Vietnam may turn to Nigeria for crude oil
Femi Asu with agency report
As the country’s domestic crude production continues to decline due to naturally aging fields, Vietnam’s Binh Son Refining and Petrochemical is currently testing Qua Iboe crude from Nigeria and Cabinda crude from Angola, for its Dung Quat refinery.
S&P Global Platts reported on Wednesday that Vietnam was poised to actively venture into Africa to secure a regular dose of light and medium sweet crude supply for the coming years.
The state-run BSR finds Nigerian and Angolan grades cheaper than Southeast Asian oil, according to the report.
BSR, the operator of the 148,000-barrels-per-day Dung Quat refinery in central Vietnam, is under pressure to find a steady stream of feedstock supply from external sources as the supply of various domestic crude grades that primarily feeds the plant is running dry.
Dung Quat was originally designed to process primarily domestic crude grades, including Bach Ho Light and Bach Ho Heavy, Su Tu Den, Chim Sao, Thang Long, as well as some import grades from neighbouring producers, including Malaysia’s Labuan and Brunei’s Seria Light.
BSR had in the recent past picked up a few odd light sweet crude cargoes from the Mediterranean market and the United States to cover Dung Quat’s short position, but for a steadier and regular flow of feedstock procurement, the company is looking at Africa for the right answer.
The company was quoted as saying the trial testing of the Nigerian and Angolan grades was part of its strategy to diversify its feedstock choices and reduce dependence on domestic grades.
Qua Iboe is classified as a light sweet crude with a specific gravity of around 36 API and a sulfur content of 0.13 per cent. Vietnamese Bach Ho Heavy has an API gravity of around 35 and sulfur content of 0.05 per cent, while Malaysian Labuan has an API of around 30 and sulfur content of around 0.08 per cent.
Reflecting Vietnam’s faltering upstream output and its growing dependence imports for refinery feedstock requirements, the country imported 11.74 million metric tonnes of crude oil in 2020, up 51 per cent from 2019.
In November 2019, the government had removed five per cent import tax on crude oil to support the refining sector’s growing reliance on more feedstocks from external sources and suppliers.
BSR’s decision to shift its focus to African supply from Southeast Asia and North America for regular feedstock procurement is a prudent move, as West African grades may come at a discount to some of Vietnam’s major imported light sweet grades from Malaysia, Brunei and the US, industry sources and trade participants were quoted as saying.
The official selling price spread between Qua Iboe and Malaysian Labuan averaged minus $2.78/b for cargoes loaded in February and minus $2/b in January, Platts data showed.