Binh Dinh Province People’s Committee Vice Chairman Ho Quoc Dung said the prime minister had given the green light to a US$27-billion Petroleum Authority of Thailand (PTT Group) oil refinery project in the province.
This is the largest foreign direct investment (FDI) project in Vietnam to date. There have been contrary opinions about the project. While the Ministry of Industry and Trade supported the project, the Vietnam National Oil and Gas Group (PetroVietnam) opposed it due to the concerns that the project would lead to the imbalance between supply and demand in the domestic market.
Vietnam Energy Association President Tran Viet Ngai said Vietnam currently does not need a new oil refinery because it already has the Dung Quat Oil Refinery which accounts for 30 percent of the domestic market for supply of petroleum products, and in the near future, new oil refineries will be built in Nghi Son and Van Phong.
Many experts expressed concerns about the feasibility of the project when knowing that the Binh Dinh Province People’s Committee and the PTT Group had come to an agreement on investment in the project, US$27 billion. The project’s investor will contribute US$5 billion and the rest, US$22 billion, will be raised from domestic and external sources, with commercial loans accounting for 60 percent (US$18 billion). It will also not prove easy to seek such a large amount of loans in the current difficult situation.
Meanwhile, Binh Dinh Province People’s Committee Vice Chairman Ho Quoc Dung affirmed the project was highly feasible. He said the project had been negotiated over three years not over just a few months. Moreover, PTT is a capable investor and stands among the top 100 groups in the world, with its assets totaling US$150 billion, annual revenue exceeding US$80 billion and profit hitting nearly US$3.5 billion per year.
The PTT Group intends to develop a high-capacity petrochemical and oil refinery in the Southeast Asian region, which is capable of competing with large refineries in the world. After surveying locations in Vietnam, Malaysia and Myanmar, the group has decided to choose the Nhon Hoi Economic Zone of Binh Dinh Province as a destination for investment. The Nhon Hoi Economic Zone offers the group a favorable location for international and domestic trade and positive conditions to develop its project, with adequate infrastructure, vacant land and deepwater ports.
Dr. Le Dang Doanh supported the prime minister’s decision to green light the project. The project would create a new impulse for the Vietnamese oil and gas sector, contributing to the development of the petrochemical industry and creating competition requiring PetroVietnam to boost technological innovation. Dr. Le Dang Doanh said he welcomed competition and believed it was good for the whole country and PetroVietnam in particular./.
By Chu Hang