Foreign partners to study Vietnam's second refinery
HANOI - State oil monopoly Petrovietnam signed a pact with two foreign partners to study the economic viability of building Vietnam's second refinery, a company executive said on Friday, after two foreign firms withdrew from the first project.
Japan's Mitsubishi Corp and ABB Lummus Global will conduct the study of the Nghi Son refinery, slated to be built in a province in the north.
ABB Lummus Global, part of the ABB group of companies, lost its bid worth $700 million to $800 million, to build the core of the Southeast Asian country's first oil refinery at Dung Quat Bay in central Vietnam last April.
Russian oil company Zarubezhneft pulled out of the Dung Quat refinery project -- in which it had a 50 percent stake -- last November, saying the $1.3 billion project would not be economical and forced Petrovietnam to go alone. France's Total SA withdrew in 1995, citing the same reasons.
Nghi Son and Dung Quat were meant to reduce Vietnam's reliance on imports of finished products. Crude oil is Vietnam's biggest export, but the country lacks the ability to process oil and must re-import the finished products.
Dinh Huu Loc, Petrovietnam's general manager of international cooperation, told Reuters the Nghi Son refinery could cost up to $2 billion although the total investment had not yet been set.
Loc said Petrovietnam would want foreign investors to take a major share in the country's largest oil refinery project.
"Dung Quat alone is already difficult for us financially, so we would like as much foreign investment in Nghi Son as possible," Loc said.
"I think Vietnam will have some stakes in the project, but we have no plan to do it on our own."
Nghi Son refinery, located 175 km (110 miles) south of Hanoi in the northern province of Thanh Hoa, is expected to process up to seven million tonnes of oil (140,000 bpd). The Dung Quat complex, based in the central coastal province of Quang Ngai, would have an annual capacity of 6.5 million tonnes (130,000 bpd).
The feasibility study for the second project, which includes its economic, environmental and social impact on the region, is targeted to be completed this year. But no deadline has been set for its construction because of the tedious process of tender selection, Loc said.
Last October, Petrovietnam said operations at the Dung Quat refinery would start in mid-2005 instead of this year due to difficulties in the tendering process for subcontracts. (1 tonne=7.33 barrels) ($1=15,390 dong)
Reuters - January 24, 2003.
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