Crude oil: Decrease in exports, increase in imports

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The import and export volume of crude oil in the period of 2012-2018. Chart: T. Binh.

The volume and proportion of Vietnam’s crude oil exports to major markets in 2018. Chart. T. Binh

Increase in volume, decrease in price

According to the latest statistics from the General Department of Customs, at the end of February, 2019, the whole country imported more than 1.462 million tons of crude oil worth US$ 635.4 million, rising more than 16 times in volume and 14 times in value from the same period 2018.

The sudden increase in crude oil imports is associated with the event of Nghi Son Refinery and Petrochemical Plant coming into operation (end of 2018). Nghi Son Refinery and Petrochemical Plant located in Nghi Son Economic Zone, Thanh Hoa is a national key project. The project is invested by Nghi Son Refinery and Petrochemical Limited Liability Company as an international joint venture in oil and gas industry between Vietnam - Japan – Kuwait, with a total investment of more than US$ 9 billion, total capacity when put into operation is estimated at 200,000 barrels / day, equivalent to about 10 million tons of crude oil / year. Diversified petrochemical products include LPG liquefied gas, unleaded gasoline RON 92, RON 95, diesel fuel, jet fuel, benzene, sulfur and many other products. In which the largest output belongs to high quality diesel fuel (2.204 million tons / year), normal diesel fuel (1.47 million tons / year), gasoline RON 92 and RON 95 (1,153 million tons / year).

The above figures of show that the demand for crude oil imports will increase in the coming time.

Talking to reporters, the leader of Nghi Son Port Border Gate Customs Branch (Thanh Hoa Customs Department) said that according to data updated from the beginning of 2019 to mid-March 3, the Branch handled customs clearance for 6 imported crude oil vessels with total output of nearly 1.4 million tons, valued at US$ 579 million.

"However, due to the lower price than estimated, the tax revenue (Value Added Tax) of each vessel is lower than expected from VND 90 to 100 billion" – the leader of Nghi Son Port Border Gate Customs Branch said. In fact, the growth rate of imported crude oil (16 times) higher than the value (14 times) in the first 2 months of the year also proved that the import price in the last 2 months was lower than the same period in 2018.

According to Nghi Son border gate Customs Branch, imported crude oil for Nghi Son Refinery and Petrochemical Plant originates from Kuwait, with the world’s sixth-largest oil reserves and one of the investors in Nghi Son petrochemical refinery joint venture.

Reversal of imports – exports

Regarding the story of import and export of crude oil – our country’s important resource, according to statistics from the General Department of Customs, in the period of 2012-2017, the exports of crude oil were always higher than the imports, with the average exports of about 8.3 million tons / year, while the imports were only about 750 thousand tons /year.

But by 2018 and the first two months of this year, there was a reversal of imports and exports with the milestone of sharp increases in crude oil imports which surpassed the exports. Specifically, in 2018, the whole country exported 3.96 million tons of crude oil, down 41.8% compared to the previous year, and less than half of the annual crude oil exports in the period 2012-2017. Meanwhile, the import volume reached 5.17 million tons, 4 times more than the figure of 1.18 million tons in 2017, and 7 times more than the annual import figure of the period 2012-2017. The data updated in the first 2 months of the year and the main reasons for the above sudden increase in crude oil imports were mentioned above.

The reversal of volume leads to a significant change in import-export turnover of crude oil. Notably, crude oil exports are no longer a "salvage" for exports like many years ago. Instead, there is the rise in phones, computers, and the stability of the textile industry.

If in 2012, Vietnam collected about US$ 8.21 billion from crude oil exports, then by 2018 this revenue dropped sharply to just over US$ 2 billion. Meanwhile, imports of this commodity group increased from about US$ 647 million in 2012 to US$ 2.74 billion in 2018.

According to the General Department of Customs data, in recent years (2012-2018) the average export value of crude oil was not much different from the average import unit price. At the same time, according to the general trend of the world oil market, the average import and export unit price of crude oil tends to fall and reached the lowest average value in 2016 with the average exports of about US$ 345 / ton and average imports of US$ 368/ ton.

For the whole period 2012-2018, the average import export price of crude oil was around US$ 600/ ton.

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Regarding the import and export markets, the largest supplier for Vietnam is Kuwait. While Vietnam's crude oil is exported to 8 major markets, accounting for over 90% of the total crude oil exports of the country, they are: Australia, Japan, China, Malaysia, Singapore, South Korea, United States and Thailand.

Notably, in the Chinese market, Vietnam's crude oil exports reached a record level of 3.87 million tons at the time of the lowest crude oil price in 2016.