Vietnam exports first batch of jet fuel

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Vietnam sold its first 4,500-ton batch of jet fuel produced by Dung Quat refinery to a Singapore-based unit of BP on Tuesday.

PV Oil, a subsidiary of state-owned Vietnam Oil and Gas Group, and Binh Son Petrochemical Refinery Co., which runs the refinery, have also chosen Shell as another buyer for the Jet A1 product.

Dung Quat is expected to produce between 200,000 and 300,000 tons every year to be sold in both local and foreign markets. National carrier Vietnam Airlines has started negotiations to buy jet fuel from the refinery for supplies for domestic and international aircraft in the country.

Jet A1 is the first Vietnamese jet fuel product.

It has been certified by oil majors including Shell, BP and Chevron, news website VietNamNet reported Wednesday.

The government last week approved a plan to increase the annual capacity of Dung Quat, the country's first oil refinery, from 6.5 to 10 million tons.

Vietnam began commercial production at the US$3 billion refinery in February last year. The plant is designed to supply about one-third of the nation's fuel demand in 2010.

Le Xuan Trinh, deputy general director of PV Oil, said up until now Vietnam has had to depend wholly on jet fuel imports.

"Now that we are able to produce Jet A1, the priority is to supply for the domestic market. However, local partners are not ready to buy locally-produced fuel."

According to PV Oil, prices of local and international fuel products are the same but Vietnamese companies can save on transport costs and pay in local currency if they choose to buy from Dung Quat. The company said selling the first Jet A1 batch to BP is a way to prove that the country is capable of producing the fuel.

Nguyen Hoai Giang, general director of Binh Son, said jet fuel is a "sensitive product" and local companies may question the fuel produced by Dung Quat.

"The 4,500-ton shipment to BP will definitely change how local consumers look at the product," Giang said.

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