Vietnam may land USD27 billion PTT refinery instead of Burma

Thailand’s state-controlled oil company PTT has begun a feasibility study set to be completed in May 2014 to look at funding and building what would be Southeast Asia’s biggest refinery in Binh Dinh Province, Vietnam. The project would be called the Nhon Hoi Petrochemical Complex Project.
Binh Dinh Province has also set up a consultancy team including experienced experts led by Tran Du Lich, a deputy of the Ho Chi Minh City National Assembly delegation; former Minister of Industry and Trade Truong Dinh Tuyen; former general director of Vietsopetro Nguyen Giao; Vice Chairman of Binh Dinh’s People Committee Ho Quoc Dung, and many other officials from provincial departments and sectors.
Deputy Chief Executive Officer of PTT Group Sukrit Surabotsopon said that after completing the specific feasibility study on techniques, technology, and trade by the end of this year, PTT will choose a financial consultant and evaluate the project’s impacts on Vietnam’s environment, health, safety, and socioeconomic development.
The proposals for a USD30 billion plant capable of processing 660,000 barrels of crude oil per day could, however, end PTT’s previous interest in investing in Burma’s inadequate oil refining industry.
The Burmese Ministry of Energy said it was in discussions with PTT on building a refinery near Rangoon with a daily processing capacity of 150,000 barrels, nearly three times Burma’s current capability, which together have a capacity of only 57,000 barrels per day, less than half of the country’s rising petrol and diesel demand. It has virtually no petrochemical making capacities.
Vietnam suffers from similar problems as Burma – plenty of crude oil and natural gas resources but inadequate oil refining and petrochemical production. The country only has one refinery and must import two-thirds of its domestic petroleum product requirements.
“PTT plans to sell at least 50% of products from this Vietnam refinery into the regional market, which is crying out for diesel, gasoline and other fuels. I dare say some of the fuel would be shipped back to Thailand, where the environmentalist lobby is hampering further expansion of refining and petrochemicals,” according to Bangkok independent energy industries analyst Collin Reynolds.
If the project is a go, construction is expected to take five years with the plant ready to go online in 2020. It is expected to have a 33 million ton capacity, one of the largest in the world.
Surabotsopon said that the estimated investment capital for this project will amount to USD25-30 billion, of which 40% is from PTT and the remainder would be raised from other partners.
PTT’s decision to explore the mega refinery potential in Vietnam comes as the Bangkok company reviews its overseas investment program for the next five years. PTT, the biggest valued company listed on the Stock Exchange of Thailand, has already slashed its budget for 2013 by almost 50% because of the effects of the global economic slowdown. Underlining the industry’s uncertainty, PTT in July cut its investment budget for 2013 by nearly USD1.5 billion, even though this had been approved only in April.
(August 21, 29, 2013)