Petrol consumption in southern provinces and Hanoi, HCM City and Da Nang from early July to mid-August has plummeted.

Binh Son Refining and Petrochemical Company (BSR), which runs Dung Quat Oil Refinery, has reported a sharp fall in consumption and lack of capacity. Since demand has dropped suddenly, distributors have stopped receiving petroleum products.

The delays in deliveries have caused inventories to soar rapidly since late July.

The province estimated that only 50-60 percent of contracts’ output would be delivered now.

Many distributors don’t have plans to receive products from BSR. As a result, the oil refinery now has over 200,000 cubic meters of petroleum products in inventory, equal to 1.2 million barrels, and nearly 400,000 cubic meters of crude oil, equal to 2.4 million barrels.

BSR has applied measures to solve the problem. It has reduced capacity to 90 percent since August 3, left 25,000 cubic meters of A95 petrol at warehouses, and plans to store another 100,000-120,000 more cubic meters in August.

The oil refinery warehouses are also nearly full, which means that it may have to halt operation.

Quang Ngai province fears pandemic developments will lead to a sharp fall in demand for petroleum products, as supply has exceeded domestic demand.

If enterprises continue to import petroleum products in the upcoming months, the oversupply will be even more serious.

Before the fourth Covid-19 outbreak, BSR was among the group of enterprises that had the highest benefits as the oil price exceeded $70 per barrel, while the business plan was built on the assumption of $45 per barrel.

The company reported net revenue increasing by 54 percent to VND48.909 trillion and net profit of VND3.543 trillion (it took a loss of VND4.257 trilion in the first half of 2020).

Thus, Quang Ngai People’s Committee wants consumers to prioritize use of domestic products and minimize imports to support domestic production.

Dung Quat Oil Refinery has an annual capacity of processing 6.5 million tons of crude oil. 

Luong Bang

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