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The Vietnam News

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Vietnam to sign deal to build 2nd oil refinery starting 2Q

HANOI - State-owned PetroVietnam is expected to sign contracts to form a joint venture with Kuwait Petroleum InternationalKuwait Petroleum International and Japan's Idemitsu Kosan Co. to build an oil refinery in northern Vietnam starting this April, a PetroVietnam official said Wednesday.

"PetroVietnam is expected to soon reach agreements to build the refinery with the two foreign companies," the official, who did not want to be identified, told Dow Jones Newswires. Nghi Son Oil Refinery Plant, which will be located in Thanh Hoa province 180 kilometers south of Hanoi, will have an annual processing capacity of about 8 million metric tons, he said. He did not provide any financial details. It will be the country's second oil refinery, after the Dung Quat plant which is being built in central Quang Ngai province, around 850 kilometers south of Hanoi.

According to a Vietnam News Agency report Wednesday, PetroVietnam, KPI and Idemitsu are in the last round of negotiations that began Feb. 15 and are slated to end Feb. 26. The objective of the talks is to forge an investment agreement for the Nghi Son refinery project. The three parties are expected to seek an investment license from the government of Vietnam in the second quarter, the state-owned VNA reported. The Dung Quat plant will cost $2.5 billion to build. It will have a processing capacity of 6 million tons a year when it comes on stream in early 2009, according to PetroVietnnam figures.

KPI and Idemitsu officials weren't immediately available for comment.

By Nguyen Pham Muoi - Dow Jones - February 20, 2008.