VietNamNet Bridge – Many oil refinery projects have been put forth recently, arousing concerns over a glut in supply as well as potential hazards to the environment caused by production on outdated technology.

Dung Quat refinery .

The Nhon Hoi refinery project in Binh Dinh Province’s Nhon Hoi Economic Zone, for instance, is not listed in Vietnam’s oil and gas development master plan, but the provincial government has thrown its weight behind the project.

Earlier, Vietnam National Oil and Gas Group (PVN) proposed the Ministry of Industry and Trade not approve the project for fear of an oversupply though Thai investor PTT said part of output would be exported.

Shortly after PTT presented the US$22-billion project in Binh Dinh Province to the Ministry of Industry and Trade, work started on the Vung Ro refinery project in Phu Yen Province nearby. Meanwhile, Canada-based Malaric has also shown its keen interest in the Nam Van Phong refinery project in Khanh Hoa Province.

At the Vung Ro project in Phu Yen Province, the foreign investor agreed with the provincial government almost ten years ago to implement the project. However, the project had not made a move until two weeks ago due to site clearance problems.

The Vung Ro project worth around US$3.18 billion is expected to produce the first products in 2017, pay over US$110 million to the State budget each year and create jobs for 1,300 locals.

It should be noted that apart from above-mentioned projects, several oil refineries have been approved in Vietnam, including the now-operational Dung Quat Oil Refinery.

Talking about the Nhon Hoi refinery and petrochemical complex, Man Ngoc Ly, head of the Nhon Hoi Economic Zone Authority, said the project had an initially estimated processing capacity of 440,000 barrels per day, equivalent to 20 million tons of crude oil, or almost four times higher than Dung Quat refinery’s current capacity.

Binh Dinh has cleared around 2,000 hectares of land for the project, which is the province’s top priority. The province will also build a deepwater port to facilitate water pumping from the port to processing facilities.

In addition to Phu Yen and Binh Dinh, other provinces are planning their own refineries worth tens of billions of dollars in total.

Vietnam currently has two operational refinery plants, namely Dung Quat in Quang Ngai Province and a smaller one at Cat Lai in HCMC. Dung Quat refinery has met around 30% of domestic demand with a capacity of six million tons per year and its capacity will be increased to ten million tons by 2015.

Work has also started on Nghi Son refinery at the economic zone of the same name in Thanh Hoa Province last October. With an estimated investment of some US$9 billion, the project’s annual capacity is ten million tons of crude oil in the first phase and will be doubled in the second phase.

Scheduled for operation in quarter one of 2017, Nghi Son refinery will, together with Dung Quat refinery, meet two-thirds of domestic petrochemical demand. The Kuwaiti government has pledged to provide crude oil throughout the project’s lifespan.

As such, if current oil refinery projects are all approved, the total output would far exceed demand, causing a heavy glut forcing investors to find overseas markets.

Experts said refinery projects should be carefully considered to avoid what has happened to hydropower projects which have adversely affected the environment due to massive deforestation.

According to observers, domestic oil reserves are not large and crude oil would have to be imported, which may not bring in huge benefits for the economy. On the other hand, without modern technology, such projects will negatively impact on the environment.

SGT/VNN