The operator of Vietnam’s only operating refinery and a state-run oil giant have signed initial agreements with two foreign trading companies for annual crude supplies over dropping domestic production.

The deals were signed between Binh Son Refining and Petrochemical Co. (BSR) and PV Oil, and Geneva-based SOCAR Trading and Glencore Singapore in Hanoi on Friday.

BSR will receive three million barrels of Azeri Light crude and two million barrels of other types of crude from SOCAR Trading for use in its Dung Quat Refinery on a monthly basis between 2018 and 2021, according to the agreement.

Glencore Singapore will supply two million barrels of crude per month to Dung Quat between 2017 and 2021, according to BSR officials. The supply could increase to three million barrels per month in 2021-2025, the officials added.

The deals would help guarantee a stable supply for Dung Quat, allowing the refinery to lower production costs and improve efficiency, according to BSR general director Tran Ngoc Nguyen.

Dung Quat, located in central Quang Ngai Province, is Vietnam’s first oil refinery, capable of refining 67 different types of crude oil other than those sourced from the country’s southern Bach Ho (White Tiger) oilfield.

Nguyen Sinh Khang, deputy director general of Vietnam Oil and Gas Group (PetroVietnam), the parent firm of PV Oil, said the import of crude oil from foreign suppliers were necessary in the context of dropping domestic crude oil production and turmoil in the global oil market.

In the first 11 months of 2017, BSR imported 6.08 million metric tons of crude oil and sold 5.57 million metric tons of oil and gas products, supplying over 30 percent of domestic demands, according to the company’s business reports.

It raked in VND71.9 trillion (US$3.17 billion) in revenue over the period, contributing VND9.06 trillion ($399.12 million) to the state budget.

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