Refinery project wheels in motion

Work on Vietnam’s second oil refinery will start earlier next year in a major boost for the nation’s energy industry.

A source from PetroVietnam, a shareholder of the Nghi Son Refinery & Petrochemical Limited Liability Company, said the $6.2 billion Nghi Son refinery project would begin right after an engineering, procurement and construction (EPC) contract was signed.

The EPC contract was expected to be signed in 2010’s fourth quarter, however the source said it was delayed as bidders had yet to finish bidding documents. Contractors from Japan, South Korea, Italy and the United States are competing to gain this key contract.

The winning consortium will be in charge of constructing the main factories, supporting facilities, crude oil reserve tanks, pipeline systems, and import and export ports.

The PetroVietnam source said 95 per cent of the 329 hectare Nghi Son site had been completely cleared for construction. The project, following in the footsteps of Vietnam’s first refinery Dung Quat, is located in the central Thanh Hoa province’s Nghi Son Economic Zone, 150 kilometres from Hanoi.

PetroVietnam holds 25.1 per cent stake of the refinery, the Kuwait Petroleum International (35.1 per cent), Japan’s Idemitsu Kosan Ltd Co (35.1 per cent) and Japan’s Mitsui Chemicals Inc (4.7 per cent).

When finished in 2014, the Nghi Son will have an annual refinery capacity of 10 million tonnes of crude oil, or 200,000 barrels per day, 1.5 times more than the Dung Quat’s current level. It will annually churn out 2.3 million tonnes of petrol, 3.7 million tonnes of diesel and a significant amount of liquefied gas for domestic use.

PetroVietnam currently manages the Dung Quat, Nghi Son and Long Son refinery projects. The Dung Quat refinery, capitalised at more than $3 billion, was put into operation last year and has capacity of 6.5 million tonnes of products, to meet around 30 per cent of the country’s demand.

PetroVietnam is selecting partners for the $7 billion Long Son refinery. In a latest process the Japan’s largest oil company JX Holdings said it would cooperate with PetroVietnam to build this refinery. If this goes smoothly, the Long Son could start operating in 2020 with an annual refinery capacity of 10 million tonnes of crude oil.