Vietnam, which imports most of its finished oil products, is considering entering into crude processing deals with Singapore refineries to try to cut import costs, industry sources said.

The country pumps around 400,000 barrels per day of crude, making it Asia’s sixth-largest producer.
“The plan to send Vietnam crude for processing in refineries in Singapore is being considered as a way to reduce the high import cost now,” said an official from state-oil monopoly PetroVietnam.
Proposals from the trade ministry and PetroVietnam have been submitted to the government, but no final decision has been made, state media reported.
Vietnam currently sells its crude in tenders and buys oil products from the open market.
But soaring global oil prices and the communist government’s policy of fixing retail prices to boost economic expansion, have resulted in losses of up to $127 million for fuel importers in Vietnam during the first two months of this year, state media reported.
Crude sales in the first two months of 2004 generated $746 million, while product import expenses were $514 million, government statistics show.
Oil traders cast doubt on the proposal.
“The economics don’t change,” said a trader with a multinational trading firm in Singapore.
He said the new practice would only mean transferring losses on the import of oil products to losses Vietnam would incur from halting crude sales in the open market.
PetroVietnam has forecast crude oil output in 2004 at 17.5 million tonnes (360,000 barrels per day), up from 17.18 million tonnes in 2003.
Vietnam expects to import 13 million to 13.5 million tonnes of petrol and oil products, 12.5 per cent more than 2003, to help feed energy demand growth of 17 per cent a year.
China provides about 75 per cent of Vietnam’s petrol imports, while high-octane petrol is sourced from Singapore and Malaysia, traders said.
Meanwhile, China’s Gaoqiao Petrochemical Corp refinery, a leading gasoline exporter, shut down an eight million tonnes per year crude distillation unit for maintenance which will last a month, a company official said.