Petro giant has hand out for cash

Expansion plans for the key refinery could see annual production capacity go up to 8.5 million tonnes against the current capacity of 6.5 million tonnes of crude oil, according to feasibility study carried out by Japan Group of Consultants (JGC).

Half of the raw crude oil for the refinery would come from the Bach Ho oilfield off the southern coast of Vietnam while the rest is expected to be shipped in from the Middle East.

The expansion is about increasing refining capacity, better protecting the environment, and utilising diverse categories of crude oil to meet the needs of a diversifying Vietnamese economy. With the approval of the government, PetroVietnam is also appealing for foreign investors to buy in up to 49 per cent of the stake of this project.

Currently, the refinery turns out 6.5 million tonnes of oil products per year and meets 30 per cent of the local market’s fuel demand. After expansion plans are finished at the end of 2015 or in early 2016, Dung Quat could meet 40 to 50 per cent of the country’s fuel needs.

Dung Quat went live last year. With total investment of $3 billion, the refinery produces a range of refined products including liquefied petroleum gas (LPG), kerosene, diesel, fuel oil, A95 and A92-grade petrol, and JetA1 fuel. Because of difficulties in choosing technology and technical equipment for the refinery the country spent more than 12 years completing the project.

Responding to criticism that Dung Quat oil refinery’s current capacity is too low given that most refineries around the world have an annual capacity of 10-12 million tonnes, the government said the project was initiated at a time when there was no overall strategy for oil and gas development. Therefore, it was difficult to define the refinery’s scale.

In related news, the government last week approved a major expansion of the Dung Quat Economic Zone where the Dung Quat refinery is based. This will see the zone grow four-fold, to 45,332 hectares.