Vietnam - Venturing into Refining

Transcription

1 Vietnam - Venturing into Refining & Cleaner-Burning Fuels Over the course of the past 20 years, Vietnam has emerged as an important economic market in southeastern Asia. Vietnam s real gross domestic product (GDP) from 2004 through 2008 averaged 7.8%. With a growing population that is currently over 85 million people, product outputs and private consumption are also rapidly increasing despite the global economic recession that has hit the region. Vietnam has also become an important regional producer of oil and natural gas. The country has boosted exploration activities, allowed greater foreign company involvement in the oil and gas sectors, and introduced market reforms aimed at strengthening Vietnam s energy industry. Domestic consumption of oil and natural gas resources has also increased as a result of rapid economic growth in the country. Until this year, Vietnam lacked refining capacity and had to import its refined products supply. This situation is dramatically changing as domestic fuel production and improved product qualities take place to meet consumer needs in the country. Vietnam s oil sector is managed by the state-owned Vietnam Oil & Gas Corporation (called Petrovietnam), which is overseen by the Ministry of Industry. Petrovietnam has formed multiple partnerships with international oil companies and national oil companies to help develop offshore fields and in construction of infrastructure and facilities. Dung Quat Refinery After many years of delay, Vietnam s first refinery, located at Dung Quat in the Quang Ngai (central) Province, began commercial operations in February 2009 (Figure 1). By June, the plant was operating at about 70% of capacity, and is expected to reach full processing and outputs by October. INSIDE THIS ISSUE Vietnam - Venturing into Refining & Cleaner-Burning Fuels A Monthly Publication by Asian Clean Fuels Association Vol. 7 Issue 3 - June/July th Annual Fuels & Lubes Asia Conference Crude oil supply to the Dung Quat refinery includes output from the Bach Ho field of the South China Sea. As a result of this diversion, exports of crude from the field will be reduced dramatically, further tightening the Asia-Pacific market. Additional projects are under way in the Dung Quat economic zone in conjunction with the refinery operations. One project is to construct a MTBE (methyl tertiary-butyl ether) plant with 60,000 tons per year output. MTBE would be blended into the gasoline stream to add octane number and help improve fuel quality and clean-burning properties. A second refinery project is being developed at Nghi Son in the northern part of the country. The facility is planned to have a capacity of over 9.0 million tons per year (200, 000 barrels per day). Petrovietnam is working out design and construction timelines, with hopes to bring the facility online sometime in Figure 1: Vietnam s Dung Quat Refinery Complex At an estimated cost of US$3.1 billion, the refinery has a design capacity of 6.5 million tons of crude oil annually (148,000 barrels per day). Current plans include eventual expansion to about 10 million tons per year by the timeframe. When fully operational the refinery will provide the domestic market with between 400,000 and 500,000 tons of petroleum products per month, or about one-third of the country s fuel demand by next year. Source: VietNamNet Bridge (Continued on p2) You can reach us at info@acfa.org.sg. Visit our Web site at Copyright Asian Clean Fuels Association. Disclaimer: The Asian Clean Fuels Association does not represent or warrant the accuracy, adequacy or completeness of the information and materials contained in this newsletter (the Content ), and expressly disclaims any liability for any error or omission in the Content, or for any action taken in reliance on the Content.

2 Vietnam - Venturing into Refining & Cleaner-Burning Fuels (continued from p1) Fuel Specifications Improving The Directorate for Standards and Quality (TCVN) is the national authoritative body responsible for setting fuel quality standards in Vietnam. Currently, the gasoline and diesel fuel specifications meet the Euro II-equivalent limits of 500 ppm maximum sulphur content. As domestic fuels production increases at the Dung Quat refinery, the TCVN has indicated plans to implement the Euro III-equivalent fuel standards by 2012, which would lower the sulphur content levels to 150 ppm maximum. Since July 2001, Vietnam has banned the use of leaded gasoline and simultaneously introduced its specifications for unleaded gasoline. The three gasoline grades presently offered in Vietnam include RON 90, RON 92, and RON 95. The 500 ppm gasoline specification came into force starting January Although some RON 83 grade gasoline is apparently still found in the market, according to Petrolimex which manages product imports as part of PetroVietnam, efforts are underway to phase out this grade. Key gasoline specifications are provided in Table 1. Table 1: Current Gasoline Specifications Property RON 90 RON 92 RON 95 Sulphur, ppm, max. 500 Lead, g/l, max Metal Content (Fe, Mn), g/l, max Benzene, vol.%, max. 2.5 Aromatics, vol.%, max. 40 Olefins, vol.%, max º C, kpa, min º C, kpa, max. 75 T 10, T 50, T 90, ºC, max. 70, 120, 190 Source: International Fuel Quality Center Vietnam has not established specific specifications for oxygenate blending, like MTBE or bioethanol, for gasoline. There are specifications set for neat bioethanol that were implemented in 2007 along with those for gasoline and diesel fuel. Similarly, standards have been implemented for biodiesel fuel, however, there are no separate specifications for biodiesel blends. The TCVN is evaluating the need to implement specific oxygenates blending specifications as fuel quality improvements take place. Transportation Still Dependent on Motorcycles The main mode of transportation in Vietnam remains the motorcycle, which represents about 95% of the estimated total of 26 million vehicles in the country. Relatively few cars are presently seen on the roads, however, as economic gains take place more personal autos will enter the motor pool. Figure 2: Hanoi Capital City Traffic The number of vehicles continues to grow rapidly, with average annual increases of about 15% in registrations, or about 9,000 new motorcycles and 600 new cars each day. Source: VietNamNet Bridge Vehicle ownership is heavily concentrated in the country s major cities. Overall, at least 91% of all motorcycles use four-stroke engines and the remainder have two-stroke engines. Starting January 2008, the government banned nationwide the use of three-wheeled motorbikes (and tricycles) due to concerns about traffic congestion and pollution. The lack of adequate road space in the cities is leading to significant traffic problems and difficult transport development due to the intense urbanization (Figure 2). Vehicle emissions standards are carried out jointly by the Ministry of Transport s Vietnam Register and the National Environmental Agency. Since July 2007, the Euro II-equivalent vehicle emissions standards are required for new vehicles. The government plans to begin implementation of Euro III-equivalent emission standards nationwide around Emissions standards for existing vehicles are established based on engine type and age. As these vehicle emissions standards are tightened to help improve air quality, cleaner-burning fuels, as produced in new domestic refinery facilities, will be necessary to meet performance and quality specifications. The Vietnam government is working to address the air quality and traffic congestion problems faced by its urban centers. Partnership efforts, such as with the Clean Air Initiatives for Asian Cities and the Better Air Quality forums, are leading to an improved understanding of air quality management and the notion that cleaner vehicles and fuels must be implemented together as one system to meet the country s goals. June/July 2009 Page 2

3 15th Annual Fuels & Lubes Asia Conference Held in Hanoi The 15th Annual Fuels & Lubes Asia Conference was held this spring in Hanoi, marking continued advances in process technology, product development, and environmental management for fuels and lubricants. World fuel and energy consumption, especially in the Asia-Pacific region, continues to grow faster than time and advanced technologies can produce new resources. The resulting new energy crisis has changed the dynamics of energy and economic development around the world. This year s program focused on the impact of current and emerging energy issues on the economies of the Asia-Pacific region and what different countries are doing to respond to today s difficulty conditions and high energy costs. Thirty-two distinct presentations by representatives from a dozen countries were given during the two-days of plenary sessions. The opening day to the conference included the Society of Automotive Engineers forum on technology requirements and fuel efficient lubricants. Highlights of several key presentations are summarized below. Dr Nguyen Hoang Yen, Deputy General Manager with Vietnam Oil and Gas Corp. (PetroVietnam), presented on the country s national standards on fuels and challenges for refiners. She noted that over the past two decades, Vietnam has increased its exploration activities and expanded foreign company involvement in the oil and natural gas sectors. Rapid economic growth in the country has also increased domestic demand for gasoline, diesel fuel and fuel oil, which will continue at an estimated 8% annually from 2008 to 2020 (Figure 1). Although still a significant net importer (including finished products), Vietnam is completing construction and output from the Dung Quat refinery, and starting work on two other grassroots refineries, one at Nghi Son and the other at Long Son. Dr Nguyen spoke about the need to follow tighter fuel quality specifications in Vietnam to help improve public health and protect the overall environment. She noted that the government must continue to lead in establishing standards to ultimately align with world specifications yet recognizing Vietnam s specific conditions on economic growth and industrialization. Her presentation included details about the refinery developments at the three locations, and planned capabilities to produce 50 ppm sulphur content fuels in the future. Mr Jamie Leather, senior transport specialist in the Asian Development Bank s Regional and Sustainable Development Department, gave a presentation titled Fuelling Asian Transport. He highlighted the unprecedented growth in vehicle ownership in many Asian countries that places a significant strain on energy needs and transport systems now and for many years into the future (Figure 2). He pointed out issues on current regional and national policies, including fuel security issues, to deal with these demands. He further noted the impacts of air and water pollution, traffic congestion, and greenhouse gases (GHG) emissions. Figure 2: Baseline Transport Energy Use (Projection) Asia-Pacific Region Figure 1: Vietnam Fuel Demand 2008 to 2020 Source: Jamie Leather, 15th Annual F&L Asia Conference Source: Nguyen Hoang Yen, 15th Annual F&L Asia Conference Mr Leather examined the various integrated pathways to promote environmentally sustainable transport systems and services. Important elements to these integrated pathways include new vehicle and engine technologies and cleaner fuels, combined with enforced vehicle inspection programs. Dr G.K. Sharma, chief technology officer of the National Automotive Testing and R&D Infrastructure Project under India s Ministry of Heavy Industries and Public Enterprises, presented on India s trends and synergies between the auto sector, oil sector and gov- (Continued on p5) June/July 2009 Page 3

4 Airborne Soot Exposure Health Effects New Study is working to assist vehicle owners in replacing these vehicles with those that comply with the stricter emissions standards. The Health Effects Institute (HEI) reported a new study that concluded people exposed to airborne soot emissions are nearly twice as likely to die from heart disease as previously thought. The study released in June found that for each 10-micrograms per cubic meter (10 µg/m3) of greater exposure to fine particulate matter (PM), the risk of premature death from all types of cardiopulmonary disease rose by 13%, and the premature death risk from ischemic heart disease increased by 24%. Ischemic heart disease reduces blood flow to the heart and can lead to heart attacks. The HEI findings indicate that the risk of mortality from fine PM exposure is nearly double what was previously concluded. The HEI is an independent research organization based in Boston, Massachusetts (U.S.). The study was jointly funded by the U.S. Environmental Protection Agency and industry members to HEI. It was part of a larger programme tracking the mortality of 360,000 people over the age of 18. The research team was lead by experts from the University of Ottawa (Canada). The study indicates that existing air quality standards for fine PM pollution in many countries may need to be examined to determine if they are adequate to provide public health protection. In the U.S., these studies are being used by the EPA to evaluate current national ambient air quality standards for PM. Shanghai Adopts Euro IV-Equivalent Emissions Standards Shanghai Environmental Protection Bureau (EPB) is adopting Euro IV-equivalent emissions standards for new light-duty gasoline vehicles, public transportation vehicles, city sanitation and postal service vehicles ahead of the country starting 1 November The city-wide implementation of Euro IV-equivalent standards is scheduled for July 2010 in time for the World Expo taking place in China. The new gasoline specifications in Shanghai include 50 parts per million (ppm) sulphur limits by September-October Benzene content is limited to 1 vol.% maximum, olefins content set at 25 vol.% maximum (with total olefins and aromatics content not to exceed 60 vol.%), and oxygen content allowed up to 2.7 weight %. Last year, the Shanghai EPB partnered with the Public Security Department on reinforcing emissions inspections for in-use vehicles and found an improvement of 5% in emissions compliance compared to 2007 (90% of vehicles met standards). Nonetheless, some 200,000 vehicles in the city still do not meet the Euro I-equivalent emission standards, contributing 50% of the city s emissions levels. The municipal government LyondellBasell to Start Bio-ETBE Production LyondellBasell, a global polyolefins technology, production and marketing firm headquartered in The Netherlands, announced in June that its Channelview, Texas (U.S.) facility will convert to production of bio-etbe (ethyl-tertiary-butyl ether) starting fourth-quarter The facility currently produces MTBE (methyl-tertiary-butyl ether) and has total capacity of 35,000 barrels per day (1.427 million tonnes per year). The bio-ethanol feedstock is being supplied by Brazilian producers using sugar cane conversion. The bio-etbe is a high-octane, clean blending component that provides quality performance characteristics for gasoline. The finished product is slated for shipment to Japan for blending by refineries to help meet transport fuel requirements based on the country s commitments under the Kyoto Protocol of climate change emissions reductions. EU Official Calls REACH Basis for Chemical Regulations Worldwide At the opening of the Helsinki Chemicals Forum, Geert Dancet, executive director of the European Chemicals Agency, stated that the REACH programme can set a standard for regulatory control throughout the world and assist multinational companies by establishing uniformity of standards internationally. He recommends that countries consider the European Union s regulatory framework to move beyond international treaties and establish de facto global standards on chemical substances. REACH (Registration, Evaluation, Authorisation, and Restriction of Chemical Substances) is the European Community regulation on chemicals and their use that entered into force on 1 June The aim of REACH is to improve the protection of human health and the environment using improved and earlier identification of chemical substances properties regarding impacts. The REACH regulation places greater responsibility on industry to assess and manage risks from chemicals and provide safety information on the substances. The REACH regulation applies to producers within the European Union, as well as importers of chemicals. The REACH provisions are being phased-in over 11 years. The Helsinki conference was held to promote the regulatory and competitive agenda for the European chemical industry. The European Commission is actively pursuing contacts with other nations to discuss adoption of chemical regulations that are consistent with REACH. Because importers of chemical substances into the European Union must comply with (Continued on p5) June/July 2009 Page 4

5 (continued from p4) REACH, the agency believes this can help motivate other countries to move forward on similar programmes. Achim Steiner, executive director of the United Nations Environment Programme (UNEP), supports the strategy, and noted that progress needs to be made toward more systematic, accountable, and urgent way of governing the worldwide use of chemicals. The UNEP is working within the Strategic Approach to International Chemicals Management to promote chemical safety and establish partnerships for developing standards. 15th Annual Fuels & Lubes Asia Conference Held in Hanoi (continued from p3) ernment in upgrading the research and development infrastructure. Despite about 7% of global automobile production, India has one of the lowest car penetrations with about six per 1,000 people. Economic expansion and the country s Automotive Mission Plan are expected, however, to lead to dramatic increases in the automotive sector. This growth is going to be accompanied by ever tightening emissions, fuel economy and GHG emissions (as carbon dioxide CO 2 from transport) requirements. Dr Sharma highlighted features of the Automotive Mission Plan and the role of the government, auto and refining sectors to ensure the necessary infrastructure becomes available in the country. Policy interventions by the government of India are needed including: Harmonization of vehicle and fuels regulations, and trade agreements In-use vehicle inspection and maintenance systems for safety and environmental protections Auto-fuel policy and emissions road map for new vehicles Alternative fuels policy, such as for biofuels quality and use Alternative vehicle R&D and deployments He noted that developing synergies within the auto and oil sectors can help to transform India into a global auto hub. Ms Glynda Bathan, environmental lawyer with the Clean Air Initiative for Asian Cities (CAI-Asia) Center, reviewed the organisation s Road Map for Cleaner Fuels and Vehicles in Asia. The critical role of fuel quality is now recognized a necessary to allow the introduction of many emissions control technologies in vehicles. Fuels and vehicles are now a fully integrated system and need to be addressed together to gain the best result for pollution reductions from the transport sector. She reviewed the benefits of coupling fuel quality regulations with vehicle emissions standards as a primary roadmap for country s to reduce air pollution. Sulphur reductions in both gasoline and diesel fuel are of high priority. Enhancing octane and improving other fuel parameters, like lowering benzene content and controlling vapour pressure, are also key steps to better fuel quality. She emphasized that no technical obstacles exist to produce cleaner fuels in Asia. Finally, she indicated that almost all Asian countries are adopting increasingly stricter Euro-equivalent fuel and emissions standards to help address air quality concerns. Additional important topics addressed during the conference included long-term trends in energy use in the transportation sector, supply and pricing issues, alternative fuels and other energy forms for transportation. The 16th Annual Fuels & Lubes Asia Conference will be held in Singapore from March 3-5, 2010, and will explore fuel economy and emissions issues beyond today s limitations and specifications. Upcoming Conferences & Events Asia Pacific Oil & Gas Conference 4-6 August 2009 Jakarta, Indonesia Oil & Gas Outlook Asia 2 November 2009, Singapore Clean Energy Expo Asia November 2009, Singapore If you have any enquiries or feedback on ACFA News, please contact us at info@acfa.org.sg or contact Joanne Chong at (+65) or joanne@acfa.org.sg. Visit our website at Disclaimer: The Asian Clean Fuels Association does not represent or warrant the accuracy, adequacy or completeness of the information and materials contained in this newsletter (the Content ), and expressly disclaims any liability for any error or omission in the Content, or for any action taken in reliance on the Content. June/July 2009 Page 5