06 September 1997 00:00 [Source: ACN]
VIETNAM has rejected the proposals and financial schemes of both LG International and Petronas for its first refinery project, and has decided again to build the project itself.
The move would mean pushing back the country's petrochemical plans targeted to start in 2000 (ACN 1 July 1996, p17).
The country's new feasibility study for the refinery calls on four state-run banks and 40 private banks to help finance the refinery project at Dung Quat in Quang Nai province, a Petro Vietnam senior official said. He expects government approval in July.
The plan is said to call for the refinery to process oil from only the Bach Ho oilfield off the southern Vietnam coast. Previous plans required crude oil to be imported from the Middle East, which would have entailed major transportation costs.
Petro Vietnam general director Ngo Thuong San said domestic sources will need to pump in about US$900m in the form of domestic bonds, loans from Vietnamese banks and some of the profits from Bach Ho. The other US$600m will come from foreign banks and possibly an international bond issue.
Petronas acknowleged the rejection but said it has not been officially notified. 'It is up to Vietnam to decide,' a Petronas official said. She declined to comment on industry speculation that the Malaysian major had offered to finance 80% of the project.
LG had earlier submitted a comprehensive petrochemical development plan to Vietnam.
Just two months ago, Vietnam said it would work with just one foreign partner to avoid the many disagreements. Besides Petronas and LG, 5-6 companies had also submitted proposals (ACN 7 Apr, p39).
The investors wanted to be involved in engineering, procurement and construction, as well as distribution rights in Vietnam. They also wanted prices to exclude the costs of oil product and transportation.
The six-member consortium was disbanded in mid-February this year. Chinese Petroleum Corp and China Petrochemical Development Corp were to have taken a combined 10% stake, Petronas and Conoco a combined 30% stake, LG International 27%, and Stone & Webster 3%. Petro Vietnam was to have held the remaining 30% share.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.