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Posco E&C to build wharf facility at petrochemical complex

Released at: 14:08, 03/02/2018

Posco E&C to build wharf facility at petrochemical complex

The Long Son Petrochemicals Complex (Photo from hoadaulongson.com)

Construction of $680-million wharf facility at Ba Ria Vung Tau complex expected to begin shortly and be completed by 2022.

by Quang Huy

South Korea’s Posco E&C has announced it has signed a contract with the Long Son Petrochemicals Company (LSP), the investor of a $5.4-billion petrochemical complex project in southern Ba Ria Vung Tau province, for the construction of a wharf facility costing $680 million, according to foreign newswire Business Korea.

The signing indicates that construction of the complex will restart shortly after several delays. LSP, in which Thai conglomerate Siam Cement Group (SCG) holds a 71 per cent stake, is building Vietnam’s first petrochemical complex.

The complex has a capacity of producing 1 million tons of ethylene and 1.2 million tons of petrochemical products and is located about 150 km southeast of Ho Chi Minh City.

Posco E&C will build 28 petrochemical storage tanks with a total storage capacity of 300,000 tons, raw material transfer pipelines, a wharf for raw material products, and marine facilities. Completion is expected in 2022.

In a bid to hasten the long-delayed mega project, SCG recently sought the government’s permission to acquire the remaining 29 per cent stake held by State-owned PetroVietnam to bring its holding to 100 per cent.

It also pledged to provide guarantees for a $3.2 billion loan package for the project to move on. But it asked PetroVietnam to issue a commitment to Long Son Petrochemicals to guarantee 29 per cent of the $3.2 billion it will borrow on its behalf.

However, PetroVietnam cannot provide such guarantees as a State-owned enterprise, which under Vietnamese legislation are prohibited from providing loan guarantees for a subsidiary in which it holds less than 51 per cent.

According to a PetroVietnam report, the project was halted due it the oil giant’s failure to take out loans for the joint venture and conduct procedures for the approval of contract packages.

The project was licensed in 2008 with total investment of $3.7 billion and the participation of three companies: SCG, PetroVietnam, and the Vietnam Chemical Group (Vinachem). Vinachem withdrew its capital due to financial difficulties and was replaced by Qatar Petroleum International (QPI). In April 2017, QPI dropped out and sold its stake to SCG.

Long Son will be the first petrochemical complex in Vietnam. The operator of the country’s first operational oil refinery, Dung Quat in the central province of Quang Ngai, raised a higher-than-expected $245 million from an initial public offering (IPO) last month. Meanwhile, the Nghi Son Oil Refinery in northern Thanh Hoa province has seen its commercial start delayed due to technical errors.

Mr. Roongrote Rangsiyopash, SCG’s President and CEO, told a press conference last July that construction of the petrochemical complex would begin in 2018 and see commercial operations start in 2022.

A PetroVietnam executive was quoted as saying last July that site clearance had been completed and investors had selected an engineering, procurement and construction (EPC) contractor.

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