Petrovietnam building one refinery, considering second

By OGJ editors
HOUSTON, Sept. 24 -- Viet Nam is building its first refinery ,Dung Quat, which is expected to be operational by Dec. 31, 2006. A proposed second refinery could be operational in 2008, officials told reporters during a Wednesday news conference in Houston.

Overall, Viet Nam's regional role within the Association of Southeast Asian Nations gives it a good position to serve as an anchor for multinational firms' future operations in Southeast Asia. Oppourtunities exist for both downstream and upstream ventures, they added.

Refinery plans
Dinh Huu Loc, general manager of international cooperation for the state-run Petrovietnam, said Petrovietnam has 100% interest in the Dung Quat refinery since Russia's Zarubeznheft withdrew from a previous joint venture (OGJ, Oct. 29, 2001, p. 66).

The joint venture did not go smoothly, and little actual progress was made until the partnership was dissolved, he said. The first refinery has taken years, but officials said they anticipate that a second refinery, once authorized, could be built in a period of about 2 years.

The Dung Quat refinery, in central Viet Nam, will have 6.5 million tonnes/year capacity and is estimated to cost $1.3 billion. Bonds were issued within Viet Nam to help with the financing.

A location somewhere in northern Viet Nam has yet to be selected for the second refinery, which remains in the conceptual phase, Petrovietnam officials said. That refinery is expected to have a 7 million tonnes/year capacity.

Viet Nam's refined product consumption is growing, and the government believes that demand will justify the second refinery, officials said.

Foreign investment in the form of a joint venture will be attempted for the second refinery, they said. In addition, Petrovietnam also would like to invest in petrochemical plants, particularly naphtha crackers, sometime in the future, they said.

Investment incentives
Dguyen Bich Dat, vice minister of Ministry of Planning and Investment, said his country is committed to broader economic reform and improving the climate for foreign investment.

"Viet Nam will serve as a gateway to what is to become a free trade region of more than 500 million people and a bridge to a massive market of 1.3 billion Chinese consumers," Dat said.

Meanwhile, Viet Nam is moving through "the complex transition from a centrally planned economy to a market economy to a global economy," he said.

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