Vietnam loses $15mn from crude oil sales to China
Vietnam lost as much as $15 million from crude oil exports to China in the first eight months of this year, after giving its northern neighbor a 2 per cent discount.
The country exported 4.9 million tons of crude oil at $408 per ton to other markets but charged only $400 per ton for the 1.7 million tons it exported to China, according to the General Department of Vietnam Customs.
During the same period, Vietnam’s crude oil exports rose 2 per cent year-on-year to an estimated 4.748 million tons, or 143,000 barrels per day (bpd). Revenue in the eight-month period rose 24.5 per cent to $1.88 billion.
Oil product imports increased 9.1 per cent to an estimated 8.649 million tons, while the value of imports jumped 38.2 per cent to $4.46 billion.
Vietnam’s liquefied petroleum gas imports during the period increased 19 per cent from a year earlier, to 968,000 tons.
Reuters reported previously that August would mark the first month on record in which Vietnam was a net importer of crude oil, citing shipping data from Thomson Reuters Eikon.
The surge in overseas orders comes as Vietnam’s 200,000 bpd Nghi Son refinery, its second such facility, prepares to produce liquefied petroleum gas, gasoline, diesel, kerosene, and jet fuel, mainly for the domestic market, likely starting later this year or in early 2018.
With local oil production stalling, traders said the country, with over 90 million people and 6 per cent annual economic growth, would gradually increase its crude imports.
“We expect to send bigger and more frequent volumes of crude to Vietnam in the future,” a senior oil trading manager said.
“Vietnam is one of the key new centers of oil demand growth, and we wouldn’t want to miss this opportunity.”
Vietnam’s orders are still small compared with Asian’s top buyers, China and India, which import around 8 million and 4 million bpd, respectively.
“But in an environment of oversupply, this incremental new demand is very welcome for crude suppliers,” the trading manager said.
Prime Minister Nguyen Xuan Phuc approved a plan in July for the country’s total crude oil and oil product stocks to be at least 90 days’ worth of net imports by 2020, joining developing nations such as China and India in establishing an oil buffer that will enhance its energy security as imports have jumped while domestic production is on the decline.
The government said it planned to keep commercial oil stockpiles stable at 35 days of net imports while crude and oil products reserves at import terminals and those held by trading companies are expected to reach 20 days of the country’s net imports by 2025.
The country’s two refineries are estimated to meet about two-thirds of its demand when the Nghi Son refinery begins operations later this year or in 2018.