Authorities in Binh Dinh Province in central Vietnam have canceled a US$22 billion oil refinery citing environmental concerns and the fact they could not agree to many demands by the foreign investors.
The province leaders Sunday aborted the project proposed by Thailand’s largest energy company PTT and Saudi Aramco, the world’s biggest oil producer, on a 1,400-hectare site at the Nhon Hoi Economic Zone.
A source told Saigon Times newspaper that the leaders felt the project did not have much of a future but has taken so much time, and the province could have earmarked the area for a more feasible project.
However, details of the disagreements between the government and the investors are not known.
The leaders expressed concern about the environmental impacts of the project, particularly on the province capital town Quy Nhon.
Thus, there is a high possibility that Binh Dinh would not license an oil refinery in the area, the source said.
First announced in 2013, the project has faced many hurdles from both sides.
State giant PetroVietnam strongly objected to the refinery right from the outset, saying its designed capacity of 400,000 barrels per day would create an oversupply in the country.
After months of debate the project finally secured the government’s support.
However, in June 2014 the Thai energy firm delayed its feasibility study, citing a political crisis back home, two months after revising its cost from the original $28.7 billion.
The investors did not apply for a license in the second quarter of 2015 as expected, claiming they had to find a partner.
With Aramco entering the picture, the foreign investors each planned to own 40 percent of the project, with the Vietnamese government holding the remaining 20 percent.
Last month PTT once again put off plans to build the refinery, citing uncertainty in global oil markets and political changes following elections in Vietnam.