VietNamNet Bridge - The continued sharp fall in the oil price has caused investors to hesitate starting the oil refinery projects they promised. Sources said some investors may give up the projects.

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The continued sharp fall in the oil price has caused investors to hesitate starting the oil refinery projects 

The local authorities once put high hopes on the $22 billion Victory petrochemistry & refinery project in Nhon Hoi Economic Zone in Binh Dinh province. However, to date, the documents of the project have not yet reached management agencies, though local authorities forecast the project would be licensed in the first half of 2015.

A source from the Nhon Hoi Economic Zone Management Board said PTT, the investor from Thailand, would have to reconsider investment efficiency in the context of continued oil price falls. How to implement the project and how big it is remains questionable.

Analysts commented that they cannot see any possibility of the oil price recovering in short term. The oil price tumbled to a 11-year low last December.

Analysts commented that they cannot see any possibility of the oil price recovering in short term. The oil price tumbled to a 11-year low last December.
The source said that the oil price fall has forced Saudi Aramco, the investor who committed to provide crude oil to the project.

Regarding the $4.5 billion Long Son petrochemistry and refinery project in Ba Ria-Vung Tau, Qatari national oil & gas group, one of the four investors, has announced withdrawal from the project because of the changes in its development strategy.

As for the Dung Quat oil refinery project, the expected ‘marriage’ between Binh Son Refining (BSR) and Russian Gazprom Neft could not come to a happy end. The Russian side has sent a document requesting to stop negotiations on its purchase of a 49 percent of stake in Dung Quat, two years after the frame agreement was signed.

In fact, the investor decisions to quit the projects did not cause any surprise to insiders. The negotiations lasted too long, while the two sides could not reach agreements on many issues. The two sides disagreed on the business appraisal and the payment for the capital transfer.

However, Thoi Bao Kinh Te Saigon quoted its sources as saying that BSR’s debts were one of the major reasons that made Gazprom Neft to reconsider its decision.

The refusal by the Russian partner may drive BSR to a new direction: it would become equitized and look for strategic shareholders instead of Gazprom Neft.

Vietnam has considered eight oil refinery projects, though it initially planned to develop only three oil refineries in Quang Ngai, Thanh Hoa and Ba Ria-Vung Tau by 2020. Two of them have been operational, including Dung Quat and a small refinery named Cat Lai in HCMC.

According to the chair of the Vietnam Association of Foreign Invested Enterprises (VAFIEs) Nguyen Mai, the total designed capacity of the refinery projects is up to 65 million tons.


TBKTSG