【Ferro-alloys.com】Vietnam's 200,000 b/d Nghi Son refinery has slashed its operation rate to 80% of its capacity from around 110% previously due to financial difficulties, with the country's biggest refiner struggling to pay for feedstock Kuwaiti crude for January delivery, an official at Nghi Son Refinery and Petrochemical, or NSRP, said Jan. 25.

NSRP has suspended imports of crude oil for January arrival because it does not have enough liquidity to purchase new cargoes of feedstock, the official said.

Nghi Son refinery runs solely on crude oil imported from Kuwait.

In December 2021, the refiner imported 1.098 million mt of Kuwaiti crude oil, up 31.8% year on year, while Kuwait crude shipments for the full year 2021 amounted to 8.76 million mt, down 8.8% from 2020, according to latest customs data.

Currently, the plant is maintaining its operation by processing crude oil from its storage facilities, the NSRP official told S&P Global Platts.

If the refiner fails to secure enough cash liquidity or loans to pay for Kuwaiti crude to feed its CDU within the next few weeks, the plant will have to completely shut down its operation by around the middle of February, the official said.

NSRP indicated that the refiner could seek for emergency loans from the government or seek financial assistance from one of its major stakeholders, including Japan's Idemitsu Kosan, but the stakeholders have been unable to agree on a solution to resolve the situation.

Idemitsu Kosan declined to comment when reached out by Platts.

State-owned PetroVietnam has a 25.1% stake in Nghi Son, with Kuwait Petroleum International (35.1%), Japan's Idemitsu Kosan (35.1%) and Japan's Mitsui Chemicals (4.7%).

Nghi Son may have to rely on the government ministries and state-run banking and financial agencies for a rescue package and the refinery is currently waiting for a response from the top decision makers in Hanoi, the official said.

Weak sales
NSRP has been struggling with financial difficulties ever since the outbreak of the COVID-19 pandemic in 2020.

For the most part of 2021, Vietnamese refiners and oil distributors grappled with excess oil stockpiles as domestic fuel consumption tumbled amid a resurgence in COVID-19 cases, prompting the Southeast Asian country slash oil product output and imports throughout last year.

The decline in domestic fuel demand had been so severe that state-run Binh Son Refining and Petrochemical, or BSR, is running out of storage to handle the build up in oil product stockpiles, industry and company sources with direct knowledge of the matter told Platts previously.

The state-run oil company had to briefly suspend middle distillate production at its 130,000 b/d Dung Quat refinery for a few days, Platts reported previously.

During Q2 and Q3, Vietnam's major oil distributor Petrolimex slashed its monthly term oil products intake from Dung Quat and Nghi Son, the country's two major refineries.

Many other trading companies and fuel distributors also sharply reduced, or suspended, receiving supplies from the two refiners during the period

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• [Editor:zhaozihao]