VIETNAM CREATES A MARKETING UNIT TO LEAD WAY FOR ITS FIRST REFINERY

VIETNAM CREATES A MARKETING UNIT TO LEAD WAY FOR ITS FIRST REFINERY

Vietnam's state oil company PetroVietnam has launched an oil processing and marketing unit to gear up for the country's first oil refinery, due to be running by 2000, a senior company official said on Wednesday.

The new company, PetroVietnam Oil Processing, Distribution and Marketing Co. (PVPDC) started Tuesday. It was formed about two weeks ago, after the government's approval in May, the official said from Hanoi.The company's general manager is Do Quang Toan, former director of the petroleum department in the prime minister's office.

The company would lay the groundwork for the first oil refinery and would work with the joint-venture partners in its construction, the official said.

It would then operate the refinery and arrange product distribution. Surplus products would be exported, the official said.

PVPDC plans to build storage terminals in Haiphong, Danang, Ho Chi Minh City and Can Tho, he said.

PetroVietnam's other trading arm, Petechim, would remain the country's main crude exporter and importer of equipment for the upstream industry. One week ago, the government also allowed Petechim to import oil products to be distributed locally by PVPDC, the official said.

This would mean that the two PetroVietnam units would compete with state oil trading company Petrolimex and another state trader, Petech, to import and distribute oil products.

Work on the 130,000 barrel-a-day refinery, to be built in Dung Quat Bay in central Vietnam, was delayed when France's Total SA withdrew its 30 percent stake last month.

Total did not consider the project viable, because the site was a long way from the main source of crude, isolated from the consumption base in the south and lacked infrastructure.

The government and PetroVietnam are talking with several foreign companies keen to replace Total. The other foreign partners in the project are Taiwan's state-owned Chinese Petroleum Corp. and Chinese Investment and Development Corp.

Industry sources said the Vietnamese government's policy was to encourage competition among local oil companies and not to allow any monopoly in the domestic market.

To achieve this, Vietnam's oil-trading operations have been streamlined recently. PetroVietnam took control of Petechim from the Ministry of Commerce and is in charge of Petechim's crude exports. The trading unit that remained with the ministry was renamed Petech, which also imports oil products.

Petrolimex, which also comes under the control of the commerce ministry, is the country's main oil-product importer and distributor, with 60 percent to 70 percent share of the domestic market.

Petrolimex dominates the market in the north, with a 90 percent share, and has a 50 percent share in the south.