Russia to take stake in Dung Quat oil

The refinery is expected to produce 8.5 million tonnes of crude oil a year (171,000 barrels per day) once a projected upgrade is finished by 2022. VNS Photo

This was reported by the Russia-based Interfax-ANI news agency. "At the current time, we don't see any obstacles that can destroy this potential agreement," Gazprom Neft's chairman Alexander Dyukov was quoted as saying.

Dyukov said Viet Nam's economy was booming and its demand to import oil products was likely to increase. The oil refinery's capacity needed to be upgraded to make more profit.

Earlier, Gazprom Neft said it now had exclusive rights to negotiate with PetroVietnam on acquiring 49 per cent of shares, the highest foreign ownership rate in a Vietnamese company, in the refinery operator's Binh Son Refining and Petrochemical Co. However, no value or timing was given for the purchase.

This negotiation is in line with an agreement signed between the two countries during Russian President Vladimir Putin's visit to Viet Nam in 2013. Following this, Gazprom Neft, the oil arm of top global gas producer Gazprom, may buy a 49 per cent share in Dung Quat refinery.

The two countries also signed a tentative intergovernmental agreement under which, after the share purchase, the Russian company is responsible for supplying oil to Dung Quat refinery, from 3 million tonnes in 2015, 3.6 million tonnes in 2016 to 4.8 million tonnes in 2017 - and no lower than 6 million tonnes from 2018 onwards.

According to Gazprom Neft's assessment, the refinery upgrade may cost US$1-1.5 billion. This would raise capacity from the current 6.5 million tonnes per year to 10-12 million tonnes.

The refinery is expected to produce 8.5 million tonnes of crude oil a year (171,000 barrels per day) once a projected upgrade is finished by 2022.

On the state-level visit by Russian Prime Minister Dmitry Medvedev to Ha Noi early this week, the two countries also agreed to step up co-operation in expanding oil and gas exploration and production in Viet Nam.

On Monday, PetroVietnam and Gazprom Neft signed a tentative agreement to collaborate on exploring and developing oil and gas resources beneath the Pechora Sea in the Russian Arctic. The signing was witnessed by prime ministers of the two countries. By October, the two sides will unveil the basic terms of partnership, as well as release a list of priority oil and gas fields.

Viet Nam and Russia have long had close energy co-operation, beginning with the construction of a hydropower plant in 1980s and then oil and gas joint venture Vietsovpetro.

The most recent co-operation is in developing nuclear energy.