Dung Quat Refinery expansion likely cost $1.2 billion

The expansion of Vietnam’s Dung Quat refinery to 10 million metric tons of crude a year, or 200,000 barrels a day, from 6.5 million tons, will likely cost $1.2 billion, a refinery operator said over the weekend.

The expansion will likely be completed by 2015 or 2016, Nguyen Hoai Giang, director of the plant, said in a statement published on the government’s website.

Giang said state-run Vietnam Oil & Gas Group, or PetroVietnam, will sell shares in the refinery to seek partners and raise funds for the expansion.

State media said Friday that Petroleos de Venezuela SA has signed an agreement with PetroVietnam to join the project to upgrade the 130,000-barrel-a-day refinery.

In March, PetroVietnam said that it had signed an agreement with Gazprom Neft (GZPFY) in which the Russian company would consider working with PetroVietnam to upgrade Dung Quat. It isn’t clear if Gazprom will be working side-by-side with PDVSA on upgrading work.

Dung Quat, which became operational in February 2009, is scheduled to undergo a two-month shutdown from the middle of July for maintenance, which is expected to result in a shortage of 1 million tons of oil products for the domestic market.

Giang said PetroVietnam will try its best to shorten the shutdown, possibly by one or two weeks. – DowJones

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