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VN becomes attractive oil refinery option

Update: September, 27/2014 - 09:05
The Dung Quat refinery in Quang Ngai Province. Viet Nam's political stability and security, strategic location for transporting goods to and fromAsia-Pacific countries, numerous deep-sea ports, and investment incentives are factors attracting investments to the country's oil refinery industry, experts say. — VNA/VNS Photo Huy Hung
HA NOI (VNS)— Viet Nam remains an attractive destination for oil refineries, with numerous business benefits and investment incentives advantages, experts said.

Tien phong (the Vanguard) online news reported that Viet Nam's intial oil and gas development strategy by 2020 involved the setting up of three oil refineries: the proposed US$3-billion Dung Quat refinery in Quang Ngai Province, with an annual capacity of 6.5 million tonnes of crude oil; and the proposed $9-billion Nghi Son refinery in Thanh Hoa Province and the proposed $4.5-billion Long Son refinery in Ba Ria-Vung Tau Province, each with an annual capacity of 10 million tonnes.

The State later added to the plan two oil refineries: the $3.18-billion Vung Ro refinery in Phu Yen Province with an annual capacity of eight million tonnes, and the $2-billion Nam Van Phong refinery in Khanh Hoa Province, with an annual capacity of 10 million tonnes.

Now, Binh Dinh Province has proposed the addition of the $22-billion Nhon Hoi refinery, with an annual capacity of 20 million tonnes, to the plan.

Tran Viet Ngai, chairman of the Viet Nam Energy Association, said the Dung Quat refinery was expected to meet 30 per cent of domestic petrol and oil demand, so Viet Nam needed only one more refinery with an annual capacity of 15 to 20 million tonnes to supply enough petrol and oil to the domestic market.

Ngai attributed the increase in oil refinery investments to the country's political stability and security, strategic location for transporting goods to and from Asia-Pacific countries, numerous deep-sea ports, and investment incentives.

He noted that deep-sea ports were quite important in transporting oil products mainly by sea. He added that for oil refinery projects, Viet Nam was granting large tracts of land, site clearance, and preferential incentives for land use fees and taxes on corporate income, imported crude oil and exports.

The refineries usually export their products, including petrol, oil and oil chemical products, said Ngai, adding that investors of refineries would gain profits mainly from chemical by-products such as polymer, asphalt and fibre, and only partly from petrol and oil products.

For instance, Formosa's oil refinery in Taiwan, with an annual capacity of 20 million tonnes of crude oil, has been exporting its polymer all over the world, Ngai noted.

Economic expert Le Dang Doanh said Viet Nam would soon be signing numerous free trade agreements that were advantageous to refineries, such as the TPP, ASEAN+6, ASEAN Economic Community, Viet Nam-EU and Viet Nam-Customs Union agreements.

Refineries in Viet Nam will be able to export their products to other countries and territories at reduced or zero tariffs after the signing of these agreements, Doanh noted, and added that a large and cheap work force was also an advantage for the refineries.

Ngai said the refineries would provide jobs to local residents, especially skilled workers, as well as provide high-technology resources and a bigger budget for the nation.

Refineries will also create competition in the domestic market for products such as petrol, oil, asphalt, polymer and fibre, and reduce the import volume and selling price of these products.

However, Doanh said, the refineries were using old and pollutive technologies that could harm the environment, and these should be regulated. — VNS


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