Refinery expansion set to clear land hurdles

Dung Quat refinery’s expansion is progressing smoothly, but is still far from completion

According to Nguyen Van Hoi, deputy general director of Binh Son Refining and Petrochemical Company (BSR) which operates and manages the central province of Quang Ngai-based Dung Quat refinery, to date 94 per cent of compensation work has been completed, with 1,533 out of 1,632 compensation claimants receiving payment.

In a recent working session with BSR and the Project Management Unit, Deputy Chairman of the Quang Ngai People’s Committee Pham Nhu So asked the relevant management agencies and the Dung Quat Economic Zone Management Authority to speed up the project’s evaluation and appraisal and join forces to tackle any problems related to site clearance and compensation.

“Compensation must be completed by the end of June this year. In addition, efforts must be sped up for the completion of resettlement blocks to accommodate relocated people. Also, measures must be taken to avoid land encroachment by some residents in cleared land space,” said Le Manh Hung, deputy general director of PetroVietnam, which is BSR’s parent group.

The project to expand the capacity of Dung Quat refinery was approved by the government in 2015 and is expected to be completed in 2021.

According to Hoi, it has been 13 months since the invitation for tenders for the design drawing consultancy bidding package. The work has been progressing smoothly, with the geological and topographical surveys encompassing the overall design already completed.

BSR chairman Nguyen Hoai Giang said that overall design played a crucial role in the project’s preparation phase as it would lay the groundwork for contractors’ detailed design work, as well as machinery procurement, and the installation and construction in later phases.

On June 13, 2016, BSR and the Project Management Unit with the project’s overall design consultant, Amec Foster Wheeler Energy Limited from the UK, held a meeting in the UK to review the implementation of the overall design drawing consultancy contract. They assessed that about 26 per cent of the work volume has been completed over the ten months since the signing of the contract.

The process to select contractors for technology copyright supply has also been completed. This relates to seven new workshops to be supplemented during the expansion process. Cutting-edge technologies are coming from developed countries like the US, France, Italy, and the Netherlands.

The UK consultant (Amec Foster) is working on a strategy to select the project’s engineering-procurement-construction (EPC) contractor, while drawing up a total cost estimate, and expediting other design activities, such as the design of auxiliary and ocean-based facilities. The contract for consultancy on the overall design has a total value of $25 million, with implementation set to take place between August 2015 and November 2016.

Amec Foster was also selected as the consultant for the original overall design of Dung Quat Refinery in the past.

Giang also revealed that BSR was in the process of selecting the consultant for the project’s financial arrangement. The winning tender is due to be announced shortly.

Under the approved capital structure, 30 per cent of the project’s total capital will come from the investor equity and 70 per cent will be financed through loans.