Vietnam signs deal for construction of first oil refinery

An international consortium led by French group Technip signed a 1.5 billion USD deal May 17 to build Vietnam's first oil refinery, the biggest ever investment in the country, AFP reported.

Officials from Technip, Japanese engineering giant JGC Corporation and Spain's Tecnicas Reunidas signed the deal with state-owned giant PetroVietnam in Hanoi.

The long-awaited deal is seen as crucial to giving Vietnam energy autonomy as, despite being a major crude producer, the nation has to import its refined products.

The whole project, which requires the building of a vast infrastructure including a port, is expected to cost a record 2.5 billion USD, according to several industry estimates.

The price tag of 2.5 billion USD is more than double its original cost of 1.2 billion USD estimated around eight years ago due to design changes and the US dollar slide against the Euro in recent years, Reuters quoted PetroVietnam officials as saying.

Tran Ngoc Canh, president and chief executive officer of PetroVietnam, said the deal was a "critical milestone in the construction of the Dung Quat refinery," as quoted by AFP.

The complex will have an annual capacity of 6.5 million tons and the deal will take effect from June 15 with construction expected to take 44 months, according to Vietnamese officials.

PetroVietnam said in a statement that the 130,000-barrel-a-day Dung Quat refinery would be put on trial operations in June 2008, according to Reuters.

Vietnam produced 20.1 million tons of crude in 2004, some 13.3 per cent more than in the previous year.

But its lack of oil refineries meant it had to continue importing all refined products, losing hundreds of millions of dollars in precious foreign exchange.

(Source: AFP, Reuters – Compiled by The Vinh)
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Published: 18 May, 2005, 10:02:33 (GMT+7)
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