Vietnam's Third Oil Refinery to be Built in $10 Billion Long Son Complex

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Long Son project in southern Ba Ria-Vung Tau Province in Vietnam, about 100 kilometers east of Ho Chi Minh City, will contain a $3.78 billion petrochemical complex as well as Vietnam's third oil refinery, with an estimated value of at least $6 billion. State-owned oil monopoly Vietnam Oil and Gas Group (PetroVietnam) (Hanoi, Vietnam) is seeking investors in the project and is expected to make an announcement in September.

PetroVietnam has many overseas investors interested in the project, as the location is close to the high-consumption area of the Mekong Delta and industrial parks around Ho Chi Minh City. Companies known to be interested include International Petroleum Investment Company (IPIC) (Abu Dhabi, United Arab Emirates); Petronas International Corporation Limited (PICL), a subsidiary of the Malaysia's state-owned Petroliam Nasional Berhad (Petronas) (Kuala Lumpur, Malaysia); the commodity trading company Trafigura Private Limited (Singapore); and GS Group (Seoul, South Korea).

Construction of the Long Son refinery began in September last year. The facility is expected to have a production capacity of about 3 million tons per year of petroleum products when it becomes fully operational in late 2013. Output from this refinery is expected to include liquefied petroleum gas (LPG), jet fuel, diesel, unleaded petrol, and kerosene.

The Long Son refinery will be the third to be constructed in Vietnam, and emphasizes the importance the country places on developing its refining structure. Vietnam previously has relied on imports of refined oil products for its domestic requirements and exported the production from its southern offshore oil fields.

Last month, Vietnam successfully produced the country's first batch of commercial-grade petrol from the $3.1 billion refinery at Dung Quat in the central province of Quang Ngai. Construction of the country's second refinery and petrochemical complex, a $6.1 billion project, began in May 2008 at Nghi Son in central Than Hoa province. This refinery will have a processing capacity of 10 million tons per year of crude oil, sourced from Kuwait, when it becomes operational in 2013.

The petrochemical complex at Long Son will be operated by a consortium consisting of Siam Cement PCL (BAK:SCC) (Bangkok, Thailand), which will own 71% of the complex, while the remainder will be owned by PetroVietnam and Vietnam National Chemical Corporation (Vinachem) (Hanoi, Vietnam).

Construction of the petrochemical complex will be near the refinery and in six phases, with completion of the first phase scheduled for 2011 and the overall final completion date expected in 2013. It is expected that the complex will provide the basis for the development of a petrochemical and plastics industry in Vietnam. It will provide 15,000 jobs during the construction phase, and about 5,000 skilled workers will be needed to run the complex when it is fully operational. Output from the petrochemical complex will be aimed at assisting the development of the domestic automobile, electronic and appliances industries.

The Siam Cement Group has been well-established in Vietnam since 1990 and already operates in Vietnam's paper, ready-mixed concrete, and building materials businesses. In June, the group indicated that it was interested in acquiring more paper firms in the country.

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