PetroVietnam objects to licensing Thai refinery in central Vietnam

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Nhon Hoi Economic Zone in the central province of Binh Dinh, where a US$27-billion Thai oil refinery is planned to be built
 PHOTO COURTESY OF TUOI TRE

State-owned oil company PetroVietnam, which owns the country's sole oil refinery and is building others, does not want a Thai company to get a license to build one, saying it would upset the demand-supply balance, Tuoi Tre (Youth) newspaper reported.

It has written to the Ministry of Industry and Trade after the ministry recommended that the government should license PTT Pcl.

PetroVietnam wants the ministry to withdraw support for PTT's refinery in the central province of Binh Dinh to avoid a "supply-demand imbalance."

It said a government road map for the oil and gas industry for the period through 2025 does not mention PTT's plant, which, if approved, will become Vietnam's largest refinery.

The plan estimates annual demand for petroleum products to reach 27 million tons by 2025.

The Thai plant, planned to be built in the Nhon Hoi Economic Zone at a cost of nearly US$27 billion, will have a capacity of 30 million tons per year when it opens in 2019.

Though PTT plans to export part of its output, there would be still be a supply overhang, PetroVietnam said.

Its own refinery in Dung Quat in the central province of Quang Ngai has a capacity of  6.5 million tons per year, while it will start building one in the northern Thanh Hoa Province next month with a capacity of 10 million tons.

The company also expects to have one more plant also with a capacity of 10 million tons by 2025.

It also warned about other factors for the PTT refinery like incentives and tax breaks, infrastructure, foreign exchange outgo, stable supply of crude for processing, financial capacity, and others.

On April 9 the Ministry of Industry and Trade had written to the government, recommending that the plant be licensed.

It quoted the Thai investor as saying that most of the plant's output would be exported, so would not need incentives like the other plants.

But it also expressed concern over the project's feasibility, saying it is difficult to build such a large plant within three and a half years, given current infrastructure conditions.

Raising a few other queries, it said the government should approve the project only on condition the investor clarifies several issues including sales of its output.

Ho Quoc Dung, vice chairman of the Binh Dinh People's Committee, the local government, has insisted that the project has "very high" feasibility thanks to "perfect" infrastructure and the investor's "determination."

Local authorities have "big expectations" from the project and its influence on the Binh Dinh economy, he said.

He said PTT is a Thai public company with assets of over $50 billion, adding that the HSBC has also pledged to support the project.

If approved, it will be one of the world's six largest oil refineries, he said.

"The project will not only improve Binh Dinh's economy but also contribute to the development of the country," he said.

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