The recent withdrawal of Vietnamese groups from billion-dollar oil refinery projects is paving the way for potential foreign investors, especially those from Thailand and China, to jump in the industry.
At a recent meeting with government agencies, Pham Van Thanh, chairman of the Vietnam National Petroleum Group (Petrolimex), proposed to pull out from the South Van Phong oil refinery project in the southern province of Khanh Hoa so that the group can focus its financial resources on developing other important projects.
Responding to the Petrolimex’s proposal, Deputy Finance Minister Do Hoang Anh Tuan said that the finance ministry agreed, emphasizing that the ministry also made the same written suggestion to competent ministries and agencies about the issue previously.
According to Deputy Minister of Planning and Investment Nguyen Van Hieu, the main reason for the Petrolimex’s withdrawal proposal is the group’s financial health.
If the withdrawal proposal is approved, other investors will have opportunities to jump in the US$4.8 billion project, which is on the list of 127 large-scale projects calling for foreign investments, as used to see with the Long Son refinery project recently.
After Vietnam Oil and Gas Group (PetroVietnam) planned to divest from the Long Son refinery project in the southern province of Ba Ria-Vung Tau, Thailand’s Siam Cement Public Company Limited (SCG) in May this year acquired all 29 percent stake of PetroVietnam for more than VND2.05 trillion (US$90 million) to become the sole investor of the project.
Roongrote Rangsiyopash, president and CEO of SCG, said that the Vietnamese economy is on an impressive growth path and the Long Son refinery project is expected to encourage long-term investment in related industries throughout the value chain, as well as improving a competitive standard of products that will lessen the country’s need to import petrochemical products.
According to SCG, the engineering, procurement, and construction contract of the Long Son refinery project, whose total investment capital was approved to increase to US$5.4 billion early this year from the previous US$3.8 billion, will be implemented from the third quarter of this year and the whole project is expected to be put into operation in 2023.
Ensuring domestic supply source
Vietnam currently has two oil refinery plants, Dung Quat and Nghi Son, which meet some 70 percent of domestic oil and petrol demands. The country still has to import the products to meet its rising production and transport demands.
Chairman of the Vietnam Petrol Association Phan The Rue estimated that Vietnam’s oil and petrol market this year will rise by 7-8 percent against last year.
Statistics from the General Department of Customs showed that the country imported 7.07 million tons of refined petrol and oil worth of US$4.66 billion in the first six months of this year, increased by 11.5 percent in quantity and 40.4 percent in value compared with the same period last year.
The imports from all markets surged in the first half, of which imports from Russia rocketed by 11.5 times in quantity and 15.8 times in value to 60,361 tons worth of US$51.24 million, followed by Malaysia (up 63.5 percent in quantity and 120.7 percent in value to 2.01 million tons and US$1.24 billion) and China (up 54.6 percent in quantity and 105.1 percent in value to 790,725 tons and US$ 534.34 million).
The country last year also had to spend US$7 billion for importing over 12.8 million tons of refined oil and petrol products.
The establishment of oil refinery plants therefore will help Vietnam to be active in the petroleum supply source, minimizing adverse impacts on the domestic petroleum market due to the global market volatility.