VietNamNet Bridge - Chairman of the Vietnam Oil and Gas Group (PetroVietnam) - Phung Dinh Thuc – has said that the Japanese partner in the Binh Phuoc Ethanol Project wants to withdraw from the project, while the group does not want to buy back the shares.

Thuc says a number of projects related to E5 bio-fuel production and trading projects of PetroVietnam and foreign partners are facing difficulties, for example, the project in Quang Nam and Binh Phuoc provinces.

Seeing losses from the sale of E5 bio-fuel in Vietnam, the Japanese partner in the Binh Phuoc Ethanol Plant has proposed to withdraw from it. "We have asked them to stay. In case of disagreement, they can sell their shares to other partners. PetroVietnam will not buy more because we have had 29 percent of capital in this project," he says.

According to the Prime Minister-approved roadmap, from December 1, 2014, gasoline for use in road of vehicles in the seven provinces of Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, Can Tho, Quang Ngai and Ba Ria - Vung Tau is E5. From December 1, 2015, this will be applied nationwide.

The PetroVietnam’s Chairman emphasizes that when this plan is realized nationwide, biodiesel projects will be better. "At the moment when E5 is uncommon, these projects will be definitely in tough situation," he says.

The Binh Phuoc Ethanol Plant has a total investment of $80 million, invested by Itochu of Japan (49 percent), PV Oil (29 percent) and Licogi 16 (22 percent). The project was kicked off in March 2010 and began operation in early 2012. At present, the factory has difficulty in selling its product.

At present, only three out of more than ten fuel traders in Vietnam sell E5, including PV Oil, Petec and Saigon Petro. PVOil - the key member in the biofuel development plan - is building three ethanol plants with a total annual capacity of 300,000 m3. It is expected that when the three plants begin operation in 2014, they will supply 6 million m3 of E5, equivalent to 94 percent of gasoline consumption in the country in 2014. After two years selling biodiesel, PV Oil said the sales are very low compared to traditional gasoline.

PetroVietnam also says that the Dung Quat oil refinery currently meets 30 percent of the market demand for petroleum. This year the plant is expected to earn VND2.1 trillion ($$105 million) of profit. Under the plan, the Dung Quat will be expanded and upgraded.

Thuc says in case of having foreign partners, the Dung Quat oil refinery will be both expanded upgraded, otherwise it will be upgraded only. PetroVietnam is actively looking for alternative sources of crude oil from the Bach Ho oilfield.

S. Tung