Page 6 - AsianOil Week 45 2022

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Ho Chi Minh supplies

teeter on the brink

POLICY THE trickle-down effects of the ongoing war in from the refinery at Dung Quat to Ho Chi Minh,
Ukraine have now reached consumers across temporarily at least, pull fleets off the roads,
Vietnam is struggling Vietnam, with limited oil supplies leading to Coupled with the fact that Vietnam has few
with the same fuel increasing numbers of petrol stations in and refineries in the south of the country in or around
problems that many around the nation’s biggest city shutting up shop. the Ho Chi Minh area in the first place, the situa-
developing Asian Home to almost 9mn people, Ho Chi Minh, tion for the city’s 9mn inhabitants is looking dire,
countries have. formerly called Saigon, has long been Vietnam’s even with the city being the end point of sale for
commercial centre, and is one of the biggest cities 45% of all oil products in the nation of 98mn.
in Southeast Asia. And according to sources in the capital Hanoi,
But recent shortages of fuel making its way the sense of a coming crisis is fast approaching in
into the nation’s supply chain, in addition to strict the north.
government price controls, have combined to Even with the Nghi Son refinery near Hanoi
send profits nose-diving for distribution net- operating at close to full capacity since April,
works across the city and in surrounding areas. sources in the north indicate that supplies are
Reports from Ho Chi Minh indicate that dwindling. As such, petrol station closures are
hundreds of petrol stations have already ceased now being reported in some areas of the nation’s
to operate in the past six weeks. political hub.
Refineries across the country too are suffer- Vietnam’s supply woes are closely linked to
ing, with many struggling to produce petroleum the fact that the government is no longer able
products at a pace capable of keeping end-suppli- to secure crude cargoes as easily as in the days
ers on the street open. before Russia’s invasion of Ukraine.
In the last month, the national government This is largely attributed to bigger econo-
in Hanoi in the north of the country ordered two mies in Europe and elsewhere snapping up oil
of Vietnam’s biggest refineries to expand output from traditionally smaller suppliers around the
to levels never seen before, and for private dis- world to replace lost fuel imports from Russia.
tribution networks to increase supply runs to In a knock-on effect, smaller economies such as
make sure petrol stations across the south can Vietnam are finding it increasingly hard to pin
stay open. down affordable supplies.
As a result, operation rates at the Dung Quat Governmental policies at home don’t help
refinery of the state-owned PetroVietnam have either, according to local analysts, with Viet-
risen to 109%, with at least one refinery official namese authorities routinely fixing prices at the
claiming this figure could be increased further. pump every 10 days.
Even with increased output, however, distri- In an ever-changing supply market, however,
bution to Ho Chi Minh, almost 750 km to the this is expected to change soon – a concept sup-
south of the refinery, becomes an issue. ported by Prime Minister Pham Minh Chinh.
Distribution agencies, incurring increased Additions to regional infrastructure in the
operational costs because of the need to ship fuel south are also being looked at by Vietnam’s gov-
over such long distances, have been hit hard, see- ernment, with plans to build a refinery near Ho
ing their own profits drop due in large part to the Chi Minh.
central government restrictions on fuel prices at So too is expanding capacity by 20% at the
the pump. Dung Quat refinery in the middle of Vietnam,
In some cases this has seen smaller distribu- thereby adding 170,000 barrels per day (bpd) of
tors unwilling to make the 1,600-km round trip production by 2026. ™

P6 www. NEWSBASE .com Week 45 14•November•2022