Ink dries on massive energy project

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The two firms last week inked a memorandum of understanding which would see joint investment into the $3 billion project in central Khanh Hoa province, a senior executive of Daelim said in a meeting with the Ministry of Planning and Investment.

This project on Van Phong Bay is set to be one of the largest oil refinery and petrochemical projects in Vietnam. Petrolimex announced the plant would have total capacity of up to 10 million tonnes of crude oil annually, similar to the capacity of Nghi Son project which is now developed by PetroVietnam and its Japanese and Kuwait partners in central Thanh Hoa province.

In the first stage of the project Daelim would provide engineering-procurement-construction services to build the oil refinery and petrochemical project, the Daelim executive said  “We want to be a shareholder at this project, too,” he added.

The executive declined, however, to give details, saying the deal was still “in the negotiations stage.” Daelim is one of Korea’s largest engineering, construction and petrochemical businesses. It has an overseas network covering 11 countries and posted revenue of $4 billion last year.  A Petrolimex source said the participation of Daelim would help the state-owned corporation to push forward the project as scheduled because the corporation had been finding it tough to mobilise funds.

Petrolimex is now the biggest fuel supplier in Vietnam with a 55 per cent market share. The company’s leading position comes thanks to its strong distribution network of 2,100 retail outlets around the country.

When Petrolimex carried out its initial public offering in July this year, the group announced the  Van Phong project would come onstream by the end of 2013 and produce a range of products like LPG, high-octane unleaded gasoline, kerosene, diesel, polypropylene and benzene.

The Daelim executive said  the Korean firm would be keen on seeking out another potential partner alongside Petrolimex. But, he said Daelim and Petrolimex first planned to build the first phase of the oil refinery with capacity of 4 million tonnes of crude oil per year.

In a bid to ensure power security, Vietnam is developing several oil refinery and petrochemical projects. The first, Dung Quat refinery, is operating in central Quang Ngai province. Three others are in the pipeline in Phu Yen, Ba Ria-Vung Tau provinces and Can Tho city.