BP + Petronas eyeing Viet C2

19 April 1999 00:00  [Source: ACN]

Petronas and BP Amoco have jointly submitted a proposal to PetroVietnam to develop the first gas-cracker project in Vietnam.

But the two majors have yet to commit themselves as joint-venture partners because plans for the cracker are still not finalised. Discussions with PetroVietnam are general at this stage, a PetroVietnam official said.

Petronas has helped to prepare Vietnam's petrochemical masterplan. It has invited BP Amoco to look into the cracker project as BP Amoco has advanced technology and has co-invested with Petronas in several joint-venture projects including the existing Kerteh cracker in Malaysia, the official said.

Petronas declined to comment on the cracker proposal. BP Amoco has confirmed that discussions have taken place but said a final decision has yet to be made.

The two majors had also earlier expressed interest in the PE project downstream of the cracker (ACN 8 Dec 1997, p25). PetroVietnam hopes to start up the first gas cracker in 2005 and the second cracker in 2010, the PetroVietnam official said. Both crackers will be located in Ba-ria, Vung Tau, in south Vietnam. The first cracker will have a capacity of 350 000 tonne/year.

However, joint-venture discussions for the first cracker cannot proceed until there is available feedstock supply, the official pointed out.

The gas feedstock for the cracker is expected to come from Block 5, part of the Nam Con Son Basin. But PetroVietnam's priority is to tap the gas from Block 6 in the Basin for its power and urea production.

PetroVietnam and the BHP-led consortium have been eager to build an integrated power and 800 000 tonne/year urea complex in Phy My, but gas development in Block 6 has been blocked by disagreement over the proposed gas price (ACN 27 July, p23). PetroVietnam and the oil exploration team comprising BP Exploration, Norway's Statoil and India's Oil and Natural Gas Corp are still negotiating on the price.

PetroVietnam, however, expects negotiations to conclude shortly. If the deal is signed this year, the PetroVietnam official said construction work on the pipeline carrying gas from the Nam Con Son Basin can start with gas from Block 6 to flow in end-2001, and from Block 5 in 2003-04.

Block 6 cannot feed the cracker as it is dry gas and has only 4-5% of ethane content. Block 5 is wet gas and has a large amount of condensate to feed the cracker.

Gas from Block 6 will also feed Vinachem's urea expansion in Ha Bac from 100 000 tonne/year to 300 000 tonne/year.

The gas will also feed the 600 000 tonne/ year methanol project in Phy My but the consortium planning the project said it will only invest if the gas price is competitive.

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