Privately-backed refinery projects yet to hit top gear

While state-backed oil refineries are well on track, private projects are facing serious delays.

To underscore this point, Can Tho authorities last week summoned the Can Tho oil refinery project investors to explain why the $350 million project had been delayed for more than two years.

Nguyen Thanh Son, deputy chairman of Can Tho People’s Committee, told VIR that the investors had submitted a proposal for putting the project back on track. “The project has been far behind schedule and its licence should have been revoked. But we will ask the Ministry of Planning and Investment and the government to give them one last chance,” he said.

Nguyen Van Duc, general manager of Vien Dong Investment and Trade Corporation – the domestic investor in the project, said the withdrawal of US-based Semtech in 2009 proved this foreign partner did not have sufficient financial strength.

In June 2010, Duc announced that his firm had chosen Taiwan’s Crystal Future Incorporation as a new partner. However, the two sides have yet to submit documents to adjust the investment certificate, which should have been done before October, 2010.

Son said Crystal wanted to be given cleared land before officially joining the project. However, land compensation and clearance must be done by both local authorities and investors.

The ill-fated project received an investment licence in May 2008, with an initial investment of $538 million to cover 250 hectares. After Semtech’s withdrawal in 2009, the domestic investor decided to scale down the project to 50ha, with capital of $350 million.

The future refinery is expected to have an annual capacity of two million tonnes, meeting 50 per cent of the Mekong Delta region’s petroleum demand.

The Vung Ro project is another private refinery project under fire.

The $1.7 billion project was first scheduled to start in April, 2010. However, the province has yet to complete the construction of a resettlement zone for local residents.

A source close to Vung Ro said that the investor could not start the project until the second quarter of 2011. “The investor, I think, will need at least four or five months to check for land mines and other unexploded devices, before making preparations for the groundbreaking ceremony.”

The Vung Ro refinery project was proposed by UK Technostar Management (with a 51 per cent stake) and its partner Russia Telloil (49 per cent), to be built on a 200ha inland area and another 210ha on the waterfront near Vung Ro seaport in Tuy Hoa district, central Phu Yen province.

On completed, it is expected to supply the domestic market with four million tonnes per year of petroleum products, including liquefied petroleum gas, benzene, gasoline, diesel and fuel for reactive power.

So far, Vietnam has three state-backed oil refineries, including the $3 billion Dung Quat refinery in central Quang Ngai province, which is now in operation with an annual refining capacity of 6.5 million tonnes.

The $6.2 billion Nghi Son refinery is under construction in Thanh Hoa province, with a capacity of 10 million tonnes per year. It is expected to be put into operation in 2013.

The $7 billion Long Son plant project with PetroVietnam as a stakeholder is now under the process of selecting partners. If all goes smoothly, this refinery could begin operating in 2020, with a capacity of 10 million tonnes, or about 200,000 barrels per day. – VIR

Tags: Can Tho oil refinery