Petrolimex and PVOIL, two of Viet Nam's largest oil traders, said they have made contingency plans regarding a possible supply disruption related to Nghi Son Refinery and Petrochemical (NSRP).

In an earlier announcement, the 200,000 barrel-a-day and largest refinery in the country said it was to stop operation on February 13, citing financial difficulties as the underlying cause.

NSRP blamed PetroVietnam for its delay in the approval of purchase agreements, early payments and fuel products offtake agreements, which were essential to the refinery finance and operation.

PetroVietnam, which owns 25.1 per cent of the refinery, insisted it was not to blame.

“The management board of NSRP is responsible for its decision to cancel two shipments of crude oil that put the refinery at risk of shutdown,” said PetroVietnam in a statement.

Under normal circumstances, PVOIL imports roughly 30 per cent of the NSRP's production output and 45 per cent of the Dung Quat Refinery, a 140,000 barrel-a-day and the second-largest refinery in the country, PVOIL's President Cao Hoai Duong told the Vietnam News Agency.

In the event the market can no longer count on supply from NSRP, PVOIL, which holds 18 per cent of domestic market share, said it is to ramp up imports to make up for the shortage in supply.

"We are also obligated to maintain a 20-day supply of petro products in accordance with government regulation. PVOIL is confident it will be able to ensure sufficient supply during and after the Tet holiday," Duong said.

Production output from the two refineries account for roughly 60 per cent of its supply or 235,000-265,000 cubic metres of fuel per month, said a source from Petrolimex, who accounts for 50 per cent of domestic market share.

Petrolimex said it has been looking for alternatives to make up for the looming shortage. It has also considered using its reserves to meet market demand in the short term.

Tran Duy Dong, head of the domestic market department under the Ministry of Industry and Trade, said the ministry has demanded NSRP, who accounts for 30 per cent of Viet Nam's fuel supply, to produce a report on its production schedule and to take measures to maintain production and meet its contractual obligations.

"NSRP's sudden announcement to close its doors is not in line with international norms and standards. It is our understanding that all related parties have been in talks to resolve the issue," said Dong.

The US$4 billion refinery, located in central Thanh Hoa Province, is jointly owned by the Vietnam Oil and Gas Group (PetroVietnam), Kuwait Petroleum Europe B.V. (KPE), Idemitsu Kosan Co., Ltd and Mitsui Chemical Inc. from Japan. — VNS