Vietnam’s largest refinery avoids suspension with improved cash flow

Nghi Son, Vietnam’s largest refinery, is expected to avoid a prolonged suspension with improved cash flow enabling a November debt repayment, a Nikkei Asia report said Thursday.

The $9 billion refinery in the central province of Thanh Hoa, with a capacity of 200,000 barrels per day, is 35.1% owned by Idemitsu Kosan, 35.1% by Kuwait Petroleum, 25.1% by state-run Petrovietnam, and 4.7% by Japan’s Mitsui Chemicals.

Japanese energy group Idemitsu Kosan, the top investor, has taken steps to boost the refinery’s capacity usage, helping it secure an operating profit, the Nikkei Asia report said.

A scheduled shutdown for regular maintenance in August had raised the specter of a longer suspension due to a lack of funds and disagreement among the four shareholders.

With more repayment deadlines looming next year, the operating company was looking to approach the Vietnamese government with a debt-restructuring proposal, the Japanese newspaper said. The operator was seeking to restructure debts to a group of banks led by state-run Japan Bank for International Cooperation, or JBIC, it added.

Vietnam’s Industry and Trade Minister Nguyen Hong Dien said at a Wednesday meeting with petrol suppliers in Vietnam that Nghi Son was scheduled to stop operations for regular maintenance from mid-August to early October. He asked Petrovietnam and Petrovietnam-invested Dung Quat oil refinery in the central province of Quang Ngai to ensure sufficient supply for the domestic market.

Nghi Son, the nation’s second oil refinery, started commercial operations in 2018, a decade after the first, Dung Quat, did so in 2009.

In May, the government decided to expand Dung Quat’s capacity to 171,000 barrels a day from the current 148,000 barrels, with an investment of more than $1.2 billion. The increase in production is expected to begin in 2028.

The country’s third refinery, the Long Son Petrochemicals Complex in the southern province of Ba Ria-Vung Tau, is set to begin commercial operations in mid-2023. Thai giant conglomerate SCG is the main investor in the 464-hectare complex, which has $5.4 billion in total investment.