3 PetroVietnam units chosen to bid for LPG

The Dung Quat Refinery has finally identified the companies that will bid for its oil and gas, with PetroVietnam subsidiaries making up three out of the four bidders.

PetroVietnam Gas, PetroVietnam Northern LPG Co, and PetroVietnam Southern LPG Co will not only join the auction but have also been cleared to buy 50% of the refinery’s gas stocks and possibly future output without bidding.

PetroVietnam Gas has a 79.13% stake in PetroVietnam Northern LPG Co and 73.75% in PetroVietnam Southern LPG Co.

The auction was originally open to 23 firms but only five applied, with the rest opting out due to the stringent conditions attached to the sale.

Only four of them were found eligible.

The refinery can produce 24,000 tons of LPG a month but only 12,000 tons will be auctioned, Nguyen Hoai Giang, CEO of the Binh Son Oil Refinery and Petrochemical Co, which operates the refinery, told Tuoi Tre.

Tough conditions

To take part in the auction, companies are required to advance VND300 million, commit purchases of at least 1,500 tons a month, have a 1,500-ton storage capacity, and have ships for loading at the Dung Quat port.

A Saigon Petro spokesman told Tuoi Tre that though his firm scrambled to complete the procedures, it was unable to lease an oil tanker in time. Most domestic and international gas sellers do not impose this condition since they ship the gas themselves, he explained.

Gas firms were puzzled by the exercise and said since locally-refined LPG only meets half the country’s demand, the refinery’s fear it cannot sell its stocks through auctions is unreasonable.

In fact, the opposite could prove true if a precedent from four years ago is anything to go by.

A PetroVietnam gas refinery in Ba Ria-Vung Tau Province also sold half its production to PetroVietnam Northern and PetroVietnam Southern without auctions.

Soon 15,000 tons of unsold stock piled up and PetroVietnam began to cut prices by US$20 a ton to lure other buyers. But it was too late since they had already contracted with new foreign suppliers.

What also remains unexplained is Dung Quat’s decision to sell half its output without an auction since Binh Son Oil’s Giang had previously told Tuoi Tre that the plant earned an extra $1 per ton if it auctioned the gas.

Its annual capacity of 300,000-450,000 tons translates into additional revenues of $300,000-$450,000- Tuoitrenews

Tags: Dung Quat Refinery