Dung Quat oil storage terminal planned for 2020

PetroVietnam Oil Stockpile Company has committed to building the storage facility in Quang Ngai province-Photo: Le Toan

The company (PVOS) proposed that the authorised management agencies add the project to Vietnam’s crude oil and petroleum product storage system development plan for 2015, with a vision to 2025.

The project will have a total storage capacity of one million cubic metres. 90 per cent of this will be used for crude oil, while the remaining 10 per cent will be used for the storage of petroleum products.

The first phase of development consists of building two underground storage facilities with a combined capacity of 600,000 cubic metres, which will be put into use from 2020 onwards. Another underground storage facility with a capacity of 400,000 cubic metres will be built in the second phase.

The underground oil storage terminals are to be operated via a bonded warehouse model. Construction is expected to start within this year, while operations are scheduled to commence in 2020. To expedite the project, PVOS has sought incentives relating to land, water area, and port usage in conditions conducive to the commercial and national storage of crude oil.

Of the project’s proposed investment of $250 million, 40 per cent will come from PVOS equity and the remaining 60 per cent ($150 million) will be sourced via commercial loans from the Korea Development Bank (KDB).

PVOS stated that they had worked with KDB and the Industrial Bank of Korea on arranging capital for the project. Korea National Oil Corporation also pledged a capital contribution for the project.

PVOS has also signed a memorandum of understanding (MoU) with Socar Trading Singapore, Sebrina Holding Pte. Ltd, and PVOil Singapore. The foreign partners have committed to using most of the underground oil terminal for crude oil storage, serving international transactions and supply to local oil refineries such as Dung Quat.

PVOS’ project was first licensed in 2010 with the total investment capital of VND6 trillion ($275 million) and a storage capacity of 1.6 million cubic metres over a 180-hectare construction area. The first phase was slated to start operation in early 2014, with the whole project due to be fully commissioned by 2015. The total investment capital was set at $340 million at that time. However, this has been delayed so far.

In April 2013, the prime minister approved a national crude oil storage terminal project in Dung Quat economic zone with a scale of one million cubic metres. PetroVietnam was assigned as the self-investor in the project.

Although the two underground oil storage terminal facilities have a similar capacity and position, the Ministry of Industry and Trade has officially proposed that the government add PVOS’ commercially-oriented project to Vietnam’ oil storage system.