VietNamNet Bridge - The national oil and gas group PetroVietnam, which has insisted on building biofuel plants as part of a biofuel development strategy, has halted the operation of the Dung Quat bio-ethanol plant.

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The PetroVietnam Central Biofuels JSC (BSR-BF) has confirmed that Dung Quat bio-ethanol plant has halted its operation because of high production costs which have made its products uncompetitive in the market. 

Meanwhile, as petrol prices have been falling in the world market, E5 biofuel cannot compete with RON92. As a result, the plant has stopped production after a long period of running at moderate level. 

BSR-BF was set up with three founding shareholders, al subsidiaries of PetroVietnam – Petrosetco, Binh Son Oil Refinery and PetroVietnam Finance Company (PVFC).

Dung Quat Bio-Ethanol, with the designed capacity of 100 million liters of ethanol a year, has total investment capital of VND2.219 trillion.

Besides Dung Quat, PetroVietnam also has invested in two other biofuel plants. PV Oil, one of its subsidiaries, now holds the controlling stakes in OBF (Orient Bio Fuel Company) and PVB (PetroVietnam Biofuels JSC).

PetroVietnam, when announcing investment in the three plants, stated that developing biofuels was one of the priority objectives of the oil and gas industry development strategy.
PVB was established in December 2007 with capital contributed by PV Oil, SeABank and some other shareholders. The ethanol plant, located in Tam Nong district of Phu Tho province, has been developed with investment capital of VND1.7 trillion and has capacity of 100,000 cubic meters of ethanol.

OBF was established in May 2009 under the cooperation contract of PV Oil which contributed 51 percent of capital and Japanese Itochu which contributed 49 percent. Its VND1.7 trillion ethanol plant, with the capacity of 300,000 liters a day, is located in Binh Phuoc province.

PetroVietnam, when announcing investment in the three plants, stated that developing biofuels was one of the priority objectives of the oil and gas industry development strategy.

However, the biofuel projects that PetroVietnam wanted cannot operate as expected. The construction of the Tam Nong project stopped in late 2011.

The Binh Phuoc ethanol plant, after two years of construction, was put into trial operation. However, since the biofuel could not be sold, the plant has halted operation and workers have been laid off.

Besides the three PetroVietnam-invested biofuel plants, Vietnam has four other plants – Dai Tan Ethanol Plant developed by Dong Xanh JSC, Dai Viet, Dak To and Tung Lam. All of them are in the same situation.

According to the Ministry of Industry and Trade (MOIT), there are five enterprises which have organized the production and made up E5, including PetroVietnam and Petrolimex.

E5 petrol is distributed in seven provinces and cities in Vietnam - Quang Ngai, Da Nang, Hanoi, HCMC, Hai Phong, Ba Ria-Vung Tau and Can Tho.



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