Russian JV slates Viet Nam refinery

A joint venture of Russian and Vietnamese state firms has signed an agreement to build Viet Nam's first refinery, at Dung Quat in central Quang Ngai province. Zarubezhneft and Petrovietnam plan to build a 130,000 b/d refinery to process crude oil from Viet Nam's Bach Ho offshore oil field, where the Russo-Vietnamese exploration and production joint venture Vietsovpetro is the operator. This is the third time a foreign partner has been lined up to build the plant: First, Total was

Dec. 7, 1998

2 min read

A joint venture of Russian and Vietnamese state firms has signed an agreement to build Viet Nam's first refinery, at Dung Quat in central Quang Ngai province.

Zarubezhneft and Petrovietnam plan to build a 130,000 b/d refinery to process crude oil from Viet Nam's Bach Ho offshore oil field, where the Russo-Vietnamese exploration and production joint venture Vietsovpetro is the operator.

This is the third time a foreign partner has been lined up to build the plant: First, Total was looking to invest, as did later a consortium led by Malaysian state firm Petronas.

Both Total and Petronas apparently pulled out of the project because the Vietnamese government insisted on building it in a remote area, about 1,000 km from anticipated markets and export terminals in southern Viet Nam.

Ho Si Thoang, chairman of Petrovietnam, reportedly estimated last year that the remoteness of the site would add $28.7 million/year to refinery transportation costs.

The capital cost of the Dung Quat refinery is expected to be $1.5 billion. Petrovietnam let a $15 million contract to Foster Wheeler Ltd., Reading, U.K., for front-end engineering design of the plant. Details of the intended construction schedule have not been released.

Announcement of the project go-ahead came from U.K. Trade Minister Brian Wilson, who visited Viet Nam in support of the Foster Wheeler bid, and a Department of Trade and Industry official said further details were not yet available.