Vietnam offers Q4-Q1 Bach Ho crude; Minas +$9.05/bbl

SINGAPORE (Reuters) - Vietnam has made a first price offer for term supplies of its flagship Bach Ho crude at a record-high premium of $9.05 a barrel to Minas quotes, up $2.52 from the current price as supplies fall, traders said on Monday.

The offer applies to supplies to be lifted between October 2008 and March 2009.

Potential buyers submitted first bids a week ago at premiums of between $6.00 and $6.30 a barrel to Minas quotes.

But they had braced themselves for a high offer as the startup of Vietnam's first refinery is expected to further limit already declining supplies.

An official with state oil producer Petrovietnam said on Monday the company expected to cut Bach Ho exports from December to around 100,000 barrels per day (bpd) -- from the current 140,000 bpd -- to save supply for the 140,000-bpd Dung Quat refinery.

The refinery will use about 30,000 bpd of Bach Ho crude when it is put into trial operation in February next year, the official said.

"They are running more in their own system," a Singapore-based trader said.

Bach Ho output has shrunk from a peak of about 240,000 bpd as the field, on stream since 1987, has matured.

Vietsovpetro, the operator of the field, has forecast that Bach Ho's output would fall by an average 21,000 bpd per year between 2005 and 2014.

Vietnam and lifters negotiate twice a year to set the price of light sweet Bach Ho crude, with both seller and buyers going through several rounds of bids and offers.

The Bach Ho current official selling price (OSP) stands at a $6.53 premium to Minas quotes, already a record high.

Bach Ho is a light sweet crude, with a American Petroleum Institute gravity of 40.5 and a sulfur content of 0.035 percent.

Bach Ho crude is run all over Asia, from Indonesia to Japan and China.

(Reporting by Maryelle Demongeot, Editing by Michael Urquhart)