Vietnam National Oil and Gas Group (PVN) has shown its reluctance to purchase products of Nghi Son oil refinery as they do not meet European 4 emissions standards (Euro 4). 

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In May last year, Nghi Son Oil Refinery and Petrochemical Co Ltd wrote to the Ministry of Industry and Trade saying that products of the refinery do not meet the Vietnam Standard and Quality Institute’s standard level 4, similar to Euro 4 and Euro 5. The Ministry of Science and Technology will apply these standards on fuel quality from the beginning of 2017.

According to the Government’s Decision No. 49/2011 on a road map for emissions reductions, Euro 4 will be applied from January 1 next year and Euro 5 from January 1, 2022. These standards are among the national standards for gasoline, diesel and bio-fuel, and they will help improve product quality and reduce emissions.

The standards will make Vietnam competitive given the application of these standards in other regional countries.

Nghi Son’s report showed that its products do not meet the standards while construction of new facilities can only be considered after 2021 due to the execution of credit contracts signed for the oil refinery. Therefore, Nghi Son petitioned the Government to relax the standards.

According to a contract between PVN and Nghi Son, products of the oil refinery must meet the Vietnam Standard and Quality Institute’s standards when they are sold to PVN. However, Nghi Son’s products fail to meet Euro 4 and 1.5 million tons of diesel just meet Euro 3 in terms of sulfur content.

PVN said the Government should tell Nghi Son to follow the road map for emissions reductions. PVN would have to negotiate with Nghi Son if the refinery does not meet the standards.

PVN is the investor of Dung Quat Oil Refinery in the central province of Quang Ngai. At present, this plant is facing similar problems with product quality as its fuels can meet Euro 2.

In phase one of the Dung Quat Oil Refinery project, the plant processes crude oil from Bach Ho oil field and similar oil.

To meet Euro 4, Dung Quat decided to invest in facilities built in phase two. However, PVN and Gazprom Neft failed to reach agreement on the latter’s acquisition of 49% of Binh Son Refining and Petrochemical Co Ltd, a PVN unit that operates Dung Quat.

Therefore, phase two of the Dung Quat Oil Refinery project has yet to be carried out.