Russia wants to stay in Vietnam oil refinery JV proj-exec
HANOI - Russia is negotiating to stay in Vietnam's first oil refinery project, despite the fact that Vietnam wants it to exit the joint venture, an industry executive said Monday.
Two weeks ago, the Vietnam News Agency reported Russia wanted out of the $1.3 billion project.
The executive from PetroVietnam told Dow Jones Newswires its Russian joint venture partner, Zarubezneft, hasn't yet agreed to leave the project.
"We all know that Vietnam's industry leaders said clearly that they want the Russians to withdraw from the project, so that we (the Vietnamese) can speed up construction," the executive said.
PetroVietnam Chairman Pham Quang Du last month told the National Assembly, the country's highest lawmaking body, "Russia's high-ranking leaders agreed (for the Russian partner) to withdraw from the refinery joint venture," according to Vietnam News Agency.
Du was also quoted as saying Vietnam isn't short of capital and it has set aside $600 million from oil export revenue, plus $250 million in loans arranged by Vietcombank and foreign contractors have agreed to provide loans of $500 million.
In 1999, Vietnam and Russia established the Vietross joint venture to build the 6.5-million-metric-ton Dung Quat refinery, which is slated to begin operations in 2004.
Construction of the refinery has been delayed because Zarubezneft lacks experience in building oil refineries, the executive said.
"That's not all. Because of the equal stakes, it's difficult for us to reach agreements on bidding with them (the Russians), who often think of themselves as Big Brother," he said.
"And now, as they want to stay, instead of leaving, dealing with them isn't easy. We don't know how much time they will need for renegotiating, and what they really want. We want them to leave the project, and we will discuss financial issues after that," he said.
He said both sides have put around $500 million into the project, adding Vietnam is ready to continue building the refinery alone to be able to make it operational by the end of 2005 or early 2006.
"If we can sort out (the project) smoothly with them this year, we can soon start preparing for the key bidding packages worth up to $740 million early next year," he said.
The Vietnamese government has selected a group of construction companies including France's Technip-Coflexip (TKP), Japan's JGC Corp. (J.JGC) and Spain's Technicas Reunidas, for technology and equipment supply.
Vietnam has no refining facilities and has to import refined oil products to meet its domestic requirements.
The country earned $2.86 billion from exporting 15.32 million tons of crude oil in the first 11 months of this year, and paid $1.84 billion for 9.14 million tons of imported petroleum products, according to government figures.
Vietnam plans to produce between 16.8 million and 17 million tons of crude oil this year, nearly unchanged from last year, PetroVietnam figures showed.
Dow Jones Newswires - December 2, 2002.
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