Dung Quat oil refinery – facts and figures

The Dung Quat Oil Refinery Project has taken nine years longer than planned. The project’s estimates had been raised many times. However, the total expenses on the refinery turned out to be lower by 10 trillion dong than the latest estimate.

On October 18, the National Assembly’s Committee of Science, Technology and Environment organized a conference to review the supervision of the implementation of the Dung Quat Oil Refinery project.

Foreign crude oil will replace Bach Ho’s?

According to the report released by the committee, the Dung Quat Oil Refinery project has been completed. The refinery is now running at 100 percent of its designed capacity. At first, the project was capitalized at $1.5 billion in 1997. The investment capital was later raised to $2.5 billion in 2005 and then to $3.05 billion (51,700 billion dong) in 2009. However, the total expenses on Dung Quat refinery were only about 40 trillion dong, 10 trillion dong lower than previously estimated.

As the explanation, the report pointed out that during the trial period of running the refinery, the investor did not have to pay salaries, did not have to spend money on chemicals and did not have to pay tax to the budget. Therefore, the Government believes that even with the lower total investment capital, the project’s efficiency will be higher than expected. The total budget collection volume from the project may reach over $27 billion.

The Government has admitted that it took too much time to complete the project. The refinery has been put into operation nine years later than requested by the National Assembly.

Responding to the criticism that Dung Quat oil refinery’s capacity is too low, at 6.5 million tons per annum, while other refineries in the world all have the high capacity of 10-12 million tons, the Government said that the refinery project was initiated at the time when there still was no overall strategy on the oil and gas development. Therefore, it was difficult to choose the place for the refinery and define the refinery’s scale.

The Government also thinks that PetroVietnam, the investor of the oil refinery, did not have a long term vision on the quality of products; therefore, the design of the refinery had to be amended two times. Meanwhile, state management agencies were slow in issuing legal documents on product quality.

The Government said that PetroVietnam is considering importing crude oil of the quality good enough to replace Bach Ho’s oil. Moreover, PetroVietnam is considering expaning the scale of the oil refinery, raising the capacity to 8-10 million tons per annum.

Who will take responsibility for shortcomings?

Commenting on the reports released by the Government and the National Assembly’s Committee of Science, Technology and Environment, Tran Van, Member of the National Assembly’s Economics Committee said, the report should give the clear answers to the two questions 1/ Will the burden of the interest rates lead to the lower efficiency of Dung Quat Oil Refinery? And 2/ How competitive are the Dung Quat products?

Ma Dien Cu, a Deputy of the National Assembly, also said that it is necessary to thoroughly analyze the existing problems and point out solutions to them instead of simply focusing on good results.- Tuoi tre

* It took 13 years in total to complete the oil refinery project. The project kicked off in 1997 and it was initially planned to become operational in 2001. However, it could only become operational in 2010.

* The site clearance began in 1997.

* 75 percent of the volume of works at Dung Quat refinery were carried out by Vietnamese sub-contractors

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