Petrovietnam’s proposed $19 bln petrochemical complex a necessity: ministry

State-run Petrovietnam’s proposal on investing around $19 billion to develop an oil refinery and national petroleum reserve in the south is "reasonable", says the Ministry of Industry and Trade.

The oil and gas giant made the proposal to the government this August, saying it is necessary to build such a key complex, in the Long Son Petroleum Industrial Park, Ba Ria-Vung Tau province, to ensure Vietnam’s oil and gas security.

The ministry argues that imports will be on the rise as demand will increase in the time to come. Therefore, the petrochemical complex proposed by Petrovietnam is in need. The ministry has underlined national oil and gas security amid supply uncertainties worldwide, and suggested the government continue to direct Petrovietnam in further steps.

Similarly, the Ministry of Planning and Investment is of the view that the proposed complex is in line with Vietnam’s power development strategy and the oil and gas industry’s development strategy.

For its part, the Ministry of Natural Resources and Environment says Petrovietnam needs to take Vietnam’s green economy development policies into consideration, and assure the project’s sustainability with minimum effects on the environment.

Vietnam’s Commission for the Management of State Capital at Enterprises (CMSC) has asked the Ministry of Industry and Trade to make clear the mammoth project’s necessity and required Petrovietnam to work out proper investment steps, as well as to make sure the project’s scale fits the country's entire power transition process.

According to CMSC, the estimated cost of $19 billion is huge, thus there should be two investment stages, probably $12.5-13.5 billion for the first and the rest for the second. Petrovietnam needs to make reports on its capital mobilization capacity, it added.

The fast-developing country has two operational oil refineries - Nghi Son Refinery and Petrochemical complex in Thanh Hoa province, and Dung Quat Refinery in Quang Ngai province, both in the central region.

Nghi Son is a $9 billion refinery co-owned by Petrovietnam, Kuwait Petroleum Europe B.V. (KPE), and Japan’s Mitsui Chemical and Idemitsu Kosan Co. Dung Quat Refinery is a Petrovietnam subsidiary and has received more than $3 billion in investments.

The two refineries can provide about 14 million tons of petroleum products annually, meeting about 70% of Vietnam’s present demand, according to the ministry. As for PP and PE plastics, domestic supply totals 2.55 million tons, about half of the country’s demand.