BP’s accord with PetroVietnam Oil Corp. and Binh Son Refining & Petrochemical Ltd. “will help ensure a stable source of crude” and assure “smooth, efficient operations” at the refinery, Vu Quang Nam, PetroVietnam’s deputy chief executive officer, was cited as saying in a statement posted on the government’s website.

The government has built the Dung Quat refinery to end a complete reliance on imported fuels. The plant, scheduled to start up by February and able to process 6.5 million tons of crude oil annually, is expected to supply around 30 percent of domestic demand, according to the government statement. The country imports 13 million tons of petroleum products annually.

Oil supplied by BP under the agreement signed in Hanoi would help cut back on use of crude from the aging Bach Ho field, the government said. The nation’s largest oil field has been operating for more than two decades.

“We expect BP to supply sweet crude which is the same type with Indonesia’s Minas oil,” Hoang Duong, deputy general director of PetroVietnam Oil, said Tuesday.

BP would provide at least half the oil the Dung Quat refinery needs, Dinh La Thang, chairman of PetroVietnam, said on December 30. Foreign suppliers of crude to the refinery would stand a better chance of getting a stake in the plant, Thang said.

In 2007, PetroVietnam signed two separate agreements with oil traders Glencore and Trafigura to supply crude to its future refineries, including Dung Quat.

PetroVietnam test-ran the US$2.5 billion refinery from December at about 30,000-barrels-per-day (bpd) capacity.

The plant will run at its full capacity of 140,000 bpd from the fourth quarter this year, meeting about 30-40 percent of the country's total demand.

Thang said in a statement last week the group would sell up to a 49 percent stake in the refinery to foreign investors who could guarantee crude supply.

Thanh Nien News with agencies - january 14, 2009