Vietnam's crude oil imports will soar to record highs in August as the country ramps up fuel refining at a time when local crude output is dwindling.
August will mark the first month on record in which Vietnam is a net importer of crude oil, according to shipping data in Thomson Reuters Eikon, with the trend set to continue in coming months as the Southeast Asian nation's refinery capacity grows.
The surge in overseas orders comes as Vietnam's 200,000 barrels per day (bpd) Nghi Son refinery, its second such facility, prepares to produce liquefied petroleum gas, gasoline, diesel, kerosene and jet fuel, mainly for the domestic market, likely starting later this year or in early 2018.
With local oil production stalling, traders said the country of over 90 million people and 6-percent annual economic growth would gradually increase its crude imports.
"We expect to send bigger and more frequent volumes of crude to Vietnam in the future. Vietnam is one of the key new centres of oil demand growth, and we wouldn't want to miss this opportunity," said a senior oil trading manager. He asked not to be identified as he was not allowed to discuss trading strategies.
Shipping data in Thomson Reuters Eikon shows that Vietnam will import around 100,000 bpd of crude in August, on three tankers, versus exports of 70,000 bpd. September tanker imports are scheduled at similar levels.
Vietnam's orders are still small compared with Asia's top buyers, China and India, which import around 8 million and 4 million bpd of crude per day respectively.
"But in an environment of oversupply, this incremental new demand is very welcome for crude suppliers," the trading manager said.
Kuwait, Brunei, Azerbaijan
Kuwait Petroleum International and Japan's Idemitsu Kosan each own 35.1 percent of the Nghi Son refinery, while state-owned PetroVietnam holds a 25.1 percent stake and Japan's Mitsui Chemicals 4.7 percent.
Kuwait was the first supplier of crude oil to the new facility, sending 2 million barrels in August on a supertanker, with its oil minister saying in July that it expected to send regular shipments to Vietnam.
The small Southeast Asian country of Brunei sent 500,000 barrels of its crude to Vietnam this month on two tankers, shipping data shows.
Three tankers carrying a million barrels of Azeri crude each are scheduled to head to Vietnam in September.
Vietnam's oil production peaked in the early 2000s at around 400,000 bpd.
Despite its rising refining capacity, analysts said that Vietnam's demand-growth for fuel would still require refined fuel imports.
"Vietnam will not be free of imports of refined fuels,(although) combined diesel and gasoline imports will halve from about 200,000 bpd in 2016," said Suresh Sivanandam, analyst at energy consultancy Wood Mackenzie.