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Nghi Son refinery to begin operations from February 28

Released at: 17:05, 28/02/2018

Nghi Son refinery to begin operations from February 28

Photo from nhipcaudautu.vn

PetroVietnam announces commencement of $9-billion refinery in northern Thanh Hoa province.

by Quang Huy

Vietnam’s second oil refinery, Nghi Son, will be ready to begin operations from February 28, the State-owned PetroVietnam said on February 26.

The $9 billion plant, co-owned by PetroVietnam, Kuwait Petroleum International, and Japanese firms Idemitsu Kosan and Mitsui Chemicals, is designed to help Vietnam cope with a shortage of refined oil products.

The first refinery, Dung Quat, currently meets 30 per cent of the country’s total domestic fuel demand. The 200,000 barrel-per-day (bpd) Nghi Son along with Dung Quat will help Vietnam meet 80 per cent of demand.

Operations at Nghi Son, in north-central Thanh Hoa province, were previously delayed but are now expected to begin producing commercial products such as paraxylene from April and, from May, A95 gasoline and diesel fuel, PetroVietnam said.

Nghi Son will process Kuwaiti crude oil to produce liquefied petroleum gas, gasoline, diesel, kerosene, and jet fuel, mainly for the domestic market.

Kuwait Petroleum International and Idemitsu Kosan each own 35.1 per cent while PetroVietnam holds 25.1 per cent and Mitsui Chemicals 4.7 per cent.

Vietnam exports some crude oil but its shipments have been falling as production declines from older fields and as some production has become uneconomic amid lower oil prices.

Investors seeking to become strategic investors of the PetroVietnam Oil Corp. (PV Oil), the country’s sole crude oil exporter, must commit to prioritizing buying petroleum products from the Dung Quat and Nghi Son refineries and realize commitments in terms of market, technology, and management development.

Eight investors, including a founding shareholder in Vietnam’s private low-cost airline Vietjet Air, have registered to become strategic shareholders of PV Oil. The six foreign bidders are Shell, Idemitsu Kosan, Puma, Kuwait Petroleum International, PTT, and SK, while the two Vietnamese contenders are the Sacom Investment Fund and Sovico Holding.

The government last month raised VND4.18 trillion ($185 million) from selling 20 per cent of PV Oil at an initial public offering (IPO). The proceeds exceeded the government’s target of $122 million and the IPO was part of a plan to equitize hundreds of State-owned enterprises (SOEs) to boost their performance, ease a tight State budget situation, and reform an economy that is highly reliant on foreign investment.

Late last week, Thailand’s Siam Cement Group (SCG) and PetroVietnam began construction of a $5.4 billion petrochemical site at Long Son, near the city of Vung Tau, east of Ho Chi Minh City. The site is scheduled to begin operations in 2022.

 

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