HCM CITY — Viet Nam’s first oil refinery, located in the central province of Quang Ngai, will begin operating in February 2009.

Viet Nam-made fuels will then be marketed in the first quarter of next year, a senior official from Viet Nam Oil and Gas Corp (PetroVietnam) has said.

The Dung Quat Oil Refinery is expected to reach its design capacity of 6.5 million tonnes of products per year by the end of the second quarter, the chairman of PetroVietnam’s management board, Dinh La Thang, told Tuoi Tre (Youth) newspaper last week.

In addition to fuels, refinery No.1 will also produce petro-chemical products, said Thang.

Prices of fuels manufactured in Dung Quat will depend on world fuel prices.

But Dung Quat Oil Refinery operations will help ensure energy security for Viet Nam, said Thang.

It will also pave the way for other industries in the central region of Viet Nam, including the steel refinery project and other industrial production enterprises in Dung Quat Economic Zone.

Thang said the operational Dung Quat refinery will require the development of distribution networks for the refinery’s products, including fuels and liquidified gas.

As of April, more than 90 per cent of construction work at Dung Quat Refinery project had been completed.

The project’s management board had also signed contracts with overseas oil companies to send engineers abroad for training courses.

According to PetroVietnam figures, Viet Nam exports from 16 million to 17 million tonnes of crude oil and imports some 12 million of fuels for domestic consumption per year.

When operating at full capacity, Dung Quat refinery will meet only 50 per cent of the domestic demand for fuels.

Thang said the agreement signed between PetroVietnam and Kuwait and Japanese partners for the Nghi Son Refinery last week would help provide the rest when Nghi Son Refinery project becomes operational in Thanh Hoa Province in 2013.

Dung Quat Oil Refinery is being built on 338 ha of land and 473ha of sea in the Dung Quat Economic Zone.

The US$2.5 billion refinery is scheduled to undergo a test run of its power supply networks by the end of this year. — VNS

You known, Petrochemical complex planned

The parties in the joint venture include PetroVietnam, Viet Nam National Chemical Corporation (Vinachem) and two subsidiaries of Thai Siam Cement Group (SCG), Vina SCG Chemicals Co Ltd and Thai Plastic and Chemicals Public Co Ltd.

Kan Trakulhoon, president and CEO of SCG, told reporters, yesterday that his subsidiaries held a 71% stake, while Vietnamese firms held the remainder.

The 400ha Greenfield petrochemical complex will be located on Long Son Island, Ba Ria-Vung Tau Province, adjacent to Vietnam's third oil refinery. The complex will be composed of four main plants.

It will include an international-scale facility producing olefins with an annual designed capacity of 1.65mil tonnes; one producing polyolefins, 1.45mil tonnes; one processing Chlor-Alkali, 280,000 tonnes; and one processing raw materials for Polyvinyl Chloride (PVC) plastics, 330,000 tonnes of EDC and 400,000 tonnes of VCM.

The complex will also contain necessary infrastructure such as a port, storage facilities and utilities.

Construction and operation of the complex will be divided into two phases, with the PVC-related plants likely to begin operating in 2012 and the other plants in 2013.

"The complex is of great importance to Vietnam as a motive to accelerate development of other related industries like auto-motive, packaging, chemicals, plastics and aluminum," said the president and CEO of PetroVietnam, Tran Ngoc Canh. "The petrochemical industry is still in its infancy in Vietnam."

PetroVietnam and Vinachem are the country's leading petrol and chemical businesses.

At the signing ceremony, Kan emphasised SCG's "long-term commitment to grow with Vietnam as a trusted partner".

SCG is one of Thailand's and Southeast Asia's leading conglomerates, with businesses in distribution and processing chemicals, paper, cement and construction materials. Since beginning doing business in Vietnam in 1990, SCG has been running seven subsidiaries in the country, with 400 labourers and total investment capital of $150mil.

(Source: Viet Nam News)

PetroVietnam is sending a delegation of senior officials to the U.S. this week to gauge potential investment interest, with talks to be held in Houston, Texas, an official at state-run PetroVietnam told Dow Jones Newswires Wednesday.

"So far our offer for the Nghi Son (refinery) project is open: foreign firms can hold 70% stakes or more than that," she said.

Vietnam's first refinery is currently being built at Dung Quat, in Quang Ngai province, 850 kilometers south of Hanoi.

The US$2.5 billion refinery is 100 percent Vietnam-owned.

A consortium comprising France's Technip S.A., Japan's JGC Corp. and Spain's Technicas Reunidas is building Dung Quat, which is expected to turn operational in early 2009.

The Nghi Son refinery project, to include a petrochemical complex, will cost $3 billion, and is slated for operations by 2010, said the official, who declined to be named.

"Because Vietnam's energy demand is rising fast, the country needs to speed up its investment plans for the energy sector, therefore PetroVietnam is urged by the government to soon find foreign investors for the Nghi Son refinery," said the official.

State media have cited PetroVietnam's Chief Executive Tran Ngoc Canh as saying Vietnam is looking at companies based in the US, Japan and Russia.

According to PetroVietnam officials, Mitsubishi Corp. and Idemitsu Kosan Co. have separately expressed interest in a partnership with PetroVietnam.

To be located about 200 kilometers south of Hanoi in Thanh Hoa province, the Nghi Son refinery is expected to have a processing capacity of 7 million tons a year. It will be processing crude imported from the Middle East, and its petroleum and chemical products will be sold domestically.

Similarly for the 6.5-million-ton-a-year Dung Quat refinery, 1 million tons of crude will be imported from the Middle East annually, while PetroVietnam will supply 5.5 million tons.

Vietnam at present doesn't have any major refining facilities, and has to import almost all of its refined oil products for domestic consumption. Vietnamese firms operate a few small processing facilities, which supply small amounts of fuel to the domestic market. Output figures aren't available.

The Dung Quat and Nghi Son refineries are expected to be able to meet 65 percent of Vietnam's petroleum demand from 2010. Domestic demand is forecast to rise by more than 40 percent to 20 million tons by the end of the decade, from 14 million tons this year.

Source: Dow Jones Newswires

A joint venture contract on Nghi Son oil refinery and petrochemical project was signed in Ho Chi Minh City on April 7.

The complex, the largest so far, will be built in Nghi Son commune, Tinh Gia district of the central province of Thanh Hoa with an investment capital of 6 billion USD for its first phase.

The joint venture is between the Vietnam National Oil and Gas Group (PetroVietnam) and Kuwaiti and Japanese partners.

Prime Minister Nguyen Tan Dung, Deputies Prime Ministers Nguyen Sinh Hung and Truong Vinh Trong, and Kuwaiti Oil Minister Mohammad Al-Aulaim attended the signing ceremony.

PM Dung expressed his pleasure to witness the signing of a project, which he said is important to the oil and gas sector’s development strategy, ensuring national energy security and contributing to the country’s socio-economic development.

The first phase includes the construction of an oil refinery with an annual capacity of 7 million tonnes of crude oil, a polypropylene plant with an annual manufacturing capacity of between 150,000-350,000 tonnes and a polyester fibres plant that is expected to pump out 260,000 tonnes a year.

When the first phase of the project is completed, it will turn out 10 million tonnes of products a year using all materials form the Kuwait National Petroleum Company.

The project is expected to be put into commercial operational in 2013.

The project’s capacity will be raised to 20 million tonnes a year in the second phase.

Once operational, the plant will produce liquefied petroleum gas (LPG), petrol for classes 90, 92 and 95, kerosene, diesel, FO, jet fuel and other petrochemical products such as polypropylene, polyester, benzel, sulfur and asphalt.

Via (CPV/VNA)

Construction of Dung Quat oil refinery nears the finish line

Chairman of central Quang Ngai Province People’s Committee, Dr Nguyen Kim Hieu, discussed the Dung Quat Industrial Zone’s conversion into an economic zone with Thoi bao Kinh te Viet Nam (Vietnam Economic Times) newspaper.

Can you tell me how close the Oil Refinery No 1 project in Dung Quat is to completion?

The project was approved by the Prime Minister seven years ago in July 1997.

The oil refinery should have been completed and put into operation by now. But this is the first large scale oil refinery project in Viet Nam, and we have little experience in carrying out such a project. Because of our lack of experience, we faced problems managing a joint-venture investment scheme that was part of the project.

Currently, the Government, ministries, and related offices are trying to solve such problems to assure the oil refinery gets completed, which is expected to be in 2007.

With the oil refinery as its centre, the Dung Quat Industrial Zone will be home to many large scale industries. How many investment projects are licensed to operate in Dung Quat and what is their status?

So far, 37 projects have been allowed to operate in Dung Quat Industrial Zone (IZ), not including the oil refinery, with a total registered capital of VND11.4 trillion (US$735 million). Of them, 12 projects have been put into operation; 11 are being constructed; and the others are still being prepared.

It is expected that 20 other projects will be licensed this year, with a total capital of VND3 trillion($191million).

Among these projects, some are very big, such as a shipyard to build and repair marine vessels up to 400,000 dead weight tonnes (DWT). It will lie on 110ha of land and cost VND4.8 trillion. A similar large project will be a steel laminating factory, with a capacity of 400,000 tonnes a year; and two wharves.

Other large scaled projects include: a coal processing factory, a car tire factory, and two electricity generating stations.

What about the construction of ports for Dung Quat?

Dung Quat’s wharf No 1 has been designed for vessels up to 10,000 DWT. However, because the local enterprises need to have a port for ships up to 15,000 DWT to enter, the province has widened the wharf’s marine passage. This has increased the cargo volume transported through the port, from 50,000 tonnes in 2002 to 200,000 tonnes last year. We expect it to receive 400,000 tonnes this year and 1 million tonnes next year.

As for the deep-sea port of Dung Quat, the Viet Nam National Shipping Lines (VINALINES), and the GEMADEPT (a transport joint-stock company) were given permission from the Ministry of Transport to invest in building two new wharves. Some marine port construction groups from Japan and Singapore are also surveying the area.

With its scale, features, and development direction, Dung Quat seems to be an economic zone (EZ), which is better than an IZ. Its management board and the provincial People’s Committee have proposed the State to turn Dung Quat in to an EZ. What about this conversion?

We believe that the plan to change Dung Quat IZ to be an EZ will be considered and approved by the Party and the Government. In this case, the zone’s development speed will be accelerated. Along with the Chu Lai open economic zone in the nearby Quang Nam Province, Dung Quat will be a leader in central Viet Nam’s development. It will become the third economic area of the country. — VNS

HA NOI — A ground breaking ceremony for one of the country’s largest and most important projects, the Nghi Son Petrochemical Refinery Complex, will take place tomorrow at Nghi Son Economic Zone, Tinh Gia District, in the northern province of Thanh Hoa.

The project’s investors will officially receive their investment licence to start construction one month earlier than expected.

The project has a total investment capital of US$6.2 billion for the first stage, and should reach a refinery capacity of 10 million tonnes of crude oil per year once put into operation in 2013. The capacity will then be doubled in the second stage of the project.

The project is a joint venture between State-owned Viet Nam National Oil and Gas Group (PetroVietnam), Kuwait Petroleum International (KPI), Japanese companies of Idemitsu Kosan Corp (IKC) and Mitsui Chemicals Inc (MCI). The joint venture was established in early April.

According to Petro-Vietnam, the project’s debt-to-equity ratio is targeted at 70:30 per cent. The Japan Bank for International Co-operation (JBIC) will provide a loan for 70 per cent of the project’s capital.

Initial paid-in capital by the four partners amounts to $200 million, of which PetroVietnam holds a 25.1 per cent stake, KPI and IKC hold 35.1 per cent each and MCI holds 4.7 per cent.

PetroVietnam’s director general Tran Ngoc Canh said that they didn’t take much time to seek international partners and fulfil agreements and procedures, only taking four years.

Usually it takes around eight years to seek international partners and fulfil agreements and procedures for this kind of project.

"The project’s pre-feasibility research was completed four years ago. In reality, the negotiation time with KPI and Idemitsu only took over a year and this is a great accomplishment by PetroVietnam with the support of the Government and local authorities," Canh said.

"We have obtained certain successes in reaching agreements with these partners because they are globally powerful groups with world-class experience.

Specifically, KPI would guarantee to supply 100 per cent of crude oil for the project in the long-term, Canh said.

Nghi Son is the country’s second oil refinery. The first one is located at Dung Quat in the central Quang Ngai Province and the third one is expected to be placed at Long Son in the southern Ba Ria - Vung Tau Province.

The first Dung Quat oil refinery is scheduled to start operation in February next year.

Persons involved with the Long Son project are currently completing pre-feasibility research and hunting for partners.

Canh said that PetroVietnam had been doing its best to build and operate three national key projects to supply 100 per cent the country’s oil and gas demands by 2025 under its development strategy, in a bid to ensure national energy security. — VNS

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