Photo: Duc Anh
Oil refinery operator earns profit in first half while petitioning government about its difficulties.
The after-tax consolidated profit of the Binh Son Refining and Petrochemical Company (BSR), the owner of the Dung Quat Oil Refinery in central Quang Ngai province, has been reported at up to $45 million for the first half of 2016.
The first half report from the PetroVietnam Group, which owns BSR, released in late July showed that total consolidated revenue of BSR stood at $1.6 billion, representing 86 per cent of the company’s half-year plan.
Its after-tax profit exceeded its annual plan by 24 per cent, according to the report. “Profit has come from reducing costs in production and operations and from the increasing crude oil price over the last six months,” BSR Chairman Nguyen Hoai Giang told VET on August 1.
The crude oil price in February was $32 per barrel then increased to $46 in May and $50 in June.
Despite being profitable in 2015 and the first half of 2016, PVN and BSR have sought further incentives from the government over the last year after experiencing difficulties with consumption of the refinery’s products.
The difference between import tariffs imposed on oil products from South Korea and Southeast Asian countries and the taxes imposed on Dung Quat’s products have seen the latter’s customer numbers fall, according to Mr. Giang.
Under the Vietnam - South Korea Free Trade Agreement the difference in import tariffs is 10 per cent, which impacts on the consumption of Dung Quat’s products and creates excessive inventories.
In early April the Ministry of Finance applied a new method of calculating weighted average import duties, with diesel at 2.32 per cent and petroleum at 18.35 per cent. This has also created problems for BSR.
The Dung Quat Oil Refinery has been operational since early this year with average output at around 103-105 per cent compared to designed capacity. By June it had produced over 3.4 million tons of various products, representing 117 per cent of the first six-month target and 58 per cent of the annual plan. It has also consumed 3.328 million tons of products, for 115 per cent of the first six-month plan and 57 per cent of the annual plan, and submitted around $280 million to the State budget.
BSR’s business performance in 2015 was positive. Total revenue was nearly $4.3 billion, with after-tax profit at around $258 million, or 52 per cent higher than the annual plan. The rate of return increased to 20.6 per cent against 0.6 per cent in 2014.
BSR has been preparing for an initial public offering at the end of this year. The government introduced plans for it to divest from Dung Quat last year, requesting it cut its ownership down to a maximum of 65 per cent.