Nghi Son Refinery and Petrochemical Plant (NSRP) had to cut production capacity to 80%, reduce at least 20% of its capacity because of financial difficulties, S&P Global Platts reported on January 25, citing confirmation from an unnamed official at NSRP.
According to the official, NSRP stopped importing crude oil for the January import session because NSRP did not have enough liquidity to purchase new raw materials.
In December 2021, the refinery imported 1.098 million tons of Kuwaiti crude oil, up 31.8% year-on-year, while Kuwaiti crude oil shipments for the plant in 2021 were 8.76 million tons, down 8.8% from 2020, according to the latest customs data.
Currently, the plant is maintaining operations by using crude oil from inventory to process petroleum products, NSRP officials told S&P Global Platts.
If the refinery does not secure enough cash liquidity or loans to pay for Kuwaiti crude in the next few weeks, it will be completely shut down by mid-February, the official added.
NSRP may need urgent loans from the Government or financial support from one of its stakeholders including Japan’s Idemitsu Kosan, but it seems the stakeholders have been unable to agree on a solution to resolve the situation.
Idemitsu Kosan declined to comment on the matter.
This official also said that the current difficult situation of the factory is only waiting for the bailout package to be appraised by the Vietnamese Government.
NSRP has struggled with financial difficulties since the outbreak of the COVID-19 pandemic in 2020.
NSRP is a joint venture company established in April 2008 by four capital contributors, including the state-owned Vietnam Oil and Gas Group (PETROVIETNAM), Kuwait International Petroleum Company (KPE), Japan Idemisui Kosan Company (IKC), and Mitsui Chemical Company of Japan (MCI), of which PVN contributes 25.1%.
The production cut of Nghi Son Refinery and Petrochemical Plant, which accounts for 35% of petroleum supply to Vietnam’s market, has directly affected the demand for petrol and oil of local traders.
On January 25, PVN also officially gave feedback about NSRP’s risk of shutting down in mid-February due to a lack of oil for production.
Accordingly, the corporation was quoted by the state-controlled media as confirming that NSRP had to cancel the import of two crude oil tankers in January 2022 and face the risk of stopping operations on February 13, 2022, due to serious financial difficulties. The main reason is that PVN has not approved the extension of agreement (RPA) and early payment (EP) of the Nghi Son oil refinery offtake contract and its appendices (FPOA).
However, PVN believes that NSRP’s arbitrary cancellation of import of two crude oil shipments, leading to the risk of plant shutdown, is entirely within the responsibility of NSRP’s management board, unrelated to the extension approval of RPA and EP.
Thoibao.de (Translated)
