The Prime Minister has authorized the implementation of a $27 billion oil refinery project.

The feasibility of Vietnam's largest-ever oil refinery project was a key topic of discussion at an online seminar on attracting investment to Binh Dinh, organized by the Government's online portal this morning.

After three years of negotiations, in March of this year, the People's Committee of Binh Dinh province and the Petroleum Authority of Thailand (PTT) signed a memorandum of understanding on the implementation of a $27 billion petrochemical refinery project, expected to be located in the Nhon Hoi Economic Zone. This is the largest foreign direct investment (FDI) project ever in Vietnam, but it has also raised many concerns about its feasibility, the investor's commitment, and the steps to implement the project.

In response to these questions, at the online seminar "Attracting Investment - Experiences from Binh Dinh" held this morning, May 12th, the Vice Chairman of the Binh Dinh Provincial People's Committee, Ho Quoc Dung, affirmed: "The project is very feasible in many aspects."

According to him, PTT is a financially powerful corporation with total assets exceeding $150 billion, ranking among the top 100 largest corporations in the world by assets. The Group's annual revenue, according to its financial reports, is over $80 billion, with profits of nearly $3.5 billion.

In its development strategy, PTT also outlined the construction of an oil refinery in the region to enhance its competitiveness. "Therefore, the investor's capabilities and plans are already in place," this person emphasized.

The government has approved the implementation of a "mega" petrochemical refining project in Binh Dinh province. Photo: Bloomberg

According to Mr. Dung, PTT had surveyed many locations in Vietnam, Malaysia, Myanmar, etc., before choosing the Nhon Hoi Economic Zone in Binh Dinh province to develop the oil refinery. He affirmed that current doubts mainly focus on the financial capacity of the investor, and no one has yet stated that the Nhon Hoi Economic Zone does not meet the conditions for building an oil refinery.

Mr. Dung stated that the Nhon Hoi economic zone already has the necessary infrastructure and conditions to immediately implement projects, with the cheapest land lease rates currently available in the area. Nhon Hoi also has a deep-water, sheltered port, located on an international trade route, providing access to the North, South, the region, and the world.

"Two days ago, the Prime Minister signed the official document authorizing the implementation of the petrochemical refining project in the Nhon Hoi economic zone," Mr. Ho Quoc Dung informed at the seminar.
Regarding the Ministry of Planning and Investment's perspective on the "mega-project for oil refining and petrochemicals in Binh Dinh," Mr. Vu Dai Thang, Head of the Economic Zones Management Board, commented that this is a very "bold" project in the current difficult economic context, and therefore the Ministry has continuously prepared reports to evaluate it.

Regarding the Prime Minister's approval to add the Nhon Hoi oil refinery project to the planning, Mr. Thang highly appreciated this event but said that much work still needs to be done, especially concerning the specific incentive policies requested by the investor and meeting the infrastructure requirements for project implementation.

Mr. Man Ngoc Ly stated that Deputy Prime Minister Hoang Trung Hai had also signed a document instructing the Binh Dinh Provincial People's Committee to guide the Thai Petroleum Corporation in preparing the investment project. The province will submit a feasibility report to the Ministry of Industry and Trade for appraisal, and the Prime Minister will issue a decision on the investment policy. In addition, the project needs to undergo environmental assessment approved by the Ministry of Natural Resources and Environment.

Next, the investor spends 12 months preparing the tender documents, 5 months submitting bids, and approximately 6 months reviewing the tender results. After this step, the project's construction permit procedures are carried out, and the construction period lasts from 2016 to mid-2020, approximately 48 months, at which point the first product of the project will be available.

The project has a capacity of approximately 30 million tons per year. Crude oil feedstock will be imported from the Middle East, Africa, and South Central America, with more than 20 refined petroleum and petrochemical product lines, primarily for export.

The total investment for the plant is approximately $27-28 billion. PTT proposed two options: either 50% or 60% of the total investment would be financed through loans, with the remainder being equity capital. The corporation would contribute $5 billion in both scenarios, with the rest raised from domestic and international partners.

Previously, the Vietnam Oil and Gas Group (PetroVietnam) had issued a document opposing the implementation of the Nhon Hoi refinery project, arguing that it was not included in the planning and would cause an imbalance in supply and demand. Currently, the Dung Quat refinery supplies 30% of domestic gasoline and diesel, and Nghi Son, Vung Ro, Van Phong, etc., will soon come into operation. However, in a recent press conference, Deputy Minister of Industry and Trade Ho Thi Kim Thoa stated that the Ministry's stance is to "support" the project.

Binh Dinh has recently emerged as an attractive destination for investors. In 2012, Binh Dinh's provincial competitiveness index rose from 38th place in 2011 to 4th place.

According to VN Express - TH