Mammoth petrochemical projects make Vietnam feel dizzy
VietNamNet Bridge – More and more investors have expressed their willingness to set up huge oil refineries in Vietnam. Government agencies and local authorities keep cautious when talking about projects, while some experts have doubts about their feasibility, and some people say the projects are just the “cake picture.”
Foreign investors may well understand the Vietnamese “oil refinery dream,”
therefore, they have been moving ahead with the oil refinery projects in the
Some projects have been registered with the high investment capital of approximately $10 billion. However, the projects seem to be too small if compared with the project PTT, a Thai oil and gas group, plan to develop in Vietnam.
The oil refinery project is expected to be located in the Nhon Hoi Economic Zone in Binh Dinh province, capitalized at $28 billion. If the project turns into reality in Vietnam, this would be the biggest oil refinery in the world.
The Thai investor plans to build the refinery on an area of 2,000 hectares which would have the capacity of 660,000 barrels per day, or 30 million tons per annum. The crude oil for the refinery would be imported from the Middle East (45 percent), Africa (25 percent) and from South America.
Once operational, the refinery would make 11 refinery products (LPG, petrol, DO…) and the other 10 petrochemical products (LLDPE, Poly-propylene, DEG...).
If everything goes smoothly, the PTT’s oil refinery would kicks off its construction in the first quarter of 2016 and become operational by 2019.
In recent years, a series of petrochemical projects have been added into the program to develop the oil and gas industry in Vietnam by 2015.
Vietnam has the Dung Quat oil refinery with the capacity of 6.5 million tons per annum, now satisfies 30 percent of the total demand.
Besides, Vietnam has the $9 billion Nghi Son oil refinery in Thanh Hoa province, the $4.5 billion Long Son petrochemical complex in Ba Ria – Vung Tau.
Nghi Son has been the biggest foreign direct invested project so far. The oil refinery, once put into operation, with the designed capacity of 10 million tons per annum for the first phase, together with Dung Quat, would satisfy 50 percent of the domestic demand.
Vietnam is also considering developing the Nam Van Phong refinery in Khanh Hoa province which is expected to have the capacity of 200,000 barrels per day, or 10 millions per annum. The investor, Petrolimex, plans to pour $4.4-4.8 billion into the project.
Super-projects not child’s play
Experts said that it’s not easy to assess a petrochemical refinery project. It took 10 years, for example, to consider the Nghi Son project. In some cases, the project implementation has been delayed because of the lack of capital.
The Can Tho oil refinery project got the nod from the government agencies in April 2008. Later, the investment capital of the project was lowered from over $500 million to $350 million, while one of the partners decided to give up. It’s still unclear when the project would start. The construction work of the Vung Ro oil refinery has just resumed after a long interruption.
Regarding the mammoth project worth $28 billion, the Binh Dinh provincial authorities have expressed their worry about the Thai group’s capability of arranging capital for the project.
To date, the feasibility of oil refinery projects in Vietnam remains controversial. All the investors plan to import crude oil for the refineries. Tran Viet Ngai, Chair of the Vietnam Energy Association, has confirmed that the current crude oil exploitation can provide 14-15 million tons a year only.
And if the refineries run with the import materials, their production costs would be high and the finished products would be uncompetitive if compared with the import products.