South Van Phong oil refinery to roll with the wind?
South Van Phong oil refinery to roll with the wind?
Vietnam National Petroleum Group (Petrolimex)’s proposal to withdraw from South Van Phong oil refinery in the central province of Khanh Hoa, opens opportunities for other investors to jump into the project or spells doom for yet another billion-dollar oil refinery.
At a recent working session with government agencies, Pham Van Thanh, chairman of Petrolimex, proposed to withdraw from the South Van Phong oil refinery project so that the group can focus on developing other projects.
Located in South Van Phong Economic Zone in Khanh Hoa, the refinery is on the list of 127 large-scale projects calling for foreign investment through 2020.
When the project was approved by the government in 2008, it had an expected investment value of $4.4-4.8 billion with a capacity of 10 million tonnes a year. It was supposed to start construction in 2011 and become operational by 2013. Petrolimex also called on foreign investors to join under the joint venture model.
After it received the licence, Petrolimex was instructed by the government to conduct an investment plan and a feasibility study for the project.
The government also suggested the investor to conduct an environmental impact assessment, implement appropriate technologies, design a careful capital structure, and find appropriate partners who could supply crude oil over the long-term.
Near the end of 2011, it was reported that Korea’s Daelim Industrial Corporation had negotiated with Petrolimex to invest in the Nam Van Phong project. The two sides also signed a memorandum of understanding (MoU) on the investment.
In addition, in December 2014, Petrolimex and JX Nippon Oil & Energy (JX NOE) signed a MoU on bilateral strategic cooperation.
However, since then no further information has been released about co-operation between Petrolimex and foreign partners.
If no investors pay attention to the South Van Phong project, its will end up like the $3.2 billion Vung Ro oil refinery project.
Accordingly, the Phu Yen People’s Committee asked the Phu Yen Economic Zones Management Board and the Phu Yen Department of Planning and Investment to consider revoking Vung Ro Petroleum Co., Ltd. (VRP)’s project.
The movement started from the investor’s decision to return the investment certificate to the authorities 10 years after receiving it.
VRP received the investment certificate in 2007 for the refinery and petrochemical complex with the initial capital of $1.7 billion. After numerous adjustments to the investment plan, the investment capital increased to $3.2 billion with the annual capacity of eight million tonnes of crude oil, double the initial capacity.
In 2014, VRP held the ground-breaking ceremony for the refinery. At the time, the investor promised to take the first phase of the project into operation in 2016. However, during the past ten years, the construction remained immobile.
