UPDATE 1-Vietnam signs crude oil supply deals with SOCAR, Glencore

  • Dec 08, 2017
  • Kitco

* SOCAR to increase Azeri Light crude supplies to Vietnam

* Vietnam also inks annual supply deal with Glencore

HANOI, Dec 8 (Reuters) - Vietnam's state-run Binh Son Refining and Petrochemical Co (BSR) and state oil marketer PV Oil have signed initial agreements with two western trading companies for annual crude supplies, officials from the refinery said on Friday.

SOCAR Trading will provide 3 million barrels a month of Azeri Light crude and 2 million barrels a month of other types of crude to Binh Son's Dung Quat refinery between 2018 and 2021, the officials said.

Glencore Singapore will supply 2 million barrels of crude per month to Dung Quat between 2017 and 2021, they said, adding that the supply could increase to 3 million barrels per month in 2021-2025.

The Southeast Asian oil producer is becoming a net crude oil importer as its output is falling due to a lack of upstream investment following the oil price slump from a mid-2014 peak, and as the country builds its refining capacity. "The signing (of agreements) today will be one among tens and hundreds of similar acts in the future to compensate for the fall in domestic crude supply," BSR's Chairman Nguyen Hoai Giang told reporters on the sidelines of the signing ceremony.

"For Asia, especially Southeast Asia and North Asia the growth has been tremendous," Quek Chin Thean, Glencore Singapore managing director said at the signing on Friday, adding that Vietnam as a market is "very exciting".

Vietnam's oil production has fallen 10.6 percent in the first 11 months this year to 12.48 million tonnes (273,830 barrels per day). The country had targeted production of 14.2 million tonnes in 2017. BSR operates the Dung Quat refinery in the central province of Quang Ngai. The plant's capacity is being expanded to 8.5 million to 9 million tonnes per year (tpy) in 2021, up from 6.5 million tpy, officials said.

The deal with SOCAR is a step-up in Vietnam's Azeri crude imports, which were 4 million barrels January-November this year, trade flows data on Thomson Reuters Eikon showed.

Nghi Son Refinery and Petrochemical LLC (NSRP), Vietnam's second refinery, is scheduled to start up its 200,000 barrels per day complex in 2018. (Reporting by Mai Nguyen; Writing by Florence Tan; Editing by Tom Hogue)