Mega refinery project gains momentum

Tran Quang Nhat, vice chairman of the committee, said the authorities “are determined” to hand over 450 hectares to UK-headquartered Technostar Management this year for the construction of the oil refinery and petrochemical project. The site is located in Hoa Tam industrial park, South Phu Yen Economic Zone.

Technostar Management, through its wholly-owned subsidiary Vung Ro Petroleum, in 2007 obtained an investment certificate for building a $1.7 billion oil refinery in Vung Ro area, Phu Yen province, which will have annual capacity of four million tonnes. But due to the change of business strategy, the firm proposed the government expand annual capacity to eight million tonnes, with total investment cost of more than $3 billion.

Because of the capacity expansion, Technostar asked for relocating its project to Hoa Tam industrial park because the current site in Vung Ro area was too small for the expanded refinery.

“This is a very important project. We cannot miss this opportunity to boost the economic development of the province,” said Nhat. He added that the provincial committee would reduce the scale of Hoa Tam industrial park to provide land to Vung Ro Petroleum.

Three years ago the province granted an investment certificate to Hiep Hoa Phat Company for developing Hoa Tam industrial park, which covers around 2,300ha. However, the developer has not started construction and is still in steps of making master plan for the industrial park. The provincial committee has also not handed over land to Hiep Hoa Phat because of the firm’s slow progress. 

“If we wait for Hiep Hoa Phat to complete the master plan and build the infrastructure system, we cannot ensure timeline for the construction of the oil refinery and petrochemical project,” said Nhat, explaining why the provincial committee decided to scale down site of Hiep Hoa Phat’s project.

The expanded capacity of the oil refinery requires a larger site 

The Government Office, in an announcement released in February, also stated that Prime Minister Nguyen Tan Dung also approved the expansion proposal of Vung Ro Petroleum, and he also allowed the investor to relocated the project.

Meanwhile, the Ministry of Planning and Investment, in an earlier document sent to the prime minister, stated that Phu Yen People’s Committee should hand over land directly to Vung Ro Petroleum for ensuring construction timeline of the project, because Hiep Hoa Phat had not yet developed infrastructure in this site.

Nhat said the provincial committee would compensate Hiep Hoa Phat for the cost of researching and making master plan for its project.

“We will try our best to help Vung Ro Petroleum start construction of the project within the third quarter this year,” said Nhat.

In August 2012, Vung Ro Petroleum reached a technology transfer agreement with Honeywell’s UOP, a leading international supplier and licensor for the petroleum refining and petrochemical production. This agreement aims to ensure that Vung Ro Petroleum owns the latest petroleum refining technology.

Nguyen Chi Hien, director of Phu Yen Department of Planning and Investment revealed that Vung Ro Petroleum had spent $42 million preparing the project and would sign a construction contract worth $287 million following the granting of the amended investment certificate. The company has deposited $5 million to local authorities to show its commitment in pursuing the project.

The refinery will not only contribute to the improvement of investment climate, but is expected to also notably contribute to State budget as Hien  estimates this oil project will generate around $111 million of taxes each year while creating  1,000 jobs for residents.