* Delayed to Q1 2018 at the earliest
* Supportive of oil product margins, to weigh on crude oil
* Issues tender to charter 27 VLCCs to ship oil from Kuwait
(Adds details, background)
By Jessica Jaganathan and My Pham
SINGAPORE/HANOI, May 15 The commercial start-up
of Vietnam's new $7.5 billion Nghi Son oil refinery will be
delayed to 2018, from an initial expected start-up in the third
quarter of this year, according to a notice on a government
The 200,000 barrels-per-day (bpd) oil refinery is now
planning to start commercial operations in the first quarter of
2018, according to a notice on the website for Deputy Prime
Minister Vuong Dinh Hue and a source close to the matter.
Trouble with a mechanical test on some of the refinery's
components set back test runs at the plant, causing the delay,
according to the notice.
A spokesman for Nghi Son did not immediately reply when
contacted by Reuters.
The start-up delay should defer an expected decline in
product margins until after Nghi Son starts operating, said
Nevyn Nah, an oil analyst with consultancy Energy Aspects.
"The impact on margins will be shifted to mid-2018 if the
refinery is commissioned in first quarter of next year," he
Vietnam's imports of oil products were expected to fall
after Nghi Son began operations.
The delay of additional fuel supplies in Asia could be good
news for refiners, a trader with a North Asian refinery said.
Still, it could weigh on the crude oil market, a
Singapore-based crude trader said.
The refinery was expected to take delivery of its first
crude oil in May and send out its first oil products by the
third quarter of the year, the company said in February.
The plant is Vietnam's second refinery and will process
Kuwaiti crude oil to produce liquefied petroleum gases,
gasoline, diesel, kerosene and jet fuel, mainly for the domestic
Kuwait now has less demand for its crude after shutting its
200,000 bpd Shuaiba refinery in April and this is expected to
continue until Nghi Son starts, four crude traders said.
Nghi Son Refinery sent out requests to shipbrokers earlier
this month to charter 27 very large crude carriers, ships
capable of carrying 2 million barrels of oil each, over July
2017 to June 2018 to transport crude from Kuwait to the
refinery, according to a tender document seen by Reuters.
Japan's Idemitsu Kosan and Kuwait Petroleum
International each own 35.1 percent of Nghi Son Refinery and
Petrochemicals, while PetroVietnam has 25.1 percent and Mitsui
Chemicals 4.7 percent.
Vietnam's existing Dung Quat refinery meets about 30 percent
of domestic demand.
(Reporting by Jessica Jaganathan, Roslan Khawsawneh and
Florence Tan in SINGAPORE and My Pham in HANOI; Editing by Tom
Hogue and Christian Schmollinger)