Up to 49% of oil refinery stocks to be sold

The Vietnam National Oil and Gas Group (PetroVietnam) announced, at a press conference on Tuesday, that it will sell up to 49% of its shares in the Dung Quat Oil Refinery to foreign partners.

PetroVietnam said stock sales will be conducted after the construction of the oil refinery is completed and its value is re-defined, based on the principle of giving priority to foreign investors that are ready and willing to supply crude oil to those plants on a long-term basis.

PetroVietnam said next week, PVN and its partner, BP, will sign a contract under which BP will provide combined oil to the Dung Quat Oil Refinery to replace at least 50% of the volume of crude oil supplied by the White Tiger oil field. However, PetroVietnam will define the specific volume of the alternative combined oil based on the prices and quality of this product.

Currently, the price for White Tiger oil field’s crude oil is more expensive than other kinds of crude oil. On the other hand, the crude oil output from this oil field tends to fall, so the use of alternative combined oil is expected to be more economical.

Dung Quat is the country’s first oil refinery, currently being built in the central province of Quang Ngai, and scheduled for completion in February 2009. Besides Dung Quat, PetroVietnam has plans to build two other oil refineries.

One of these two, with an estimated output capacity of 200,000 barrels a day and investment capital of $6 billion, is to be built in the central province of Thanh Hoa, in a joint venture with the Kuwait international oil and gas group and the Idemitsu Kosan group of Japan.

The other, also with a production capacity of 200,000 barrels a day, is scheduled to be built in the southern region, the country’s largest consumer centre. The project is still at the discussion stage with foreign partners, including the Venezuelan National Oil and Gas Group.

Despite being the third-largest producer of crude oil in Southeast Asia, with an average output of 300,000 barrels a day, Vietnam still has to import petroleum due to a lack of oil refineries. According to PetroVietnam, the country will need to buy approximately 26.5 tons of crude oil to supply the three refineries when they are operational.

Once operational, these three oil refineries will help the country to reduce its import and trade deficit.

Source: TTXVN