Vietnam Seeks $1.2 Billion Foreign Credit for Refinery Expansion

Vietnam is seeking some $1.2 billion in overseas loans to expand its sole oil refinery after Russia’s Gazprom Neft dropped a plan to acquire a stake in the plant.


                             A view of the Dung Quat oil refinery. Photo: Tuoi Tre

The Vietnamese government is looking to borrow $1.2 billion in loans from foreign creditors to expand the Dung Quat oil refinery, the sole operational facility of its kind in the country, after Russian oil producer Gazprom Neft abandoned a plan to acquire a stake in the refining platform.

“The expansion will help our refinery operate more efficiently since it will boost the overall output by 30% and help cut production costs,” Nguyen Hoai Giang, chairman of Binh Son Refining & PetroChemical Co. (BSR), the operator of the refinery, told Bloomberg.

When the upgrade is completed in 2021, the refinery will be able to meet half of Vietnam’s fuel needs, rising from one-third now, Giang said.

Vietnam spent $3.81 billion on importing 9.53 million tons of petroleum products in the first ten months of this year, down 14.9% in value but up 17.9% in volume from a year earlier, according to customs data.

According to local media, the expansion, estimated to cost $1.8 billion, will help increase the processing capacity of the refinery by around 30% to 8.5 million tons per year, equivalent to 192,000 barrels per day, from 148,000 barrels per day currently.

BSR expects to sign an engineering-procurement-construction contract with foreign companies for the expansion in 2018, Giang said, without specifying potential suppliers.

Amec Foster Wheeler is reported to pocket $25 million from providing front-end engineering and design (FEED) for the expansion and upgrading of the oil refinery.

Giang said that BSR is gearing up a plan to launch an initial public offering (IPO) as soon as the third quarter of next year. “The exact timing and share sale volume will depend on the market situation next year.”

The company is in talks with international companies, including one from the Middle East and a few from Southeast Asia, to sell a 35 percent stake ahead of the IPO, he tipped.

Tuan Minh / BizLIVE