Gov’t to underwrite huge loans for Nghi Son oil refinery

Leaders of the Ministry of Industry and Trade and Vietnam Oil and Gas Group (PVN) on Tuesday signed a pledge on the Government guarantee worth VND4 trillion for developing the basic components of the Nghi Son Oil Refinery project.

Nghi Son Oil Refinery with a total investment cost of some $9 billion will be built on a 400-hectare area in Nghi Son Economic Zone in Thanh Hoa. The project is scheduled to get off the ground in May this year and start operation in 2017, meeting 40pct of the domestic fuel demand.

Nguyen Trong Phong, deputy head of the management board of Nghi Son Oil Refinery and Petrochemicals Complex, said the VND4-trillion guarantee would help the investor cover capital construction, site clearance, port dredging and marine works.

The components of the oil refinery cost a combined $5.4 billion, plus the costs of site clearance and other works, taking the total investment of the project to over $9 billion.

Involved parties contributing capital to set up Nghi Son Oil Refinery and Petrochemicals Company to operate the future oil refinery are PVN (with a 21.1pct stake), Kuwait’s Petroleum Group (35.1pct), Japan’s Idemitsu Kosan Petroleum Group (35.1pct) and Mitsui Chemicals (4.7pct).

The Petroleum Group of Kuwait will supply ten million tons of crude oil per year for the facility during the first phase and 20 million tons a year when it is expanded in the future.

Nghi Son Oil Refinery and Petrochemicals Company will sign an engineering, procurement and construction (EPC) contract with a consortium of contractors late this month. The consortium consists of Japan’s JGC Corporation and Chiyoda, France’s Technip, South Korea’s GS Engineering & Construction and SK Engineering & Construction and Malaysia’s Geoproduction Sdn Bhd.

The main products of the oil refinery will be liquefied petroleum gas (LPG) and gasoline products A92, A95 and A98, jet fuel and diesel oil. It will be the second largest oil refinery facility in Vietnam in terms of the scale after the Dung Quat Oil Refinery.

PVN on Tuesday also signed a contract for sales guarantees with Nghi Son Oil Refinery and Petrochemicals Company, said Phong.

At a press briefing on PVN’s business performances in 2012 and targets for 2013 held in late last year, Le Minh Hong, deputy general director of PVN, said the group would arrange funds to carry out key projects such as Nghi Son Oil Refinery and Petrochemicals Complex and Long Son Petrochemicals Complex in 2013.

Source SGT