Singapore—Vietnam is growing fond of West African crude oil after state-run Binh Son Refining and Petrochemical, or BSR, successfully processed two Nigerian grades in recent test runs at its Dung Quat refinery, but Indonesian Minas grade also emerged on its radar recently as the company's search for more staple feedstocks continues amid faltering domestic upstream production.
BSR has successfully processed two Nigerian crude grades at the 148,000 b/d Dung Quat refinery in central Vietnam in February and early March, a company official told S&P Global Platts. During the feedstock test runs in its main CDU, light sweet Nigerian Qua Iboe crude and Cabinda were mixed with staple domestic grades in roughly 30:10:60 proportion.The share of the Qua Iboe can be raised to 40-45%, but the share of Cabinda crude in the feedstock blending pool was relatively lower because it contains high residue, the official said. Cabinda would need to be primarily processed from the RFCC unit.
Following the successful Nigerian feedstock trial runs, BSR will test Indonesian Minas crude over March-April, the official said.
BSR's decision to select an Indonesian grade came as little surprise as refiners must secure a few short-haul feedstock supply options in case of any emergency situations that may call for additional and prompt deliveries, refinery feedstock and fuel trading sources based in Hanoi, Da Nang and Singapore said.
"Africa and Middle Eastern supplies are always susceptible to geopolitical issues as well and how often have we seen trades disrupted from those regions in the past ... it's a must for any major Asian refiners to secure both long and short-haul sources," a sweet crude and fuel oil trader based in Hanoi said.
BSR is under pressure to find a steady stream of feedstock supply from external sources as the supply of various domestic crude grades that primarily feeds the plant is running dry.
State-run oil firm PetroVietnam produced 11.47 million mt of crude oil in 2020, down 12.4% from 2019 and marking the fifth consecutive yearly decline. Vietsovpetro, a stakeholder and operator of some of major domestic upstream projects, produced estimated 3.42 million mt of crude oil in 2020, down 8.8% from a year ago, the company said.
Reflecting Vietnam's faltering upstream output and its growing dependence on imports for refinery feedstock requirements, the country imported 11.74 million mt of crude oil in 2020, up 51% from 2019.
Minas discountDung Quat was originally designed to process primarily domestic crude grades, including Bach Ho, Su Tu Den, Chim Sao and Thang Long. The plant also processed light sweet import grades from neighboring producers including Malaysia and Brunei on a regular basis.
However, Indonesian Minas crude may prove to be a better short-haul feedstock choice as the Indonesian grade often trades at a discount to various light sweet Malaysian grades in the Southeast Asian spot market, sweet crude and condensate traders based in Singapore said.
The outright price spread between Minas and Malaysian Labuan crude averaged minus $4.14/b in 2020 and the spread averaged minus $3.27/b to date in the first quarter 2021, Platts data showed.
Meanwhile, Brunei Shell has set the official selling price of flagship Seria Light crude lifted in January at $55.83/b, $1.42/b higher than Indonesia's Minas crude outright OSP of $54.41/b for the same loading month.
More Nigerian testingBSR said it plans to test another Nigerian grade Forcados in June, extending the company's strategy to diversify its feedstock choices and reduce dependence on domestic grades.
BSR will test total five new crude grades in the first half of this year and will choose those which have competitive prices for long-term purchase plan, Platts reported earlier.
Forcados is classified as a light-medium sweet crude with a specific gravity of around 31.5 API and a sulfur content of around 0.22%. Minas has an API gravity of around 33.4 and sulfur content of 0.1%, while Qua Iboe has an API of around 36 and sulfur content of around 0.13%.
