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BSR valued at $3.2bn ahead of IPO

Released at: 14:47, 02/06/2017

BSR valued at $3.2bn ahead of IPO

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November IPO of Binh Son Refinery to see 5-6% of shares up for grabs.

by Quang Huy

Binh Son Refinery (BSR), the operator of Vietnam’s only oil refinery, Dung Quat, was valued at VND72.88 trillion ($3.2 billion) at the end of 2015, with the State holding a 60 per cent stake, according to the Ministry of Industry and Trade.

An affiliate of the Vietnam National Oil and Gas Group (PetroVietnam), BSR is preparing for an initial public offering (IPO) later this year. CEO Mr. Tran Ngoc Nguyen said BSR will sell 5-6 per cent of the company’s shares to the public in an IPO scheduled for November.

The operator of the Dung Quat Oil Refinery will also allow its employees to buy a combined 0.07 per cent stake within the year and will look to attract strategic investors next year.

Chairman Mr. Nguyen Hoai Giang told foreign media on June 1 that the Vietnamese Government had recently given permission for BSR to sell more than half of the company to either foreign or domestic strategic investors, giving a potential buyer a controlling stake.

The company had been in talks with Japan’s JX Nippon Oil & Energy Corp., South Korea’s SK Energy Co., and Russia’s Gazprom Neft, among others, but the talks have failed to progress, Mr. Giang said.

Dung Quat Oil Refinery in the central province of Quang Ngai now meets around one-third of Vietnam’s demand for fuel and oil products with an annual capacity of processing 6.5 million tons of crude oil each year.

BSR has a plan to expand capacity at Dung Quat by 30 per cent at a cost of $1.8 billion while reducing production costs due to cheaper oil prices. After completing its expansion in 2021, the refinery’s capacity will increase to 8.5 million tons of crude oil per year, meeting up to 60 per cent of local demand.

The country’s demand for oil and petroleum products has increased every year and the volume imported in 2015 rose 18.7 per cent, according to data from the General Department of Customs under the Ministry of Finance.

The $3-billion refinery posted revenue of VND21 trillion ($923 million) in the first quarter of this year, or 33 per cent of its full-year target. BSR projected revenue this year at VND62.4 trillion ($2.75 billion), down 17 per cent from 2016 on an expected fall in crude oil prices and shorter production time due to maintenance work.

2016 was viewed as a successful year for BSR, as total revenue reached more than $3.1 billion and it contributed over $483 million to the State budget, exceeding its plan by $88 million. Production was estimated at 6.84 million tons and sales at 6.8 million tons.

In the 2016-2020 period, BSR aims to record production of 28 million tons, of which diesel oil products will account for 50 per cent, with 14.064 million tons, A92/E5 gasoline over 6.383 million tons, and A95 gasoline 4.14 million tons.

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