Setbacks with test runs at Vietnam's second oil refinery will delay its commercial start-up until 2018, compared to the expected launch in the third quarter this year, Reuters reported on Monday, citing a notice on a government website and a source close to the issue.
The 200,000-bpd Nghi Son refinery -- whose total investment cost is US$9 billion -- is planned to process Kuwaiti crude oil into liquefied petroleum gases, gasoline, diesel, jet fuel, and petrochemical products.
Kuwait Petroleum International and Japanese Idemitsu Kosan hold 35.1 percent each of Nghi Son Refinery and Petrochemicals, PetroVietnam owns 25.1 percent, and Mitsui Chemicals -- 4.7 percent.
According to refinery and crude traders, the delay of additional oil product supplies in Asia could be good news for refiners, but could weigh on the crude oil market.
Back in February, Nghi Son Refinery and Petrochemicals had expected to take delivery of its first crude this month and send first oil products by the third quarter this year.
According to a document seen by Reuters, Nghi Son Refinery wanted earlier this month to charter 27 very large crude carriers (VLCC) to ship Kuwaiti crude oil to Vietnam between July this year and June 2018.
The delay in Nghi Son Refinery is seen deferring an anticipated drop in product margins until after it becomes operational, Nevyn Nah, an oil analyst with consultancy Energy Aspects, told Reuters.
"The impact on margins will be shifted to mid-2018 if the refinery is commissioned in first quarter of next year," he noted.
In the middle of last year, Vietnam said that Nghi Son's construction was facing delays, as test runs scheduled for November last year were to be postponed by some four months.
Currently, Vietnam's operating refinery Dung Quat meets about 30 percent of domestic fuel demand.
By Tsvetana Paraskova for Oilprice.com
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