Binh Dinh Province's Nhon Hoi Economic Zone, where a US$22-billion refinery is planned. Photo credit: Bao Dau Tu
A US$22-billion oil refinery project in the central province of Binh Dinh now faces an uncertain future, as foreign investors are no longer sure about its profitability prospects due to low global oil prices, local media reported on Wednesday.
Nguyen Ngoc Toan, deputy chief of the province's Nhon Hoi Economic Zone, told news website Bao Dau Tu that Thailand's PTT Plc and Saudi Arabia's Aramco promised to inform local authority of their decision this June.
Speaking to local media in July, PTT representative Jittayapa Wongsaroj said dropping oil prices forced it to reassess the project. The process was originally expected to complete by the end of 2015.
Even before oil prices took a nosedive about one year ago and have since fallen to less than $37 per barrel at the moment, the mega project had seen several hiccups much to the chagrin of Binh Dinh's officials, who believed it could serve as a major boost for the local economy.
First announced in 2013, the project faced strong opposition from Vietnam's national oil and gas group PetroVietnam, which insisted that the refinery with a designed capacity of 400,000 barrels per day would create an oversupply in Vietnam.
After months of debate, it finally secured the government's support.
However, in June 2014, the Thai energy firm delayed its feasibility study, citing political crisis in its country. The delay came about two months after the project's estimated cost was revised, from $28.7 billion, with a reduced output.
The investors did not apply for an investment license in the second quarter of 2015 as expected, claiming that they had to find a local partner, Bao Dau Tu reported.
Meetings between the investors, local officials, and representatives of state-run oil product importer and distributor Petrolimex were reportedly planned, but never happened, it said.
Last month PTT also announced that it will delay another $3-billion refinery project in Vietnam, along with another two similar projects in Indonesia and Myanmar, according to Thai media.