Foreign investors show interest in oil refinery projects

However, foreign investors have shown interest in the projects.

Petrolimex, which controls 60 percent of the petroleum distribution market, has unexpectedly proposed to the government to allow it to withdraw from the Nam Van Phong petrochemistry and refinery project to gather strength to implement other projects.

The 10 million ton per annum Nam Van Phong, capitalized at $4.4-4.8 billion, got the government’s approval in 2008. The investor initially planned to start construction in 2011 and put the refinery into operation in 2013. However, the plan was delayed several times.

In 2014, Nam Van Phong called for investment again six years after the government’s approval. The project implementation was resumed at a time when Vietnam had other oil refineries, including Dung Quat in Quang Ngai province, Nghi Son in Thanh Hoa, Vung Ro in Phu Yen and Long Son in Ba Ria-Vung Tau.

In the same year, Petrolimex signed an MOU on strategic cooperation with JX Nippon Oil & Energy, paving the way for the Japanese corporation to join Nam Van Phong project. 

However, even though the Japanese investor holds 8 percent of Petrolimex’s shares, Nam Van Phong remains.

At a meeting with investors on the threshold of its IPO in March 2017, the then Petrolimex’s chair Bui Ngoc Bao said the time of investment depended on the government’s policy. He also affirmed that Nam Van Phong would not need special investment incentives, but it only equal treatment like similar oil refinery projects in Vietnamese territory.

The $3.7 billion Long Son petrochemistry complex project is facing the same problem. 

Licensed in 2008, the project had difficulties seeking investors. At first, this was registered by a joint venture between PetroVietnam, Vinachem and Thai SCG. However, the Vietnamese partners both withdrew from the project.

In 2012, Vinachem withdrew from the project because of financial difficulties, transferring its stake to Qatar Petroleum International (QPI). 

In early April 2017, QPI transferred its stake in Long Son to SCG. With the deal, SCG’s capital contribution to the project increased from 46 percent to 71 percent.

In January 2018, PetroVietnam also quit the project

Limited financial capability and difficulties in capital arrangement are common problems of huge oil refinery projects.

All PetroVietnam’s shares in Long Son have been sold to SCG which now holds 100 percent of capital. In February 2018, SCG started construction and planned to put the refinery into commercial operation by 2022.

Meanwhile, Nam Van Phong’s fate is still unclear.

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Luong Bang