The number of new oil contract signings has fallen in years, photo Le Toan

Bui Ngoc Duong, general director of Binh Son Refining and Petrochemical JSC (BSR) said refineries and petrochemical companies are increasingly looking for crude oil supply sources outside the country to satisfy the rising domestic demand.

“BSR would like to access long-term, quality crude oil sources through cooperation with crude oil suppliers such as Chevron, Novel, Freepoint, Meridian, and McQuilling,” Duong said.

He added that Vietnam’s crude oil production has continuously decreased, making it difficult to supply to the Dung Quat oil refinery. The factory’s demand has increased to 148,000 barrels per day, a figure that is predicted to reach 160,000-165,000 barrels per day in the 2024-2028 period and 171,000 barrels beyond 2028 after BSR completes an expansion.

PetroVietnam Oil Corporation (PVOil), BSR’s largest crude oil supplier, is purchasing the maximum amount of crude oil in Vietnam to supply BSR. The move not only reduces the dependence on imported materials but also eases the impact of input material costs on product prices.

PVOil has supplied 28.3 million barrels of crude oil of all kinds to BSR, equivalent to over 156,000 barrels per day.

Nguyen Duong Quang, director of the Crude Oil Division at PVOil, said, “We have negotiated with oil owners to purchase the maximum amount of in Vietnam for BSR. The company also supports BSR in the negotiation of a long-term purchase agreement to purchase from White Rhino oil field. The company also offers flexible loading and unloading options based on the actual capacity of the Dung Quat refinery.”

BSR will face some challenges for the crude oil supply during the next two years, including changes in export and import as well as other barriers in implementing the crude oil supply contracts.

Lim Meng Tong, a representative of Chevron, said, “Oil companies and traders are dealing with issues in crude oil production due to the fierce competition in international trade and conflicts in some parts of the world.”

Chevron’s crude oil production capacity stands at 1.44 million barrels per day, mainly from the United States, Canada, and some African countries.

According to state-run Vietnam Oil and Gas Group (PetroVietnam), crude oil reserves are depleting rapidly, and the company is studying the development of small and marginal fields that are suitable for Vietnam’s natural resources. The main reason is the reduction of investments in oil exploration. The number of newly-signed oil contracts has decreased significantly from 2015 to 2019, with one new contract each year. In the 2020-2021 period, no new contracts were signed.

Ta Vu Duy Hoa, deputy head of the Economic and Investment Department at PetroVietnam, said, “It is a huge challenge to maintain oil production in 2023 and beyond. The main fields are in the natural decline stage, leading to a decrease in domestic oil production. As of July 26, there were 82.9 million tonnes of crude oil supplied to Dung Quat, but domestic crude oil output only met 60-70 per cent of the plant’s demand.”

According to the International Energy Agency, global oil demand is forecast to rise gradually over the months and rise strongly in the second half of this year, reaching 103.2 million barrels per day and boosted by strong air travel and increased oil use in China. Oil demand in 2023 is higher than that of last year by around two million barrels per day.