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Vietnam's first oil refinery, located in Quang Ngai Province, is still on track to be fully operational in the first quarter of 2009, according to local media sources.

The US$2.5 billion Dung Quat refinery, which is said to be more than 97 percent complete, is expected to complete trial operations and come onstream in February 2009.

State-owned Petrovietnam, the trading name of The Vietnam National Oil and Gas Group (PVN), is reportedly planning to import 52,500 tonnes of diesel in October to carry out the first test run of the production facility.

The refinery will run at 30,000 barrels-per-day (bpd) for approximately three months between February and May, after which production is scheduled to be doubled to 60,000 bpd and then reach full capacity by the end of 2009.

The facility will produce a range of refined oil products, including fuel oil, and is expected to meet one third of the domestic fuel demand, according to Truong Van Tuyen, Deputy General Director of the Vietnam National Oil and Gas Group.

As Vietnam has up until now had no processing capacity of crude oil, the country has had to import all its petroleum products, including bunker fuel.

State-owned Vietnam National Petroleum Import Export Corp (Petrolimex) has controlled the flow of all oil imports for a number of years, with most of its fuel oil cargoes being sourced from Singapore.

Petrolimex has affiliates and branches throughout Vietname, as well as its own storage facilities.

Marine gas oil (MGO) and 180-centistoke (cst) fuel are available in most ports, delivered by Petrolimex-owned and operated barges and road tank wagons (rtws).

The production of fuel oil at the Dung Quat refinery from next year is set to lead to a reduction in the need for fuel oil cargoes from external markets and make Vietnam more competitive and attractive as a bunkering location.

Meanwhile, Petrovietnam, Kuwait Petroleum International and Japanese refiner Idemitsu are also constructing Vietnam's second refinery, the 200,000-bpd Nghi Son facility in the north of the country. The US$6 billion plant is scheduled to be completed in 2013.