Start-up of Vietnam's first oil refinery to be delayed one year
HANOI - the first in the country — will start operating in late 2005, one
year behind schedule, because negotiations over key construction contracts
have stalled, an industry official said Friday.
The official from state-run PetroVietnam, which is jointly managing the project
with Russia's Zarubezneft, said contracts were still being negotiated with a
group of construction companies led by France's Technip-Coflexip to build the
US $700 million refining facilities.
"Prime Minister Phan Van Khai has asked us to complete negotiations for the
bidding contracts this month (October), and we hope to sign all the deals before
the end of this year," the official said under customary condition of anonymity.
PetroVietnam and Zarubezneft each hold a 50 percent stake in the US$1.4
billion project. The companies have agreed to invest US$400 million each and
will borrow an additional US$600 million, excluding financial fees, to complete
the project, according to PetroVietnam.
Construction of the Dung Quat refinery has been delayed several times, due to
communication problems between PetroVietnam and Zarubezneft and the
Vietnamese and Russian governments, as well as complex tendering
procedures, he said.
The project managers are looking at bidding packages for building the main
facility, which is the most important part of the refinery, he said.
The group of construction companies includes France's Technip-Coflexip,
Japan's JGC Corp. and Spain's Technicas Reunidas, he said.
"With delays and additional facilities, the total costs for the Dung Quat project
will be higher than the initial estimates," he added, without providing details.
In addition to building the oil refinery, PetroVietnam is to build oil-chemical
processing facilities, valued around US$100 million, he said.
The Dung Quat refinery will have a processing capacity of 130,000 barrels a day
or 6.5 million metric tons a year of crude oil. Its annual production will include
2.084 million tons of automotive diesel, 1.94 million tons of unleaded gasoline,
1.33 million tons of diesel oil, and more than 100,000 tons of propylene,
according to figures from PetroVietnam.
Vietnam has no refining facilities and has to import refined oil products to meet
its domestic requirements.
The country plans to produce 16.8 million tons of crude oil this year, slightly
less than last year's 17 million tons.
The Associated Press - October 11, 2002.
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