UPDATE 1-Vietnam cuts diesel prices, petrol prices unchanged

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HANOI, Sept 16 (Reuters) - Vietnam, Asia's second largest importer of petrol and diesel, reduced retail diesel prices by 2.8 percent to 15,500 dong (93.9 U.S. cents) per litre due to lower oil prices, top oil product distributor Petrolimex said.

State-run Petrolimex said in a statement on Tuesday the cuts are for diesel with 0.05 percent of sulfur but it kept its retail prices of petrol and diesel with 0.25 percent sulfur content unchanged.

U.S. light crude oil CLc1 tumbled over 4 percent to a seven-month low on Tuesday. [O/R]

"The policy is to keep retail prices of petrol unchanged to help importers such as Petrolimex to recover the losses incurred earlier during the year when world prices were high," a Petrolimex official told Reuters.

Importers, all state-owned, have said they lost more than $500 million in the first half of 2008 as world oil prices surged.

At current prices of 17,000 dong per litre for the popular 92-octane petrol, importers were expected to make a profit of 4,000 dong for every litre they sell.

The Southeast Asian country, which relies almost entirely on oil product imports as it lacks refineries, reinstated import tariffs at 5 percent on refined products on Monday as the government sought to take advantage of declining world crude prices.

Vietnam, Asia's second-largest importer of petrol and diesel after Indonesia, last trimmed retail petrol prices by 5.6 percent on Aug. 27, the second cut in August alone, but prices are still nearly 25 percent higher than at the beginning of 2008. (Reporting by Nguyen Nhat Lam and Ho Binh Minh; Editing by Anshuman Daga)