Dung Quat oil refinery project.— File Photo

HA NOI (VNS) — The feasibility of a US$27 billion oil refinery project invested by Thailand's PTT Public Company Limited in the central coastal province of Binh Dinh is under debate after the State-owned oil and gas group PetroVietnam voiced its protest.

The refinery, to be located at Nhon Hoi Economic Zone, has a capacity of 660,000 barrels per day, or 30 million tonnes of crude oil a year, a five fold increase over the output of Dung Quat, Viet Nam's largest oil refinery.

The facility is expected to use crude oil imported from the Middle East (45 per cent), Africa (25 per cent) and South/Central Americal (30 per cent). Its products will supply the domestic demand as well as exports to other countries in the region.

The investor has finished the feasibility study on the project and late last year, Binh Dinh's provincial authority submitted a document to the Prime Minister for the go-ahead.

If the Government green lights the plan, it will be the biggest foreign-invested project in Viet Nam.

However, PetroVietnam has filed strong protests to the Ministry of Industry and Trade (MoIT), voicing concerns that the project will create a surplus of oil and gas on the domestic market.

Nhon Hoi Economic Zone.

The country's master plan for the oil and gas sector did not include the Nhon Hoi refinery, the group explained, adding the project's location is too close to Vung Ro, Van Phong and Dung Quat, which already have plans for the construction of oil refinery plants.

Dung Quat Oil Refinery currently supplies 30 per cent of domestic fuel demand. PetroVietnam is now building the second refinery, the $9 billion Nghi Son facility in Thanh Hoa Province. Once operational, both refineries will ensure 50 per cent of the annual local demand.

PetroVietnam is in charge of buying and distributing products from Dung Quat and two more refineries by 2025.

"The presence of Nhon Hoi Refinery will affect PetroVietnam's purchasing and distribution as well as diminish the efficiency of utilising State capital in these facilities," PetroVietnam said.

Binh Dinh authorities disagreed with PetroVietnam, and according to Le Huu Loc, chairman of the provincial People's Committee, the project was highly feasible and the province was determined to implement the project.

PTT had studied investment opportunities for over three years and chose Binh Dinh as the prime location for the project.

"The province will lease a 2,000ha land lot to the investor at preferential prices of only $15-16 a square metre over 50 years. In addition, the investor will not have to pay land compensation," Loc was quoted as saying in the Sai Gon Giai Phong (Liberated Sai Gon) newspaper.

With regards to concerns over the investor's financial capacity, Loc said PTT was a State-owned company with total assets of more than $50 billion, and HSBC has also pledged to financially support the project.

The MoIT has the Prime Minister to include the Nhon Hoi Refinery in the development master plan for the oil and gas sector by 2025, but also demanded that investors make clearer explanations of capital arrangement, project progress, input supplies and product consumption solutions. — VNS