Two petrochemistry projects stopped by authorities because of long delays
Two petrochemistry projects stopped by authorities because of long delays
Shortly after the $22 billion petrochemistry & oil refinery project in Binh Dinh province was withdrawn by local authorities because of delay, another project in Can Tho has been stopped for the same reason.
The 2 million ton per annum Can Tho Oil Refinery was granted an investment certificate in May 2008. The investors – a joint venture between the Vien Dong Investment & Trade JSC and Semtech Ltd B.V.I, - registered the investment capital of VND8.608 trillion, or $538 million, in which the former contributed 30 percent of capital and the latter 70 percent.
Later, Semtech Ltd B.V.I left the joint venture because of financial problems. Vien Dong found a new partner - Razeedland Plaza (M) SDN. BHD, Brunei Darussalam, and the new joint venture got approval from city authorities in June 2015.
Prior to that, the Binh Dinh province announced the termination of the Nhon Hoi petrochemistry & oil refinery project, a mammoth project, with registered capital of $22 billion. Explaining the decision, the local authorities said the investor – PTT Group from Thailand – delayed the project and made claims which could not be satisfied by the government of Vietnam.
As such, except the operating Dung Quat Oil Refinery in Quang Ngai province, Vietnam still has four other valid oil refinery projects, namely Nghi Son in Thanh Hoa province, capitalized at $9 billion, Vung Ro in Phu Yen province ($3.2 billion), Nam Van Phong in Khanh Hoa province ($8 billion) and Long Son in Ba Ria-Vung Tau province ($4.5 billion).
Of these, the Long Son project has been delayed for eight years because of many reasons. Meanwhile, Qatar Petroleum, a partner of the project, withdrew from the project in 2015.
Despite commitments by investors, no one can say for sure if the projects would continue to be implemented.
As for Vung Ro project, for example, Technostar Management Limited, the investor, promised to put the refinery into operation by 2016 after 10 years of delay. However, it is obvious that the promise cannot be fulfilled.
In case of Nam Van Phong, the investors and local authorities still have not reached an agreement about the investment incentives to offer to the project.
Meanwhile, experts have warned that PetroVietnam, the national oil & gas group, would have to offset VND1.8-2.5 trillion ($80-110 million) in annual losses for Nghi Son oil refinery when it starts operation because PetroVietnam pledged to acquire Nghi Son oil products.
