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Vietnam Investment Govt to limit 2nd oil refinery to local firms

October 13, 2007

Govt to limit 2nd oil refinery to local firms
Petrovietnam has faced obstacles including higher capital costs in talks with foreign investors for Vietnam's second oil refinery and proposed that only domestic firms invest in the project, state media said on Friday.
In February Petrovietnam discussed with Japanese refiner Idemitsu Kosan Co Ltd (5019.T: Quote, NEWS , Research) about forming a joint venture to build the 170,000 barrels per day (bpd) Nghi Son refinery, which the Japanese company estimated would cost $5.25 billion.
Petrovietnam had suggested two alternatives to the government including a secondary option to continue negotiating with foreign firms to invest in the plant in northern Thanh Hoa province, Dinh La Thang, chairman of the state oil monopoly, told the Vietnam Economic Times.
"We have submited two options to the government, in which we are more inclined to the first option," Thang said, referring to limiting the project to local investors.
He said Petrovietnam had lined up five domestic companies to be partners in the project and secured foreign crude oil supply to the plant for 30 years He did not name any of the five firms.
No information was available on which foreign crude they secured, but in September Petrovietnam signed an initial pact with Western trader Trafigura to supply crude to its refinery for 30 years.
Idemitsu was among several foreign companies, including South Korea's Hanwha Chemical Corp (009830.KS: Quote, Profile , Research), which have expressed interest in investing in the Nghi Son refinery, slated to become operational in 2013.

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