Hanoi (VNA) - Despite being hit hard by falling oil prices andCOVID-19 in the first half of 2020, the Dung Quat Oil Refinery maintained operationsvia various means and is now ready for the recovery phase in the second half ofthe year.

Unprecedented difficulties

Bui Minh Tien, General Director of Binh Son Refining and Petrochemical(BSR), which operates the Dung Quat plant, emphasised that the first half ofthis year was the most difficult period BSR has ever faced.

The impact of COVID-19 from mid-February to mid-April dragged down oilprices, causing several problems for distribution of the plant’s products.Inventories skyrocketed, at times reaching 90 percent, with tanks filled withoil and the plant facing the possibility of closure.

In April, key revenue earner Mogas 95 saw the company lose 2.98 USD a barrel.Overall, crude oil prices nosedived.

According to the S&P Global Platts Insight magazine, which showcasespricing, news, and analytics across global energy and commodities markets, crackspreads were mostly negative between the end of March and the beginning ofApril. Crack spread refers to the overall pricing difference between a barrelof crude oil and the petroleum products refined from it.

Facing such difficulties, BSR leaders focused on maintaining the plant’soperations and applying various measures to keep the plant from closure. These included optimisingthe use of processed crude oil, adjusting production to market demand, and cuttinginventories to make room for low-priced barrels.

The company also maximised its distribution of crude oil within thecountry, to boost value chain links in the sector and seize spot contracts withdomestic clients. It also closely followed developments in the market, steppedup forecasting and analysis, and optimised the trade of high-value immediateproducts.

Meanwhile, good cost saving and currency flow management, on-timepayment for crude oil, and negotiations with oil suppliers for longer repaymentperiods and lower delivery fees led to more effective production and business.

As a result, the Dung Quat Oil Refinery ran stably in the period, with averagecapacity surpassing designed capacity by 5 percent. It produced a total of some3.43 million tonnes of oil, exceeding the target by 6.7 percent. Totalconsumption hit approximately 3.35 million tonnes, or 4.3 percent higher thanplanned.

Spotting profits followingnegative revenue

According to BSR, despite posting losses in April and May, the company got out of the negative situation in June and began to reel in profits totalling over 1trillion VND (43.2 million USD).

General Director Tien said that in the second half, the company plans toproduce and distribute about 2.5 million tonnes of products and earn 23.6 trillion VND, contributing approximately 2 trillion VND to the Statebudget.

In the third quarter, BSR will carry out the fourth overall maintenanceof the refinery to ensure safety, quality, and cost saving. Meanwhile, moreinvestment will be poured into scientific research, particularly ondiversifying crude oil sources, on the optimisation of capacity at the plantand workshops, and on product restructuring.

Dung Quat is in the central provinceof Quang Ngai and was the first-everoil refinery in Vietnam,with an annual capacity of 6.5 million tonnes of crude oil. It applies cutting-edgetechnologies from the USand the EU and is capable of processing about 57 different types of crude oilwith high API quality and low sulphur content. The refinery uses 85 percent locally-sourced and 15 percent imported materials./.