Petrovietnam to tap Japanese firms for refinery, storage projects

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 25 -- Vietnam’s state-owned Petrovietnam will give priority to Japanese companies for participation in ¥3 trillion worth of development projects, according to media reports.

More than 70% of the projects concern oil and electric power, with those related to refining and electricity given budgets of at least $12 billion and $9 billion, respectively, according to a report by Japan’s Nikkei business daily.

For refining, product storage, and port facility development, Petrovietnam is believed to be interested in holding talks with Mitsui & Co., Mitsubishi Corp., Itochu Corp., Sumitomo Corp., Marubeni Corp., Sojitz Corp., Idemitsu Kosan Co., and JGC Corp.

Petrovietnam plans to list as many as 50 Japanese companies as potential joint-venture partners and hold one-on-one talks with them over the 3 days starting June 22, the business daily said.

For these talks, Petrovietnam Chairman Dinh La Thang will visit Japan from June 21 and may meet with Economy, Trade, and Industry Minister Masayuki Naoshima.

To secure loans for the projects, Petrovietnam also will likely hold talks with private Japanese financial institutions as well as the Japan Bank for International Cooperation.

Whether the projects will qualify for, or actually end up being included, in Japanese development assistance to Vietnam is not yet clear, the report said. But if the projects are covered by aid, the risk to the Japanese firms will be reduced.

“The announcements appear to support reports that government is stepping up support for an expansion of [Japanese] energy companies’ overseas operations in line with similar efforts in China, India, and South Korea,” said analyst BMI.

Meanwhile, if negotiations with Japanese companies are unsuccessful, the Nikkei report said Petrovietnam will likely turn to South Korean businesses, and will possibly tap US and European companies to fill any vacant partnership spots.

Vietnam is not alone in seeking Japanese investment.

Last week, Russia’s Deputy Premier Igor Sechin, taking direct aim at Middle Eastern oil producers, urged Japan to increase its imports of Russian oil in addition to cooperating with his country on the development of its natural resources (OGJ Online, May 19, 2010).

Contact Eric Watkins at [email protected].