Vietnam’s Nghi Son refinery can move into the black soon: Idemitsu Kosan

The Nghi Son oil refinery, the second of its kind in Vietnam, can achieve positive profits in the fiscal year 2023 (ending March 2024), according to Japan’s Idemitsu Kosan, which holds a 35.1% stake in the facility.

A report by the Japanese petroleum firm for the first half of FY2023 (April-September) says the refinery almost reached break-even point for operating profits.

With regular maintenance completed as planned, enhanced productivity would improve earnings in the next fiscal year.

The report shows that Idemitsu Kosan recorded an operating and equity income of JPY194.6 billion ($1.29 billion) in the first half of FY2023, up JPY28.4 billion ($187.7 million) or 17.1% year-on-year. Oil exploration and production (E&P) activities accounted for losses of JPY6.6 billion ($43.6 million), including JPY1.4 billion in Norway and JPY5.2 billion in Vietnam. Overall, Idemitsu Kosan earned an income of JPY10.5 billion ($69.4 million) from oil E&P in the period.

Production in the first half of FY2023 reached 31,600 barrels of oil equivalent per day (BOED), up 0.2% year-on-year, including 16,800 BOED in Vietnam, up 6.2%.

The report said Idemitsu Kosan planned to operate a black pellet factory in central Vietnam that would produce 120,000 tons every year and move towards three million tons by 2030.

The Japanese firm reported net sales revenue of JPY4.02 billion ($26.6 million) in the first half of FY2023, down 16.4% year-on-year.

The state budget 2024 passed last week by the National Assembly targets revenues of VND1,701 trillion ($69.4 billion) and fixes budgetary expenditure at VND2,100 trillion (86.4 billion).

The spending includes VND9,653 billion ($397.6 million) for state-owned oil gas group Petrovietnam to meet its obligation to buy the refinery’s 2024 output under a 15-year government guarantee and undertaking (GGU) that started in 2013.

The spending on Nghi Son oil refinery did not include the unpaid amount of VND8,247 billion ($339.5 million) in 2018-2023.