Thursday, May 28 2020

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PVN proposes halt of petrol imports to support refineries amid tumbling domestic consumption

Update: April, 11/2020 - 08:00

 

A woman buys petrol for her motorbike at a station in HCM City. The Việt Nam Oil and Gas Group has asked relevant ministries to halt petrol and oil imports as domestic sales struggle - VNA/VNS Photo Hoàng Tuyết

HÀ NỘI — The Việt Nam Oil and Gas Group (PVN) has asked relevant ministries to halt petrol and oil imports as domestic sales struggle due to travel restrictions to prevent the spread of COVID-19 pandemic.

PVN’s proposal was raised as sales of petrol and oil products in the domestic market slumped an estimated 30 per cent in the first quarter of this year. PVN also forecast bigger reductions in the coming months.

Inventories at PVN’s refineries at Dung Quất and Nghi Sơn now stand at 90 per cent as petrol wholesalers cancel orders.

PVN also asked for products made from crude oil to be exempt from value added tax to help increase exports and reduce inventories.

In response, the Domestic Market Department under the Ministry of Industry and Trade said PVN’s proposal would be put under consideration.

The department also said that many global oil producers had lower production costs, making imports cheaper than local products, adding that any decisions made at this time must be considered carefully to ensure compliance with market mechanisms and joint interests.

Tumbling oil prices in the first quarter of this year together with the COVID-19 pandemic have weighed heavily on petrol and oil producers and distributors.

Bình Sơn Refining and Petrochemical Company Limited said it was considering a temporary halt to production at the Dung Quất Refinery. With tumbling petrol and oil demand in the domestic market coupled with high stockpiles, Bình Sơn was facing a loss in the first quarter of this year.

Despite PVN’s high stockpiles, imports of petrol and oil have continued. Customs’ statistics showed that more than 1.85 million tonnes petrol and oil was imported into Việt Nam in the first quarter of this year.

Together with an output of 3 million tonnes from the Dung Quất and Nghi Sơn refineries in the first quarter, domestic supply surpassed demand by 35 per cent, according to PVN.

In a recent report to Prime Minister Nguyễn Xuân Phúc, the Commission for the Management of State Capital at Enterprises said that PVN was one among those heavily affected by COVID-19 and tumbling oil prices.

PVN’s financial statistics showed that its revenue was estimated at VNĐ88.3 trillion in the first quarter of this year, nearly VNĐ13.2 trilllion lower than the same period in 2019. After-tax profit was estimated at VNĐ4.4 trillion, dropping by VNĐ4.58 trillion.

Dung Quất and Nghi Sơn normally meet around 70-80 per cent of domestic demand for petrol and oil.

As of March 30, crude oil inventories at Dung Quất and Nghi Sơn were 384.256 cu.m and 533.500 cu.m, or 76 per cent and 64 per cent, respectively. Petrol inventories at Dung Quất totalled 138.242 cu.m, or 87 per cent, and at Nghi Sơn 167.52 cu.m, or 81 per cent. — VNS

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