Bloomberg Confirms Al-qabas Report About ‘vietnam Refinery’

The CEO of the Vietnam Refinery has sent a letter to the partners informing them that the third shipment of oil for January has been canceled, which forced the company to significantly reduce production.

Bloomberg Agency confirmed what Al-Qabas had repeatedly reported over the years about the $9.2 billion “Nghi Son” refinery, to which the Kuwait Petroleum International Company (KPI) contributes with a 35.1% share, to financial, administrative, and technical problems, differences and divergence of views between partners, which impedes the continuation of its work. , especially since the refinery’s situation has gone from bad to worse in light of the continuing losses and the accumulation of debts.

According to an official document seen by Al-Qabas, on January 18, 2022, the partners were informed through the letter that if the loan provided by Kuwait Petroleum International and the Japanese company Idemetsu to pay oil shipments is not extended on January 27, 2022, the refinery does not have any liquidity to pay the value of the oil shipments and will completely suspend work on February 13 next.

The volume of accumulated debts of the Vietnam Refinery Company until the end of June 2021 amounted to more than 9 billion dollars, and the volume of accumulated debts exceeds the size of all the company’s assets, which means that the Vietnam Refinery Company is in bankruptcy.

Also, the Japanese partner had previously announced that the liquidity shortage in the refinery during the next 10 years would be around $5 billion. The refinery’s financial advisor also asked the partners to pay an additional amount of $3.127 billion, of which the Kuwait Petroleum International Company’s share is about $1 billion.

Citing informed sources, Bloomberg Agency said that Nghi Son, the largest oil refinery in Vietnam, in which the Kuwait Petroleum Corporation is involved, has reduced oil processing and refining rates, and it may have to close next month after the liquidity crisis led to a halt in Kuwaiti crude oil imports a week ago.

The agency said that the “Nghi Son” refinery is seeking financial assistance from the Vietnamese government, and if it fails to do so, closing the refinery will be the strongest possibility.

An executive official in “Nghi Son” told the agency that the refinery has reduced operating rates and is discussing potential solutions with stakeholders and relevant partners, expecting, on the other hand, that the refinery’s operations will return to normal.

And “Bloomberg” reported that there are two oil refineries in Vietnam that produce the bulk of its fuel needs, and it is possible that the decrease in refining in the “Nghi Son” refinery will increase the storage of unrefined raw materials.

The sources indicated that the decline in domestic demand for fuel in Vietnam due to the closure measures related to the Corona pandemic, and the volatile oil market contributed to the liquidity crisis of the “Nghi Son” refinery.

The Vietnamese refinery began operations in 2018, and it has the capacity to process and refine 200,000 barrels per day of Kuwaiti crude, it works to refine various oil products such as gasoline and diesel.

 

SOURCE  :   TIMES KUWAIT

 

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