OilVoice - Vietnam Edges Closer to Second Refinery

Vietnam Edges Closer to Second Refinery

Thursday, February 04, 2010

The soon-to-be operators of Vietnam's largest oil refinery are set to hold an international tender to pick a developer for the facility. The Nghi Son Refinery & Petrochemical (NSRC) joint venture has started offering bidding documents for the contract to developers and hopes to ink a deal for the refinery in the third-quarter of 2010. The distribution of the bidding documents indicates that Vietnam's second refinery is still on schedule to come onstream during 2013. The refinery which is estimated to cost in the region of $8 billion to build stands to produce 200,000 barrels of oil per day (bpd).

Owing to its complete reliance on oil product imports, Vietnam has embarked upon a large-scale development of its refining industry, aimed at eliminate net imports before the year 2020. On the back of the successful commissioning of the country's first refinery, the 140,000 bpd Dung Quat complex in the central province of Quang Ngai, Vietnam is pushing ahead with the expansion of its refining industry.

At present, at least five new refining projects are on the table for domestic state companies and foreign investors alike to discuss. While it is highly unlikely that all of the proposed refining projects will go ahead, once the government grants its final approval, the top-down nature of decision-making in Vietnam means subsequent stages tend to proceed at a rapid pace.

The Nghi Son refinery project (the country's second) was first initiated back in April 2008 when PetroVietnam entered into a agreement with several international oil firms including Japan's Idemitsu and Mitsui Chemicals and Kuwait's KPC. The refinery is to be built in the northern province of Thanh Hoa. PetroVietnam Construction has started levelling the site, about 180 km (110 miles) south of Hanoi.

In terms of funding, PetroVietnam plans to raise between $1 billion and $2 billion through bond sales in both its domestic market and overseas in order to raise money for investment in 2011, including the Nghi Son project. Meanwhile, the Vietnamese government has said that some of the funds raised in its recent $1 billion, 10-year sovereign bond sale would go directly towards the Dung Quat facility.