VietNamNet Bridge – Vietnamese have not leaped for joy on the mammoth 28.7 billion dollar oil refinery project, because they still keep doubts about the feasibility of the project.

The “petrochemistry ambition”

The pre-feasibility study on the Nhon Hoi oil refinery registered by the Thai PTT Group got the approval from the Binh Dinh provincial authorities some days ago. This would be really a huge oil refinery to cover an area of 2000 hectares, have the capacity of 660,000 barrels per day and employ 15,000 workers.

Once becoming operational, slated for 2016, the refinery is expected to make up 10 percent of Vietnam’s GDP.

Nguoi lao dong newspaper has quoted Man Ngoc Ly, Head of the Binh Dinh Economic Zone Management Board, as saying that 50 percent of the investment capital for the project would be the investor’s capital, while the other 50 percent would be from commercial loans.

PTT would be in charge of arranging 1/3 of the capital needed, while another 1/3 would be called from PTT’s partners in Vietnam, and the remaining from the strategic partners, who provide crude oil to the project.

The Vietnamese partners may include the national oil and gas group PetroVietnam, Petrolimex, Military Petroleum, Khang Thong Group and STFE.

Ly, while saying that he personally thinks the project is feasible, stressed that it would still be necessary to check information to find out the real financial capability of the investor and partners, to know if the project is really feasible.

Also according to Nguoi lao dong, some analysts have doubts that a big proportion of capital for the project would be sourced from China.

On the issue, Ly admitted that the PTT’s partners may include Chinese enterprises. However, he said if it is true, the Chinese capital would just account for a small proportion.

Dau tu has quoted its sources as saying that at first, the oil refinery project was designed to have the investment capital of one billion dollar only. After that, the investor decided to raise the investment capital to 21 billion dollars. Meanwhile, at the meeting for the pre-feasibility study approval, participants heard that the investment capital would be 28.7 billion dollars.

The newspaper has also reported that PTT and its partners would complete the pre-feasibility study report, so that the Binh Dinh provincial authorities can submit to the Ministries of Industry and Trade, Planning and Investment and Government. PTT would have to complete the feasibility study report after six months.

In the past, the government once agreed in principle on a project by a Taiwanese investor to build an oil refinery in Binh Dinh. However, the investor then gave up the project due to the global economic crisis.

As such, in order to be able to implement the new project, the Binh Dinh authorities would have to ask for the permission from the government again.

Sources said that PTT has an oil refinery in Thailand already. The group got the nod from the Thai government to carry out a big petrochemical project in the south of Thailand. However, due to the political uncertainties, PTT decided to look for another investment destination.

Vietnam has become the choice of PTT. Prior to that, PTT was suggested about the Long Son oil refinery project. However, Binh Dinh has finally been chosen.

Regarding the super projects suggested in Vietnam, in mid-2007, a US investor also organized a presentation about the investment in a steel project in Thanh Hoa province capitalized at 30 billion dollars. However, the US investor has been found as having no financial capability.

Compiled by C. V