Vietnam has decided to put on hold the implementation of Euro 4-equivalent emission standards for diesel cars until next year to allow automobile companies more time to adhere to the new guidelines.
The decisions follow requests from importers and manufacturers to delay the implementation, given they were unable to adjust their business without the certainty that Euro-4 equivalent diesel fuel would be available in the country. Euro-4 diesel fuel is not yet sold in Vietnam.
Importers and manufacturers will be required to start selling Euro 4-compliant diesel-fueled cars from January 1, 2018, a year later than previously planned, according to a decision by Deputy Prime Minister Trinh Dinh Dung in March.
All the new units of Euro-2 standard, which have not finished customs and registration procedures by then, will have to be exported.
Under a government scheme unveiled in 2011, Vietnam planned to adopt Euro 4-equivalent fuel for new automobiles from January 1, 2017, moving to Euro 5 from January 2022. New motorcycles were required to adopt Euro 3 standards from January 1, 2017.
The government asked oil companies to ensure they supplied fuel meeting the emission standards mapped out in the 2011 directive, but failed to release a roadmap for the sale of cleaner fossil fuels.
Importers and manufacturers of new diesel cars, including buses and trucks, said last year that they were unable to follow the new policy without the certainty that Euro-4 fuel would be available for retail. On February 21, they requested an amendment to the 2011 directive, to allow companies to continue importing and manufacturing new cars, both gasoline- and diesel-fueled, that meet Euro-2 and 3 emission standards beyond the January 2017 deadline.
At present, Vietnam's gasoline and diesel specifications adhere to Euro 2 standards.
GASOLINE VEHICLES
The government has, however, decided to go ahead with its plans to implement Euro-4 emission standards for gasoline-fired vehicles from January this year, the Ministry of Transport said in a statement March 25.
Registration of new gasoline cars that meet Euro-4 standards and motorcycles that meet Euro-3 standards started January 1.
The move to tighten fuel specifications for the higher octane gasoline grades is part of the country's commitment to reduce greenhouse gas emissions by 2030, following the landmark agreement under the United Nations Framework Convention on Climate Change in Paris in 2015.
CLEANER FUEL IMPORTS
Vietnam currently imports Euro- 3 and Euro-4 fuels, and will only be able to produce Euro-3 fuel when its 200,000 b/d refinery at Nghi Son becomes operational later this year.
State-owned Petrolimex, which accounts for roughly half of the local oil market, is supplying Euro 3 and 4 gasoline nationwide, while smaller oil companies are looking at being able to supply Euro-4 diesel shortly, according to the Ministry of Industry and Trade.
Petrolimex began to sell Euro 4-equivalent, 95 RON gasoline grade, at its retail stations nationwide in January.
The company started supplying Euro 4-equivalent 95 RON gasoline at 70 filling stations in Ho Chi Minh City, the country's southern economic hub, at the end of February, and also supplies Euro 4-compliant 95 RON gasoline in 49 stations in Hanoi, nine stations in Vinh Phuc province and five in the Bac Ninh province.
The company issued a tender in early December seeking 13,000-15,000 mt of 95 RON gasoline with maximum 50 ppm sulfur content, below the usual 350 ppm sulfur specification in previous tenders. Lead content was reduced from 0.013 g/liter to 0.005 g/liter.
Petrolimex has also lowered the maximum olefins content to 30% by volume, and maximum benzene content to 1% by volume. Previously, Petrolimex maximum olefins content was 38% by volume, and maximum benzene content 2.5% by volume.
The lower gasoline grade 92 RON remains unchanged at the pump with specifications broadly meeting Euro 2 standards, except that the sulfur content is lower at 350 ppm compared with 500 ppm under Euro 2.
Besides Euro 4-equivalent, 95 RON gasoline, Petrolimex was selling Euro 2- and 3-equivalent 95 RON and Euro 2-equivalent 92 RON at its stations nationwide as of April 5. Other major suppliers such as PV Oil and Saigon Petro are yet to sell Euro 4-equivalent, 95 RON as of April 7.
DOMESTIC REFINERS
As the new emission standards will only apply to new automobiles and motorcycles, the Dung Quat and Nghi Son refineries will continue to sell their products in the domestic market without changes, according to a PetroVietnam official.
The country currently allows sales of Euro 2-, 3-, 4-equivalent gasoline and diesel, with demand growth for all three types expected to remain high, driven by a booming automobile sector.
Sales of new cars in the country last year were at 304,427 units, up 24.3% year on year, and accounting for 12.1% of the total cars in use in 2016, according to data from the Vietnam Automobile Manufacturers' Association and the Vietnam Register.
Sales of new motorcycles from five major motorcycle manufacturers in 2016 rose 9.5% year on year to 3.12 million units, accounting for around 7% of the total in the country last year, data from the Vietnam Association of Motorcycle Manufacturers showed.
"Sales of gasoline and diesel from the country's sole 130,000 b/d refinery at Dung Quat and the upcoming 200,000 b/d Nghi Son plant will be guaranteed," the official said.
Dung Quat currently produces gasoline and diesel equivalent to Euro 2 standards while Nghi Son will produce Euro 3-compliant fuels when it starts up later this year. PetroVietnam expects Dung Quat will be able to produce Euro 5-equivalent fuels after completing the scheduled expansion by 2022.
Dung Quat can produce gasoline with sulfur content meeting Euro 3 standards but its gasoline has not met some other aspects of the specifications, for example olefins concentration. Most of the refined products from the Nghi Son refinery were expected to meet almost all Euro 4 specifications, according to the PetroVietnam official.
On November 11, 2015, the Ministry of Science and Technology issued a circular, setting out the specifications for Euro 2-, 3- and 4-equivalent gasoline and diesel.
They include a maximum limit of 500 ppm sulfur and 2.5% benzene for Euro 2-equivalent gasoline, 150 ppm sulfur and 2.5% benzene for Euro 3-equivalent gasoline and 50 ppm sulfur and 1% benzene for Euro 4-equivalent gasoline.
The maximum sulfur content in Euro 2-equivalent diesel is 500 ppm, which is down to 350 ppm for Euro 3-equivalent diesel and 50 ppm for Euro 4-equivalent diesel.
The ministry is yet to announce the specifications for Euro 5-equivalent gasoline and diesel.
Under the Euro standards guidelines, the maximum sulfur content for gasoline and diesel is set at 150 ppm and 350 ppm, respectively, for Euro 3-compliant fuels, falling to 50 ppm under Euro 4 and 10 ppm for Euro 5 standards.
