PetroVietnam to boost Long Son Refinery project
The national oil company (NOC) Vietnam Oil and Gas Group (PetroVietnam) has bought stake from its sister State-owned company Vietnam National Chemical Group (Vinachem) in order to boost the development of the Long Son Refinery project in the Vung Tau Province of southern Vietnam in partnership with the Siam Cement Group (SCG) from Thailand and the other NOC Qatar Petroleum (QP).
This Long Son Refinery project is part a series of world-scale refineries that Vietnam intent to build on the next decade not only to meet its fast growing domestic consumption but also to export refined products to East Asia countries.
With only the Dung Quat refinery in operation in Vietnam, this country is benchmarking Singapore to become a regional hub for refineries and integrated petrochemical complex in a part of the world sustaining the best growth in the world.
Since 2009, Dung Quat is producing 140,000 barrels per day (b/d) on the top of which the Nghi Son refinery project currently in execution should add 200,000 b/d by 2017.
In 2020, these two refineries should cover 65% of the domestic market for which a third refinery should close the gap with an additional 160,000 b/d capacity.
In this context the Long Son Refinery project comes of the top of the local needs, which means that this refinery or a part of the other should run only for exporting refined products.
PetroVietnam to replace Vinachem in Long Son project
With PetroVietnam replacing Vinachem in the Long Son project, the working interests between the partners end up as following:
– Siam Cement Group (SCG) 46%, through its subsidiary SCG Chemical, is the operator
– Qatar Petroleum 25%
– PetroVietnam 29%
Designed to treat 200,000 b/d, the Long Son Refinery should require $8 billion capital expenditure.
This cost is justified as the choice for these refineries to be designed to accept heavy crude oils from South America, Middle-East or even North America in the case the export ban should be lifted in the meantime.
Since Vietnam is willing to host far more refineries than it needs, the financing and consequently the progress of these projects are depending on private funding and the capability of the investors to secure the crude oil supply at the scale of these projects.
With the uncertainty pending on the future oil prices, these refineries projects need to integrated a petrochemical complex in order to reduce exposure to the barrel prices fluctuations.
Therefore even if a refinery project is supposed to be rather simple and straight forward, in the actual context, it requires to meet several conditions, even in Asia.
Regarding the Long Son Refinery project, Siam Cement (SCG), Qatar Petroleum and PetroVietnam are expecting now to move forward in order to run into commercial operations by 2020.
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