Nghi Son Refinery & Petrochemical LLC (NSRP) has secured necessary support from its stakeholders to avert any indefinite shutdown of its 200,000-b/d refinery and petrochemical complex in Thanh Hoa Province in Vietnam.
While NSRP did previously seek relevant approvals from joint-venture owners PetroVietnam (25.1%), Kuwait Petroleum Europe BV (35.1%), Idemitsu Kosan Co. Ltd. (35.1%), and Mitsui Chemical Inc. (4.7%) on a plan to idle the refinery beginning in mid-February to help improve immediate funding needs, the partners have agreed to and approved a solution involving a short-term closure that will allow NSRP to maintain operations and sustainability of the refinery without need of a lengthy shutdown, NSRP said in a Jan. 30 release.
Responding to a swathe of recent media reports implying the refinery would remain indefinitely shuttered due to the operator’s financial difficulties, NSRP said those reports were based on unauthorized and confidential business information, as well as assumptions.
NSRP revealed no further details regarding the length of the refinery’s short-term operational suspension or the scope of its funding challenges.
NSRP restructuring plan
Addressing the recent NSRP media reports separately, PetroVietnam said in a Jan. 26 release that—while refinery continues to operate “relatively stably, producing and selling products that meet market requirements”—overall restructuring of NSRP is now “a necessary and urgent need.”
Specifically, PetroVietnam said NSRP’s “risk of shutting down on Feb. 13…due to serious financial difficulties” does not stem from the Vietnamese state-owned operator’s failure to approve certain provisions of agreements between the partnership, including early payment under a fuel products offtake agreement (FPOA).
While PetroVietnam concedes production, efficiency, and finances of the NSRP JV has been impacted by the rising global demand for renewable energy sources, sharp drops to processing profit margins, and unfavorable market fluctuations resulting from the coronavirus (COVID-19) pandemic, shortcomings in NSRP’s governance—which is operated by “foreign parties”—also has contributed to the JV’s current financial difficulties.
“[A]ccording to [NSRP’s charter, its board of management] is responsible for the efficiency of production and business activities, including the import of crude oil and the operating capacity of the plant,” PetroVietnam said.
NSRP’s decision to voluntarily cancel import of two crude oil tankers in January 2022—which led to the risk of the refinery’s complete shutdown—is the “responsibility of the NSRP executive board, not related to [PetroVietnam’s agreements with NSRP],” according to PetroVietnam.
PetroVietnam said it is in negotiations with foreign capital contributors on the NSRP overall restructuring plan.
Fully commissioned in December 2018, the NSRP processes 100% Kuwaiti crude oil into products for Vietnam’s domestic market (OGJ Online, Dec. 12, 2018).
