Can Tho refinery gets new deadline

Vietnam’s first operating oil refinery Dung Quat will expand to refine 8.5 million tonnes of crude oil per year

In its latest announcement to Can Tho Oil Refinery Limited, the Can Tho City People’s Committee said that the firm would have its investment certificate revoked if work did not start on the $350 million oil refinery by January 15.

According to Le Manh Tung, deputy director of the Can Tho Municipal Planning and Investment Department, the investor must finish all procedures, such as changing partners, paying a deposit, proving its financial capacity, and negotiating with the contractors prior to this deadline. This is not the first time that the investor in the Can Tho refinery has been threatened with having its investment certificate revoked.

The project was originally licensed in May 2008 and intended to be developed by the local firm Vien Dong Company in conjunction with the US’ Semtech Limited. This would have been the largest project in the Mekong Delta city, with the proposed investment capital of $538 million on a 250 hectare site in Phuoc Thoi ward of O Mon district, and would have boasted the refining capacity of two million tonnes of crude oil per year. However, the project has been delayed since then with several partners being replaced.

Vietnam currently has only one operating oil refinery - the Dung Quat in the central province of Quang Ngai’s Dung Quat Economic Zone. Last week, the Vietnamese government handed over an investment certificate for the expansion of the existing Dung Quat.

With the additional investment capital of $1.8 billion, the Dung Quat oil refinery will be upgraded to the annual refining capacity of 8.5 million tonnes, from the current 6.5 million tonnes of crude oil.

Invested in by the state-run PetroVietnam, the refinery began operating in 2009. Currently, the refinery’s output has helped meet 30 per cent of the domestic demand for a range of petroleum-based products. The refinery is likely to post profits of VND4 trillion ($190 million) this year.

The Vietnamese government has permitted PetroVietnam to either totally invest in the expanded refinery itself, or find a foreign partner to jointly expand the refinery.

PetroVietnam is negotiating with Russian gas and oil giant Gazprom Neft, which has expressed an interest in acquiring a 49 per cent stake in the Dung Quat, but so far no final deal has been reached.