The Vietnam National Oil and Gas Group (PetroVietnam) and the national flag carrier, Vietnam Airlines, are in the process of finalising a fuel supply contract.

The deal will take effect at the end of the year when PetroVietnam's Dung Quat Refinery Plant, where the aviation fuel is produced, earns its ISO standard certification.

For now, both parties are proceeding with the delivery of the first batch of aviation fuel.

The domestic air transport market consumes more than 700,000 tonnes of fuel a year worth around 45 million USD on average, according to Vietnam Airlines General Director Pham Ngoc Minh.

At full capacity, the Dung Quat Refinery can supply more than 300,000 tonnes of Jet A1 aviation fuel, or slightly more than 40 percent of the market demand.

Meanwhile, the subsidiaries of both groups, PetroVietnam's PV Oil and Vietnam Airlines's Vietnam Air Petrol Company (Vinapco), finalised a supply contract in June, according to PV Oil's managing director Le Xuan Trinh.

Under the contract, Dung Quat Refinery will supply 15,000 tonnes of Jet A1 petrol every month to Vinapco.

PV Oil and Binh Son Refinery (BSR), another subsidiary of PetroVietnam, exported 4,500 tonnes of Jet A1 fuel to British Petroleum Singapore in mid-August. It was the first time that locally produced aviation fuel was sold on the international market.

PV Oil and BSR say they have targeted Royal Dutch Shell as their next potential customers.

Before Jet A1's arrival in the market, it went through a strict quality check in May by an alliance of international aviation fuel suppliers including Shell, Chevron, ExxonMobil, Total, BP and Satoil.

The product also earned recognition from the American Society for Testing and Materials (ASTM) and British Defence Standard (DEFSTAN).

BSR plans to turn out more than 120,000 tonnes of Jet A1 from now until the end of the year and around 300,000 tonnes in 2011.

"The export of the first batch is an international recognition of made-in-Vietnam aviation fuel," said Nguyen Hoai Giang, managing director of BSR, adding that he hoped Jet A1 would be able to replace imported aviation fuel in the near future./.