the operator of the facility, announced in late March that it had secured sufficient crude supplies to continue operations through the end of May. The four million barrels going to Vietnam may be part of these supplies, Nikkei said.

Vietnam has become an increasingly important link in supply chains for Japan-bound plastic products, with some outputs used in automobiles, home appliances, and daily necessities exported to the Japanese market.

In March, then-Prime Minister Pham Minh Chinh sent Japanese Prime Minister Sanae Takaichi a letter requesting assistance in procuring crude as the Middle East conflict has squeezed the global oil supply.

Vietnam is pushing ahead with plans to set up a national oil reserve in Nghi Son Economic Zone and near Nghi Son refinery. Currently, Vietnam does not have a dedicated national fuel reserve.

Instead, strategic inventories are stored at facilities operated by major fuel distributors under commercial contracts, with the state paying storage fees based on regulated norms. This arrangement provides only a thin buffer, equivalent to roughly 7-10 days of consumption.