PM okays tentative plan for third oil refinery of 7 mil. tons/year or more
VNGOVNet – Following the proposal of PetroVietnam and recommendations of the Ministry of Planning and Investment, the PM on January 31 approved the tentative project to build the third oil refinery with the minimum capacity of 7 million tons per year. The refinery is expected to be finished and put into operation prior to 2015.
According to the tentative project, the third oil refinery will be located in Long Sơn, Bà Rịa-Vũng Tàu Province. However, the investor can choose either Dốc Hầm (Ninh Thuận Province) or Vũng Rô (Phú Yên Province) as alternative locations.
The project can be carried out in the form of a joint-venture between foreign and domestic investors or wholly foreign investment or fully Vietnamese investment.
The refinery will outsource most of its crude oil supply as raw material from abroad using only small amounts of crude extracted at home. The investor is permitted to propose categories and structure of petrochemical products on the basis of prioritizing domestic consumption and the project’s commercial viability. The products are due to meet standards equivalent to EURO 4.
The refinery is to strictly meet all Vietnamese regulations on safety and environment, having adequate auxiliary and outside-the-fence facilities to support its regular, safe and sustainable operation.
The investor will calculate the total investment estimate and propose solutions to raise investment capital for the project as well as the proportions of capital contributed by different parties concerned in a way of ensuring the project's feasibility and the proper proportions of capital by parties (in case of a joint-venture); make a rough estimate of profits on crude oil price (CIF price at the refinery port) and sell price (in the domestic market: equivalent to the import price into Vietnam; in export markets: equivalent to FOB price in Singapore), considering Vietnam’s legal regulations on investment and the project’s competitiveness and capacity.
The project's economic calculation should be based on international criteria, including internal rate of return (IRR), net present value (NPV) and payback time.
The PM allowed the investor to prepare and propose plans on pre-investment, investment, production and distribution in line with Vietnamese law.
PetroVietnam was assigned to work with the People’s Committees of Bà Rịa-Vũng Tàu, Ninh Thuận, and Phú Yên and the relevant agencies to take the follow-up steps after this approval, striving to put the refinery into operation on the proposed schedule and in conformity with law.
By Xuân Hồng
(Source: Document 177/TTg-DK)
