Vietnam to form oil trading firm for first refinery

HANOI, April 23 (Reuters) - The Vietnamese government said on Wednesday it has approved the establishment of an oil trading firm to trade crude oil and products for the country's first refinery, the 140,000-bpd Dung Quat plant.

State oil group Petrovietnam has said its $2.5-billion Dung Quat refinery in the central province of Quang Ngai would come onstream by February next year.

A government directive said the trading firm, Binh Son Refining-Petrochemical Co Ltd, would be a subsidiary of Petrovietnam.

In its first year, Dung Quat refinery is designed to use mainly Vietnam's light sweet Bach Ho crude but Petrovietnam officials have said the plant would have to switch to using foreign crude oil because of Bach Ho's declining production.

Bach Ho output accounts for about half of Vietnam's daily production of about 300,000 barrels per day.

Earlier this month Petrovietnam signed an agreement with Japanese refiner Idemitsu (5019.T) and Kuwait Petroleum International to invest $6 billion in a second refinery, Nghi Son, with a capacity of 200,000 bpd when it is completed in 2013. (Reporting by Nguyen Nhat Lam; Editing by Michael Urquhart)