Vietnam's Power Plans See New Hydropower and Oil Refineries Lifting Economy By 2010

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Vietnam's drive to build power and energy resources is making headway despite delays caused by funding problems, prospective international partners blowing hot and cold, and state decision making procedures. Recent developments in the hydropower and oil and petrochemical refining fields point to increased industrial production capacity and improved standards of living for the population by 2010.

The country's latest hydroelectric power is now under construction on the Krong Poko River in Kon Tum Province. The $192 million EVN (Electricity of Vietnam) Pleikrong project will have two 100 MW turbines with a 417.9 million kWh capacity. The new plant, which will be commissioned in 2007, and five other situated along the Se San River, will have a total capacity of 1740 MW. By 2010 the plants, costing $1.7 billion, will generate 8.2 billion kWh annually which would give the six plants a capacity close to the Hoa Binh plant on the Da River. The last of the planed plants to be commissioned will be the 330 MW Se San 4 which will be under construction from 2006-2010. The $270 million plant will generate 1.4 billion kWh per annum. (PEC 98700040/44/51/55/57/93)

The Vietnam government said that the new plants would require provinces in the Central Highlands to restructure their agriculture, forestry and industry sectors to generate economic growth.

Vietnam imported 6.724 million tons of petroleum products worth $1.622 billion in the first eight months of 2003 which represents a heavy capital outflow for a country that is boot-trapping its economy into 21st Century shape. Lacking refineries there has been no way for the country to convert its own crude oil production for domestic consumption. In 2002 Vietnam's oilfields produced more than 17 million tons of crude oil all of which was exported.

The good news is that the state owned PVPDC (PetroVietnam Oil Processing and Distribution Co) is now using condensate supplied by its parent company PetroVietnam and BP (LSE:BP) (London, UK) (PEC: 98700027) to produce a total of 340,000 tons of A92 gasoline and 30,000 tons of diesel per annum at its $12 million processing plant at Ba Ria-Vung Tau in the south of the country. The products will be sold on the domestic market.

As the country's first full scale refinery is finally due to move into the construction phase for scheduled operation by 2007, a second refinery plan is waiting official approval to start building in 2004 for operation in 2008.

Construction s on the main refining facility at the Dung Quat refinery, for which initial plans were first approved in 1998 at an estimated cost of $1.3 billion (1998), are advancing with a foreign consortium led by Technip-Coflexip (NYSE:TKP) (Paris, France) and including JGC Corp (Yokohama, Japan) and Technicas Reunidas (Madrid, Spain) at a contract price of $800 million. Earlier this year, Russia's ZarubezNeft withdrew from a joint venture, VietRoss, at the eleventh hour citing economic reasons.

When completed, the refinery will have the capacity to refine 6.5 million tons of crude oil per annum. Under the current technical design, 80% of the main refinery's petrol output will be Mogas 85 and the remainder Mogas 92. Technip has proposed that the total output should be Mogas 92. In the original plan additional petrochemical products would only be produced five years after the refinery's petrol output had been feeding the domestic market.

The second proposed refinery at Nghi Son in Thanh Hoa province, 125 kilometers south of Hanoi, will be able to process seven million tons of crude per annum and supply around 5.2 million tons of petroleum products. Annual output will include 240,000 tons of liquefied petroleum gas, 300,000 tons of polypropylene and 500,00tons of bitumen according to PetroVietnam. Half of the refinery's crude will come from domestic sources with balance coming from imports.

The National Assembly is expected to approve plans by mid 2004, which would make the 2008 operational date achievable. Foreign investment proposals have been received for the refinery and a joint venture is being considered with PetroVietnam holding a 50% plus stake. Individual foreign companies would be allowed staked up to 20% under current official thinking as technical and financial options are being considered. PetroVietnam is completing a feasibility study with Nippon Oil Corp to be considered in early 2004.

The Vietnam government has forecast that the country's demand for petroleum products will double by 2010.