Not long after warning of a prolonged shutdown due to “financial difficulties,” Vietnam-based Nghi Son Refinery and Petrochemical Company said it had reached a short-term funding agreement to maintain its normal production.
Vietnam’s largest refinery has faced the possibility of closure due to disagreements among shareholders over funding for crude oil imports and has previously cut output to 80% of capacity.
In a statement released on January 30, the company said it was “seeking relevant approval from sponsors for a short-term proposal to meet immediate funding needs.” The press release in English also says that NSRP, ie Nghi Son Refining and Petrochemical Company, officially announced the short-term proposal that has been approved by sponsors to help the company stay afloat.
Last week, Vietnam’s largest oil refinery informed a number of state regulators that the company was “facing financial difficulties” so it had to cancel crude oil imports, as well as the risk of “stopping completely full operation” of Nghi Son factory in Thanh Hoa since mid-February. A week earlier, the company had to reduce the plant’s operating capacity from 105% to 80%.
The state-owned Petro Vietnam (PVN), one of the four main contributors to the joint venture project behind the Nghi Son refinery, was quoted by Vietnam’s state-controlled media at the time as saying that it was “trying to negotiating,” “persuading” and reaching an agreement with foreign capital contributors on the overall NSRP restructuring solution in order to maintain safe and effective operations as well as ensure the interests of PVN.
Speaking to VnExpress, Mr. Do Thang Hai, Deputy Minister of Industry and Trade, said that PVN had a meeting and made a number of decisions to remove finance obstacles so that Nghi Son Refinery could continue operating in the coming time.
PVN, which holds a 25% stake in NSRP, said on January 28 that the group had agreed to an early payment under the fuel offtake agreement, adding that the financing would help NSRP improve liquidity and continue production while completing the restructuring plan.
With an investment capital of $9 billion, the Nghi Son oil refinery is located in Nghi Son open economic zone in the Tinh Gia district of Thanh Hoa, with a phase 1 capacity of 200,000 barrels of crude oil per day, equivalent to 10 million tons of raw oil every year. It is known that this capacity is nearly double of Dung Quat Oil Refinery in Quang Ngai.
Like Nghi Son, Dung Quat Oil Refinery of Binh Son Refinery and Petrochemical Joint Stock Company were also in danger of shutting down.
Last September, Dung Quat had to cut production two times within a month, which has never happened in 12 years since this first Vietnamese refinery went into operation. This plant was in danger of closing at that time due to a sharp drop in domestic fuel demand from the anti-epidemic blockade.
Thoibao.de (Translated)
