Nghi Son oil refinery is in danger of shutting down?

The situation of the restructuring agreement and the risk of shutting down the Nghi Son oil refinery is the hot topic of the regular press conference on the afternoon of May 18 of the Ministry of Industry and Trade.

At the press conference, many press agencies questioned the information that Nghi Son Refining and Petrochemical Co., Ltd (Nghi Son Refinery - NSRP) is still short of cash flow, unable to reach an agreement on financial restructuring and is in danger of shutting down and closing down.

There is much information about Nghi Son Refining and Petrochemical Company Limited (NSRP) of Vietnam needing to reach a debt restructuring agreement with creditors, leading to the risk of default as early as November and possibly having to stop working.

NSRP is currently applying for an extension of a project finance loan from a group of banks led by the Japan Bank for International Cooperation.
Today, answering reporters' questions about the issue of petroleum supply soon as well as the situation of the Nghi Son oil refinery, Mr. Tran Thanh Tung, Deputy Director of the Department of Petroleum and Coal (Ministry of Industry and Trade) Nghi Son refinery and petrochemical plays a vital role in domestic petroleum supply, accounting for 35-40% of supply.

In the first four months of the year, Nghi Son Refinery and Petrochemical Factory produced more than 2.2 million tons of petroleum, of which April 2023 alone produced more than 67,000 tons. Now, in mid-May, the operation is still stable.

As planned, Nghi Son Refinery and Petrochemical Plant will carry out the production operation registered with the Ministry of Industry and Trade in June and the third and fourth quarters.

Regarding attracting the cash flow of Nghi Son Refinery and Petrochemical Plant, Mr. Tung said that on April 19, the Ministry of Industry and Trade sent a document to this enterprise and foreign investors to contribute capital to the project.

PVN (Vietnam Oil and Gas Group) affirmed that restructuring finance, apparatus, and safe and stable operation of the plant is an "internal" problem of the enterprise, under the responsibility of Nghia Son. Investors contribute capital - based on the commitment to joint venture agreements, project documents, and compliance with the provisions of Vietnamese law.

The Ministry of Industry and Trade representative reiterated Nghi Son Refinery and Petrochemical Plant, PVN, and foreign investors. The parties must take the initiative and work together to solve this plant's difficulties and problems, ensuring customers' safety. The machine operates efficiently and supplies enough gasoline for the market.

Also read: Industry minister checks troubleshooting at Nghi Son oil refinery » Breaking News, Latest World News Updates - VietReader Viet Nam

Nghi Son's problem worries the authorities.

More information on issues related to Nghi Son refinery and petrochemical plant, Mr. Do Thang Hai, Deputy Minister of Industry and Trade, shared that Nghi Son accounts for 35-40% of the domestic market's demand each time If something goes wrong, the authorities will lose sleep and eat. Nghi Son Refinery and Petrochemical Plant has been and will continue to encounter such a situation. The problem is whether there must be a solution to handle this situation entirely and whether it is possible to "not sleep" forever.

No decision power

As Sputnik has reported, Nghi Son is a joint venture between Japanese corporations Idemitsu Kosan and Mitsui Chemicals, Kuwait Petroleum Corporation, and PetroVietnam. PVN holds just over 25% of the shares, so it is clear that Vietnam it difficult to decide on its own on issues related to the country's largest oil refinery.Deputy Minister Do Thang Hai shared that the Ministry of Industry and Trade is the industry management agency in the oil and gas field, and the settlement in Nghi Son Refinery and Petrochemical Plant is an internal problem of this plant.

The Government, ministries, branches, or any state management agency only participate by the agreements of the committed parties. In addition, during operation every year, the plant has at least 30-45 days of maintenance, not to mention technical problems.

Also read: Petroleum supply faces tough challenges » Breaking News, Latest World News Updates - VietReader Viet Nam

Securing fuel supply

At the press conference, information about the situation of petroleum supply in the coming time, Mr. Hoang Anh Tuan, Deputy Director of the Department of Domestic Market (Ministry of Industry and Trade), stated, in the context of the price and supply of gasoline in the country as well. As the world still has many unpredictable fluctuations, the Ministry of Industry and Trade will monitor the implementation of the minimum total petroleum source in 2023 of the central petrol and oil traders, in case of necessity specifying the schedule of importing or buying domestic petrol and oil for the principal trader to implement.

The Ministry of Industry and Trade closely monitors developments in the world petroleum market and domestic production, coordinates with the Ministry of Finance, and controls gasoline prices to closely follow the world gasoline price movements, in line with supply and domestic demand for petroleum to ensure harmonization of interests among participants in the petroleum market, encouraging businesses to maintain supply.

The Ministry of Industry and Trade also directs petrol and oil fundamental traders to strictly implement the total amount of petroleum allocated at least in 2023 (quantity, type) to ensure a continuous gasoline supply to customers. 

Actively sourcing goods (from domestic and imported sources) to ensure an adequate supply of petroleum for the domestic market in the coming time is a necessary solution.

Not to interrupt the supply of petroleum in the business system; maintaining sales activities at the petroleum retail stores of the enterprise and supplying enough goods for the retail stores of the enterprise's distribution system.
At the same time, share supply and profits in the distribution system to customers reasonably to ensure no interruption in the supply of petroleum to the market.

The representative of the Ministry of Industry and Trade reiterated that the central petrol and oil traders need to have a close commitment with the petrol and oil producers (in the contract signed between the parties) to ensure that the traders produce gasoline oil to properly perform the rights, obligations, and responsibilities to supply petrol and oil to the central petrol and oil traders according to the content and output signed in the petrol and oil purchase and sale contracts signed between the parties.

The Ministry of Industry and Trade proposes that the State Bank of Vietnam continue to support petroleum wholesalers and petrol distributors to access capital, reduce difficulties for businesses, encourage businesses to create sources and ensure the supply of petroleum for the domestic market.

Mr. Hoang Anh Tuan also said that the Committee for managing state capital at enterprises should direct the oil refineries (Nghia Son, Dung Quat - PV) to stabilize production activities and ensure the supply of petroleum to the market shortly.

Ministries, branches, and localities shall coordinate with the Ministry of Industry and Trade and the Industry and Trade sector nationwide to create conditions for businesses to take measures to create petrol and oil sources and to support petrol and oil circulation to supply petrol and oil for locations across the country promptly.