Siam Cement Backing $3.77 Billion Petrochemical Complex in Vietnam

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Researched by Industrial Info Resources (Sugar Land, Texas)--After going through a period of stops and starts over the past decade, Vietnam appears to be moving forward with petroleum refining and petrochemical projects. A factor that could still inhibit the progress of some of the projects is the country's soaring inflation rate, which could cause a steep escalation in project capital costs and unsettle the various investment consortiums backing projects.

Vietnam's central government has granted a license to Long Son Petrochemical Company Limited to proceed with the construction of a $3.77 billion petrochemical complex in the southern province of Ba Ria-Vung Tau. Construction completion is expected in the second quarter of 2013. The complex will have an annual production capacity of 1.65 million tons of olefins, 1.45 million tons of polyolefins, 280,000 tons of soda and 730,000 tons of vinyl chloride monomer, a feed for polyvinyl chloride.

Construction will entail six phases. After its completion, the petrochemical complex will form the base project in the development of the country's midstream and downstream petrochemicals and plastics production industries, including firms in the automotive, consumer-goods packaging and aluminum sectors.

Siam Cement PCL (BAK:SCC) (Bangkok, Thailand) will have a 71% stake in the project with its subsidiaries Vina SCG Chemicals and Thai Plastic and Chemicals. PetroVietnam and Vietnam National Chemical Corp will hold the remaining 29%. Siam Cement has been investing in Vietnam since 1990 and already has petrochemical operations in the country, as well as companies covering ready-mix concrete, building materials and distribution networks. Siam Cement is considering the acquisition of local companies in the paper industry.

The Long Son project site could also get a 240,000-barrel-per-day (BBL/d) oil refinery, but a closing stage has not yet been reached with Venezuela's PDVSA. The $7 billion refinery project is in the sights of a number of international companies as it is situated in a favorable position to service the high-consumption area of the Mekong Delta and industrial parks around the capital of Ho Chi Minh City.

The government is pushing refinery projects with the aim of becoming self-sufficient in oil products. PetroVietnam is due to complete the 140,000-BBL/d Dung Quat refinery in 2009. The 200,000-BBL/d Nghi Son refinery in Thanh Hoa province is due for completion in 2013. A consortium made up of PetroVietnam, Kuwait Petroleum International and Japan's Idemitsu Kosan Company Limited (TYO:5019) (Chiyoda, Tokyo) is building the $6 billion project.

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