HCMC – The Dung Quat Oil Refinery in the central province of Quang Ngai has reduced its capacity to 80% and is at risk of suspending its operations as its warehouses are full given the plummeting demand during the Covid-19 pandemic.
A leader of the Binh Son Refining and Petrochemical Company (BSR), the operator of the Dung Quat Oil Refinery, said if the southern localities, which are its large customers, extend social distancing until October, the oil refinery was likely to suspend its production and suffer from losses of some VND1 trillion per month, Thanh Nien Online newspaper reported.
Over the past month, the oil refinery has reduced its capacity twice and was forced to operate at a capacity of 80% for the first time ever.
According to a report by the Vietnam Oil and Gas Group, the parent company of BSR, delivered at a recent meeting with the Ministry of Industry and Trade, when the oil refinery cut its capacity to 90% on August 3, BSR had 200,000 cubic meters of processed fuels and 400,000 cubic meters of crude oil in inventory. The company had to store 25,000 cubic meters of its products at a warehouse outside the oil refinery and planned to store at least 100,000-120,000 more cubic meters at this warehouse.
However, the BSR leader said its inventories of processed products had reached 400,000 cubic meters, double the figure last month.
Meanwhile, its sales in August halved to 300,000 cubic meters.
BSR has no space for crude oil and has to sell one million barrels of crude oil and planned to sell another one million barrels.
The BSR leader expected the pandemic would be brought under control this month and social distancing would be eased so that it could sell its products in inventories in the last three months of the year.
Moreover, the oil refinery’s expansion plan may be affected.
Dung Quat Oil Refinery is one of the most important links in Vietnam’s fuel production chain. The oil refinery has an annual capacity of 6.5 million tons of crude oil, equivalent to 148,000 barrels per day.
After the expansion, its capacity will be raised to 8.5 million tons of crude oil per year, or 192,000 barrels per day.