Dung Quat oil refinery expansion priced at over $1.2 billion

Vietnam’s government has decided to expand the Dung Quat oil refinery's capacity to 171,000 barrels a day by 2028 from the current 148,000 barrels, with an investment of more than $1.2 billion.

Deputy Prime Minister Tran Hong Ha signed the investment decision on Friday for Dung Quat. The plant, located in the central province of Quang Ngai, is operated by Binh Son Refining and Petrochemical, which is 92% owned by state-run Petrovietnam.

Of the new investment, existing equity will account for $503 million, while the rest will be sourced from external loans. The total is lower than the estimate made in 2014 for the same project, which was over $1.8 billion.

Under the 2014 expansion plan, the upgrade would have been completed in 2022, with the increased capacity reaching 192,000 barrels a day, slightly higher than the 171,000 agreed on Friday.

The new project will include five auxiliary and peripheral workshops with newly patented technology: a workshop for treating gasoline with hydrogen; another for treating diesel with hydrogen; an alkylation workshop; a hydrogen production workshop; and a sulfur recovery workshop.

The expansion will also include a water treatment workshop and an amine regeneration unit. In addition, the project will upgrade technologies already in use.

At present, Dung Quat is responsible for 35% of petrol products in the Vietnamese market, home to a population of 100 million people. It has received more than $3 billion in investment from Petrovietnam.

Vietnam has two operational oil refineries - Dung Quat and the Nghi Son Refinery and Petrochemical complex in Thanh Hoa province, also in the central region. The $9 billion Nghi Son refinery, with a capacity of 200,000 barrels per day, is 35.1% owned by Japan's Idemitsu Kosan, 35.1% by Kuwait Petroleum, 25.1% by Petrovietnam, and 4.7% by Japan’s Mitsui Chemicals.

The country’s third refinery, the Long Son Petrochemicals Complex in the southern province of Ba Ria-Vung Tau, is set to enter commercial operations in mid-2023. Thai giant conglomerate SCG is the main investor in the 464-hectare complex, which has $5.4 billion in total investment.

Petrovietnam in August 2022 asked the government to consider investment for a $19 billion oil refinery and national crude oil-petroleum reserve in Long Son Petroleum Industrial Park, also in Ba Ria-Vung Tau, to ensure the country’s oil and gas security.