Thailand's PTT Considers Building Massive Oil Refinery in Vietnam

 

PTT PLC (PTT.TH) is considering building a refinery with a capacity of 660,000 barrels a day--which would make it one of the largest in the world--in the Nhon Hoi Economic Zone in coastal Binh Dinh province at an estimated cost of $28.7 billion, according to a provincial government statement and a Vietnamese provincial official.

Such an investment would provide a much-needed boost for Vietnam, which global investors have increasingly shunned in recent years. The country is expected to record its slowest economic growth in 13 years in 2012.

The move also comes amid a refining boom in the Asian-Pacific region, where surging demand for oil products is expected to be the main driver of growth in global oil consumption in coming years.

Sukrit Surabotsopon, PTT's senior executive vice president for petrochemical and refining, presented a pre-feasibility study to provincial authorities Thursday, the Vietnamese statement said.

Construction would likely begin in 2016 and the refinery would become operational in 2019, Le Huu Loc, chairman of Binh Dinh province's People's Committee, told Dow Jones Newswires on Friday.

PTT has demonstrated that it is "very willing" to undertake the project, "so we are confident that it will be able" to carry it out, Mr. Loc said.

Nattachat Charuchinda, chief operating officer of PTT's downstream petroleum business group, confirmed Friday that PTT had presented a pre-feasibility study to Vietnamese provincial officials. He declined to confirm the estimated cost of the project, but indicated that the proposed capacity stated by the Vietnamese provincial government was accurate. Crude oil would be sourced from the Middle East, he said.

Mr. Nattachat said the project would also include an aromatics plant, with the output likely to be shipped to nearby China. "The potential in Vietnam is huge," he said, noting that the country currently only has one oil refinery.

Mr. Loc said PTT has approached a number of Vietnamese companies about partnership roles in its planned refinery. They include state-run Vietnam Oil and Gas Group, or PetroVietnam, Vietnam National Petroleum Corp., or Petrolimex, and Military Petroleum Corp., he said.

Officials from these companies were not immediately available to comment.

Vietnam's sole refinery, the 130,000-barrel-a-day Dung Quat refinery, started production in 2009. It meets only around one third of the country's demand for oil products.

However, PetroVietnam Chairman Phung Dinh Thuc said this month that PetroVietnam and its partners had reached an agreement to proceed with the country's long-delayed second refinery, the 200,000 barrel-a-day Nghi Son refinery, and would sign an engineering, procurement and construction contract in December.

PetroVietnam's partners in Nghi Son are Idemitsu Kosan Co. (5019.TO) and Kuwait Petroleum International, each with a 35.1% stake. PetroVietnam and Mitsui Chemicals Inc. (4183.TO) hold 25.1% and 4.7%, respectively.

The Nghi Son refinery is to be built 180 kilometers south of Hanoi. Mr. Thuc said it is scheduled to start production in 2016.

In addition, Thailand's Siam Cement PCL (SCC.TH) and partners plan to build a $4.5 billion petrochemical complex in Ba Ria-Vung Tau province in southern Vietnam.

Siam Cement and its unit, Thai Plastics and Chemical PCL (TPC.TH), will take a combined 48% stake in the project. Qatar International Petroleum Marketing Co., or Tasweeq, Vietnam National Chemical Corp. and PetroVietnam also own stakes. However, the group is still seeking financing for the project, which has been delayed since 2009.

A Vinachem official said in July that the company will likely sell its stake to its Thai partners.

--Oranan Paweewun in Bangkok contributed to this article.

Write to Vu Trong Khanh at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and Oranan Paweewun at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Copyright © 2012 Dow Jones Newswires



 



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