PetroVietnam proposes $2b Dung Quat expansion while negotiating sale to Gazprom

Dinh Van Ngoc, CEO of Binh Son Refining and Petrochemical Company Limited (BSR), the operator of Dung Quat, recently told baodautu.vn that PetroVietnam had submitted the upgrade and expansion master plan to the government in September.

Accordingly, after expansion the refinery’s production scale would increase to 8.5-9 million tonnes of crude oil per year, compared to the current 6.5 million tonnes.

Investment needed for the expansion is estimated at $1.8-$2 billion and the process would take between 60 and 78 months to complete.

Also according to the plan, Dung Quat will continue its current production and maintenance work during the expansion phase.

That said, while the expansion process is underway, there will be times that the refinery needs to shut down operations for a short time. The operator has said they want this to occur at standard maintenance times to minimise losses.

As well as working on the expansion plan, PetroVietnam is also in negotiations with Russian partner Gazprom Neft to sell 49 per cent of its stake in the refinery.

It has announced that it hopes negotiations will be concluded before the end of this year.

The Russian partner is well financed and has 5-6 major oil refineries under its control with a combined processing capacity of more than 40 million tonnes of crude per year. Some of these have undergone regular upgrades and expansions.

Ngoc said the company has proposed the government allow it to simultaneously conduct negotiations and carry out the expansion, since the latter is essential to meeting the country’s ever-increasing demand for fuel.

Dung Quat is wholly domestic owned and the only operating oil refinery in Vietnam at present.

According to PetroVietnam chairman Nguyen Xuan Son, BSR expects around VND4 trillion ($190 million) in profits this year. The company posted VND2.08 trillion ($99 million) in after-tax profits in the first six months of the year.