PetroVietnam in Talks to Buy Crude Oil for Refineries

By Dinakar Sethuraman

Nov. 13 (Bloomberg) -- Vietnam Oil & Gas Group, known as PetroVietnam, is seeking supplies of as much as 26.5 million metric tons a year of crude for three proposed refineries to meet rising domestic fuel demand.

The company is willing to offer stakes in the refineries in exchange for long-term crude supplies, Tran Ngoc Canh, chief executive officer of the state-owned company, told reporters today at the Gasex 2008 conference in Hanoi. PetroVietnam could offer as much as 30 percent in each refinery under Vietnam's law and higher stakes in special cases, Tran said.

``PetroVietnam has plans to build three refining and petrochemical complexes,'' Tran said. ``The demand for oil products is very big in Vietnam and is growing at 14 to 15 percent a year.''

The Southeast Asian nation's first refinery may help reduce dependence on fuel imports and narrow the trade deficit. The $2.5 billion Dung Quat plant, set to come into operation in February, will be capable of processing about 6.5 million metric tons of crude annually.

BP Plc, Royal Dutch Shell Plc, several Middle Eastern companies and Venezuela are among those competing to supply crude to Vietnam, Tran said yesterday.

Vietnam, Southeast Asia's third-biggest oil producer, imported $10.3 billion of petroleum products in January through October, the second-biggest import by value. The budget shortfall has increased 66 percent from a year earlier.

The company plans to more than double capacity to 60 million tons a year at the three refineries by 2025, he said. PetroVietnam may build a liquefied natural gas import terminal.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.