Ministry suggests adding $22bn Thai oil complex to Vietnam’s oil sector planning

The Nhon Hoi oil complex, to be located in the eponymous industrial park in Binh Dinh Province, should be part of the oil and gas projects zoned for development between 2015 and 2025, the ministry said in a document submitted last week to the Prime Minister.

Thai energy firm PTT Pcl is the developer of the complex, consisting of an oil refinery, an olefin manufacturing plant, and an ethylene steam cracking component.

The proposed megaproject is worth US$22 billion and will have a total capacity of up to 20 million tons of products per year during its first phase, the industry and trade ministry said in its document.

The planned 20 million ton per year capacity of the Nhon Hoi complex is three times that of Dung Quat, the Southeast Asian country’s sole operating refinery.

PTT will only hold a stake of 40 to 45 percent in the project, while Saudi Arabian national petroleum and natural gas company Saudi Aramco will also own a similar share in the complex, according to the ministry.

The remaining 15 to 20 percent stake must be held by a Vietnamese entity, which the Binh Dinh administration suggested in mid-October to be Petrolimex, Vietnam’s largest fuel wholesaler.

Little preferential treatment

The Ministry of Industry and Trade said Vietnam should encourage and support a foreign investor if it wants to build an oil refinery that satisfies legal requirements, while the interests for both parties are ensured, according to Hai Quan (Customs) newswire.

The ministry rejected claims that the Nhon Hoi oil complex would affect the operations of other government-backed refineries in Vietnam, the newswire said in a Friday article.

Dung Quat refinery, located in the Dung Quat Economic Zone in the central province of Quang Ngai, is the only operating refinery in Vietnam, while the second such facility, the Nghi Son Refinery, is slated to be commissioned in 2017 in the north-central province of Thanh Hoa.

The industry ministry said the proposed Nhon Hoi plant, as well as other projects besides Dung Quat and Nghi Son, would not receive as much preferential treatment as their predecessors.

The presence of Nhon Hoi will act as motivation for Dung Quat and Nghi Son to increase their competitiveness and reduce production costs, it added.

The ministry said not all of the requests for incentives to develop the project by PTT will be accepted.

PTT has asked to enjoy zero taxes on crude oil imports and transfer of profits abroad, and be allowed to distribute the complex’s products domestically, to which the ministry agrees.

But the request to have its corporate income tax exempted for the first 13 years of the project has been turned down, according to the ministry.

“This is against all current laws and regulations,” the ministry said, adding it agrees with the proposal by the Binh Dinh administration to levy a 10 percent corporate income tax on the complex for 17 out of 30 years from its opening.

“The project will enjoy zero tax for the first four years, 5 percent in the next nine years, and 10 percent in the remaining 17 years,” the ministry said.

PTT has said in the project’s feasibility report that if everything proceeds as planned, the oil complex could break ground in 2016 and begin production in 2021.