Vinashin to complete FS05 for PetroVietnam in March 2010

Tran Quang Vu, Managing Director of the Vietnam Shipbuilding Industry Group (Vinashin) and Chairman of Nam Trieu Shipbuilding Company, which holds the main responsibility for building the floating storage offloading unit (FSO5) ordered by PetroVietnam, confirms that the FS05 will be handed over no later than March 2010.
Local newspapers previously published a series of stories about the Vinashin’s difficulties. The shipbuilding group has been in up to its ears in debt and has not been able to fulfill shipbuilding contracts as scheduled.

In the case of FS05, Vinashin has delayed the handover to PetroVietnam for 20 months. PetroVietnam, in turn, has complained that it now has to pay for an alternative vehicle until it gets the FS05, costing them $12,000 per day plus other expenses, including lending interest rates.

Tran Quang Vu revealed the company’s position in a recent interview.

Thoi Bao Kinh Te Vietnam: Why has Vinashin been late in handing over the products ordered by PetroVietnam?

Tran Anh Vu: We have reported to the Deputy Prime Minister Hoang Trung Hai, PetroVietnam and relevant ministries about the tardiness.

FS05 is the biggest ever mechanical project carried out in Vietnam. This could be considered an oil extraction plant, not simply a depot.

Meanwhile, we have been facing a lot of difficulties in implementing the project, from designing to selecting material suppliers. Especially, we have confronted financial difficulties due to the economic crisis. The crisis has prompted some ship owners to give up their ships, which has led to the turnover cut.

However, we have been trying our best to continue the project in order to ensure the best quality for FS05 to satisfy PetroVietnam.

TBKTVN: What would you say about the fact that PetroVietnam requires the explanation about Nam Trieu’s spontaneous cut of the FS05 length and the number of holds?

Vu: The FS05 design must be approved by the registration agency. Arguments were raised among ship owners, registration agencies, shipbuilders and designers. We finally reached a consensus about the length of the project and other indexes to ensure the quality of the product.

TBKTVN: PetroVietnam claims the tardiness has caused big losses to the oil and gas group. . .

Vu: I think so, however, let’s think this way. PetroVietnam may incur some disadvantages, but such big projects like FS05 will help Vietnam’s mechanical industry develop rapidly. Developing the industry should be seen as the top priority.

TBKTVN: How do you explain the adjustment of the contract’s value (the value of the contract has been raised to $169 million from $110 million)?

Vu: It is because the prices of all kinds of materials have increased sharply. At the time of the bid, it cost at least $220 million to build a product like FS05. We joined the bid to build the FS05 at $196 million, much lower than that required by foreign contractors.

I mean, even though the cost has been raised to $169 million, it is still lower than the actual value of the product.

VietNamNet/TBKTVN

Tags: Vietnam industry, Vinashin