VietNamNet Bridge – Thailand’s PTT Public Company Limited (PTT), one of the two main investors of Nhon Hoi oil refinery complex, has proposed partnering with Vietnam National Petroleum Group (Petrolimex) to develop a multi-billion-dollar project in the central province of Binh Dinh.

Representatives of PTT made the proposal at their meeting with Vietnam’s Prime Minister Nguyen Tan Dung in Thailand on the sidelines of the 5th Greater Mekong Subregion Summit in Bangkok last week.

Man Ngoc Ly, head of the Nhon Hoi Economic Zone (EZ) Authority who also attended the meeting, said that during the process of studying the project, PTT expressed its interest in cooperating with a State-owned enterprise of Vietnam to develop the project along with its partner Saudi Arabian Oil Company (Saudi Aramco).

PM Dung said he supports PTT to cooperate with a local firm in the Nhon Hoi oil refinery project, which is estimated to cost US$22 billion, but whether Petrolimex could contribute capital to the project or not is mainly a matter of PTT and Petrolimex.

Previously, PTT wanted a Vietnamese investor to participate in the venture with its capital accounting for 20% of the project’s total.

According to exisiting regulations, the National Assembly will decide if one State-run enterprise like Petrolimex contributes more than VND11 trillion (around US$500 million) to a project.

At the meeting, the chairman of PTT also unveiled the intention to purchase shares of oil and gas exploration blocks in Vietnam’s continental shelf and join a project to upgrade Phu Cat Airport in Binh Dinh Province into an international airport to support the refinery complex and other projects at the Nhon Hoi EZ.

The Government recently approved the implementation of Nhon Hoi oil refinery complex and agreed to add the project to the master plan for development of the oil and gas industry in Vietnam.

Nhon Hoi oil refinery, also known as Victory Project, is designed to have a refining capacity of 20 million tons of crude oil per year and is expected to be completed in the 2021-2015 period.

The PM has assigned Binh Dinh authorities to grant an investment license for the project in line with regulations.

A source from Binh Dinh government said whether a Vietnamese firm could join forces with PTT or not is not the primary reason for the Thai firm to decide to proceed with the project.

Ly of the Nhon Hoi EZ Authority said if no local firm agrees to join the Victory Project, PTT and Saudi Aramco will execute the project on a 50-50 footing and reduce their holdings later when the third party joins.

Given the fast reduction of oil prices on global markets, PTT said the fall affects enterprises exploring and exploiting oil and gas but will create opportunities for oil refinery projects such as Victory.

Concerning incentives for the project, the investor previously proposed a corporate income tax rate of 10% in the first 30 years.

The Government recently approved in principle a tax rate of 10% for 15 years, tax exemptions for four years from the first year of earning taxable income and a 50% reduction of the tax in the following nine years.

The proposal for a preferential tax of 10% in 30 years will be reconsidered based on results of the Front End Engineering Design phase (FEED) of the investors.

Other incentives for the Victory project include tax exemptions for imports of crude oil as well as machines and equipment which are not yet produced domestically. The investors will be allowed to sell products in Vietnam in accordance with local regulations, among others.

The Victory Project covers an area of 1,400 hectares in Nhon Hoi EZ. After 2021, the project’s designed output will be raised to 30 million tons per year and total investment may hit US$30 million.

SGT/VNN