Vietnam yesterday inked a deal with companies from Japan and Kuwait to build an oil refinery complex worth nearly US$9 billion as part of efforts to meet its growing energy needs.
The Nghi Son refinery, which is due to start operating by 2017 in Thanh Hoa Province, about 200km south of Hanoi, will turn Kuwaiti oil into gasoline and other petroleum products.
The refinery will be able to process 10 million tonnes of crude oil a year, the Vietnamese government said.
State-owned PetroVietnam will own a 25.1-percent stake in the joint venture, while Japan’s Idemitsu Kosan Co and Kuwait Petroleum International Ltd will each hold 35.1 percent. Mitsui Chemicals Inc of Japan will own the remaining 4.7 percent.
Speaking at the signing ceremony, Vietnamese Prime Minister Nguyen Tan Dung hailed the project as “very important” for the country’s economic and social development, a government statement said.
Vietnam has offshore oil reserves, but still spends several billion dollars a year to import petroleum products to feed its growing economy.
A groundbreaking ceremony for the Nghi Son refinery was held in May 2008, but the project has suffered a number of delays.
It is still unclear when construction will start, an official from PetroVietnam said, asking not to be named.
Idemitsu and its partners delayed deciding whether to build the Nghi Son plant at least three times to resolve issues including how to finance the project.
The companies will start the process for a US$5 billion syndicated loan with banks and export credit agencies, including the Japan Bank for International Cooperation, Idemitsu said in a statement issued on Jan. 15.
The Nghi Son refinery will be Vietnam’s second. The country’s first refinery Dung Quat — which cost about US$2.5 billion and has a capacity of 6.5 million tonnes of crude a year — opened in central Vietnam in 2009 after lengthy delays.
PetroVietnam has said that it hopes the two refineries would satisfy 65 percent of the nation’s oil and gas needs. It is also preparing for a third refinery project in southern Ba Ria-Vung Tau Province.