Delays persist on Nghi Son refinery plan

January 03, 2013 | 09:58

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A key contract of the $8 billion Nghi Son oil refinery remains delayed despite Prime Minister Nguyen Tan Dung confirming Vietnamese government’s guarantee to push forward the project plans.

State-run PetroVietnam chairman Phung Dinh Thuc last week said that the engineering procurement and construction (EPC) contract of Nghi Son project would be delayed until January 2013.

“This is a very big scale project and negotiations are very hard in the context of the current financial crisis, whereas all partners are very careful on any decision,” Thuc said.

Apart from having the huge investment capital of more than $8 billion, central Thanh Hoa province-based Nghi Son project is the first new refinery in Vietnam with foreign investors’ participation. Dung Quat refinery in central Quang Ngai province, the first of its kind in Vietnam, is currently in operation and is 100 per cent owned by PetroVietnam.

The EPC signing would also represent a milestone as Vietnam’s largest ever EPC contract for the oil and gas sector.

One year earlier, according to PetroVietnam, the total value of the EPC contract to build Nghi Son refinery would reach more than $5 billion.

International contractors involved in this EPC contract are also the ones that have involved in building Dung Quat, including Technip from France and Japan’s JGC.

In October 2012, the overseas press reported that Idemitsu Kosan, the third largest oil refinery company in Japan and also a partner in Nghi Son refinery in Vietnam, had announced it would postpone investing in this project, due to the restructuring of its investment funding process.

PetroVietnam confirmed that the decision to adjust funding plans of the Japanese partner would slow down the project a little bit, but did not affect its overall progress.

Under plans first unveiled in 2008, Nghi Son refinery is a joint venture between PetroVietnam with a 25.1 per cent stake, Kuwait Petroleum International with 35.1 per cent, Japan’s Idemitsu Kosan with 35.1 per cent and Mitsui Chemicals with 4.7 per cent.

The project will have an annual capacity of 10 million tonnes of crude oil, or 200,000 barrels per day, 1.5 times greater than Dung Quat’s current capacity.