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Mon, Feb 23, 2009 - Page 10 News List

Vietnam to open nation’s first oil refinery

AFP , DUNG QUAT, VIETNAM

Workers walk at Dung Quat oil refinery, Vietnam’s first oil refinery, on Saturday in the central province of Quang Ngai.

PHOTO: AFP

Vietnam was to open its first oil refinery yesterday after more than a decade of delays, in what is being hailed as a significant moment in the country’s development and energy security.

Vietnamese Prime Minister Nguyen Tan Dung was expected to inaugurate the more than US$2.5 billion Dung Quat refinery yesterday evening live on nationwide television, an indication of its importance to the communist country.

Although Vietnam has considerable offshore oil reserves, it currently has to import all its petroleum products, costing the Southeast Asian nation hundreds of millions of dollars — a figure rising as energy consumption soars.

It spent US$10.88 billion importing refined products last year, official figures showed, while exporting US$10.45 billion crude oil.

State-owned PetroVietnam Group financed and will run the new facility, which is expected to churn out 6.5 million tonnes a year or 148,000 barrels per day — about 30 percent of the country’s needs.

PetroVietnam, which expects the refinery in the center of the country to be at full capacity from August, is designing another refinery in the north and has tentative plans for a third as Vietnam strives for energy autonomy.

“Dung Quat refinery is one of the most modern in the world,” said Dinh Van Ngoc, senior vice-president and chief executive of the arm of PetroVietnam that will run and manage the facility.

“It’s very meaningful for Vietnam, both practically and also spiritually — it can prove to the whole nation and Vietnamese people that Vietnam can build a refinery,” he said.

Dinh said the final figure for the cost of the refinery would be higher than US$2.5 billion but declined to be more specific.

The complex, built by an international consortium led by French oil services group Technip, has a long and checkered history.

When plans were first drawn up in the 1990s, the estimated cost was US$1.5 billion.

But several foreign backers pulled out, among them French giant Total, which baulked at the authorities’ insistence that the refinery be built in a mainly agricultural area with no tradition of heavy industry.

Critics and foreign investors argued that central Quang Ngai Province was too far from the offshore oil reserves in the south and from Ho Chi Minh City, Vietnam’s economically advanced commercial capital.

Experts said the government refused to have the first refinery anywhere else because it wanted to develop one of the poorest regions in the country.

The communist leaders also wanted to forge a new industrial area as a counterbalance to the capital Hanoi in the north and Ho Chi Minh City, formerly Saigon, in the south.

Authorities hoped the refinery and the industrial zone being built around it would create jobs for more than 20,000 people in the area, spurring the local economy.

New roads have been built in the zone and around the refinery, with a handful of new factories springing up, including at least one from South Korea.

Bruno Le Roy, the engineer managing the site for Technip, acknowledged it was “a political decision” to build the refinery in Quang Ngai Province, referring to the authorities’ determination to bring money to central Vietnam.

“I’ve seen in the last two years a big change in this area,” he said at the refinery, which covers 338 hectares of what was once farmland.

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