Friday, January 23, 2015

Dung Quat Refinery expansion plan fixed at 8.5 mln tons of crude and investment of USD 1.82 billion

After much study and calibration, the ambitious plan to expand and upgrade the Dung Quat oil refinery based in Dung Quat Economic Zone of central coastal Quang Ngai province has been eventually fixed and ratified by an Investment Certificate issued by the local government. The target capacity is announced to be 8.5 million tons of crude per year (192,000 barrels per day),  lower than the figure of 10 million tons as tentatively publicized previously. The total cost for this plan is said to be roughly 1.81 billion USD, 30% of which shall be contributed by the involved partner(s) and the remaining 70% shall comes from loans, according to a news article from PVN/BSR.

A ceremony was organized on 23rd Jan 2015 at Dungquat EZ to officially announce the expansion project.

The expansion plan will involve the construction of some new technological units, upgrade the capacity of existing units, building more crude oil tanks, product tanks, upgrading the existing loading jetties ... so that more crude can be processed, a wider variety of crude input types can be handled by the refinery, and the products can meet the environment standard of Euro V. Besides the current single point mooring (SPM) accessible for  150,000 DWT crude vessels, another SPM for vessels up to 300,000 DWT will also be built.

Layout of the Dung Quat Refinery expansion area.

It’s projected that the work for FEED contract and license contract shall finish in Q. II 2015, EPC contract shall be executed since Q.IV 2017 until Q.III 2021 and the expanded refinery shall be put into operation before 2022.

The investment certificate came after an announcement on the Prime Minister’s approval for this expansion plan. Accordingly, the Prime Minister agreed to let Petrovietnam invest this project on its own in parallel with negotiating with Gazpromnheft (Russia) about the [possibility/options of] transferring. Considering the dropping oil price, it seems that Petrovietnam will still maintain its role as the sole owner of Dungquat refinery until there is an official announcement on when and how the Russian oil giant will become a stakeholder in this project.

According to PVN yearly review for 2014, the operator of Dungquat refinery being Binh Son Refining and Petrochemical Company (BSR) under PetroVietnam  processed 6.4 million tons of crude into 5.81 million tons of oil products and reached a revenue of approximately USD 6 billion, contributed to the state budget more than USD 1 billion.

The revenue targeted for 2015 was announced to be lower than last year, at roughly USD 5.75 billion. 

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