JX Nippon Oil edges closer to first overseas refinery

JX Nippon Oil and Energy Corporation last week signed a strategic co-operation MoU with state-run Petrolimex. The agreement included Nippon Oil becoming a main partner of Petrolimex in the Nam Van Phong Oil Refinery project.

Nguyen Van Khanh, head of Petrolimex’s Oil Refinery Department recently told VIR that JX Nippon Oil had reached several agreements with Petrolimex during the negotiations to become a key partner in the Nam Van Phong Oil Refinery project. “The two sides are making efforts to finalise negotiations this year,” Khanh said.

JX Nippon Oil should complete its feasibility study within six months, the Nikkei Asian Review reported last week.

The $8 billion Nam Van Phong Oil Refinery will handle approximately five million tonnes of crude oil a year. The prime minister approved the project in principle and assigned Petrolimex to undertake project planning and select foreign partners with sufficient capability, experience and commitment to providing crude oil in the long-term to co-invest.

The project is expected to go online in mid-2020 at the earliest, churning out petrol and other products.

Khanh also mentioned that the Vietnamese partners, including Petrolimex, would participate in the project with a maximum 30 per cent stake. This percentage may increase following a proper roadmap agreed upon by participants in the project.

An unnamed source told VIR last week that JX Nippon Oil was also interested in petrol retail business in Vietnam. “If JX Nippon wants to enter Vietnam’s petrol retail sector, partnering with Petrolimex is a smart move.” Petrolimex holds an estimated 55 per cent share of Vietnam’s petrol retail market.

Currently, Vietnam’s petrol retail sector is not open to foreign investors, except for those participating in developing oil refineries in Vietnam.

Nghi Son is now the only under-construction oil refinery project having foreign investors which include Indemitsu Kosan, Mitsui Chemicals and KPI. Those foreign investors are allowed by the Vietnamese government to set up a product distribution joint venture when the Nghi Son project comes into operation on the condition that the Vietnamese stake is at least 51 per cent.

JX Nippon Oil and Energy started its lubricant business in Vietnam in 1996 and established its representative office in Ho Chi Minh city in 2010.