Foreign oil
and gas conglomerates flee Vietnam
After more than
four years since it was announced, the $22 billion Nhon Hoi petrochemical
project officially proposed to withdraw from Vietnam’s oil and gas
development plan to 2025. To date at least three foreign oil and gas groups
have fled from Vietnam.
Illustrative
image.
The
authorities of the central province of Binh Dinh have officially announced
that the Victory Nhon Hoi Oil Refinery and Petrochemical Complex was
cancelled after a long delay.
“The
province and the Thai partner, the Petroleum Authority of Thailand Company
(PTT), agreed to end the project because of the latter’s inability to implement.
PTT was unable to proceed because of the project’s unfeasibility given the
low global crude oil price compared to when the investment decision was
made,” said Mr. Nguyen Ngoc Toan, Deputy Manager of the Nhon Hoi Economic
Zone on the VN Economic Times.
When PTT
decided on the investment in 2012 it was the first petrochemical refinery
complex in Vietnam, with a total capacity of 20 million tons per year and was
to contribute about 40 percent to Binh Dinh’s GDP once operational. It was
also expected to provide about 30,000 jobs.
Given the
difficult economic situation, PTT and the other partner, Saudi Aramco from
Saudi Arabia, asked for a reevaluation of the project in February, with
investment to be cut from the initial $28 billion to $22 billion and capacity
to 400,000 barrels a day.
Binh Dinh
province threatened to revoke the investment license in June due to delays in
reimbursing the Nhon Hoi Economic Zone for infrastructure investment.
If the
project was implemented it would have benefited from corporate income tax and
property tax preferences well as reductions on import taxes on crude oil and
equipment, machinery, and materials that cannot be produced domestically.
Once completed its products were to also be sold domestically.
PTT
initially proposed having its own seaport and had sought other special
incentives.
The project
has not moved forward since 2012. The investment was subsequently cut to $22
billion and then $20 billion and Binh Dinh had yet to receive any licensing
documents for the project.
Global
crude oil prices then tumbled, which has put many global giants in the oil
and gas field into difficulty, with PTT and Saudi Aramco being no exception.
Earlier,
Russia’s Gazprom Neft Public Joint Stock Company dropped its plans to
purchase 49 percent of the Vietnam Oil and Gas Group (PetroVietnam)'s stake
in the Dung Quat Oil Refinery being developed by the Binh Son Refining and
Petrochemical Company Limited (BSR) in the central province of Quang Ngai.
“We are
ready but are not satisfied with the terms proposed. Profit conditions were
initially favorable but BSR is not ready to provide the conditions we
expected, which result in lower profitability,” he said. “We cannot enter
into a low profit investment,” Gazprom Neft Chairman Mr. Alexandr Dyukov was
quoted by Russia's Sputnik as saying in June 2016.
He added
that the most important matter was identifying business performance
indicators.
“At this
moment Gazprom Neft does not agree with proposals from the Vietnamese
partner. When they are ready to provide better conditions we will agree,” he
said
PetroVietnam
announced early this year that Gazprom Neft had released an official document
ending negotiations over purchasing the 49 per cent.
Gazprom
Neft also said that the group will research opportunities to purchase shares
in Dung Quat in the future.
In November
2013 Gazprom Neft and PetroVietnam signed a framework agreement on a share
acquisition in Dung Quat and its modernization. Gazprom Neft expected to buy
49 percent and propose plans to expand the oil refinery with investment of
about $1.5 billion to $3 billion.
During
negotiations, however, the valuations of the two sides were different and the
handling of BSR’s debts was a complex issue. Negotiations were therefore
brief and could not be completed within the valid timeframe contained in the
agreement (i.e. prior to June 30, 2015).
On August
21 last year Gazprom Neft sent a petition to Vietnamese authorities proposing
it be granted incentives and favorable conditions to take on the
shareholding.
In a
response in November last year, the Ministry of Industry and Trade (MoIT)
confirmed that import tax incentives on products will not be available to BSR
after 2018 and other incentives like corporate income taxes and value added
taxes must comply with Vietnamese law.
On December
7 PetroVietnam sent a notice to Gazprom Neft on these constraints.
At the same
time it also announced plans to equitize BSR in order to invite Gazprom
Neft’s to become a strategic shareholder.
However,
the Russian group officially ceased negotiations and will research other
opportunities in the future.
Vietnam’s
oil and gas industry has recently seen the withdrawal of major oil companies
due to recalculations of their investment decisions, including Qatar
Petroleum International at the Long Son Oil Refinery project in southern Ba
Ria Vung Tau province.
Licensed in
2008, the complex was invested by a join-venture of Thai Siam Cement Group
(SCG), Qatar Petroleum International (QPI), and Vietnam National Oil and Gas
Group (Petrol Vietnam).
It was
previously slated to begin construction in 2014 and be completed in 2017.
However, the construction was delayed due to site clearance issues.
As further
obstacle, in December 2015 the Qatari investor has officially withdrawn from
the project due to the restructuring of its development strategy. QPI and the
two remaining investors failed to reach a compromise on capital transfer,
leading to a serious delay in the project’s progress.
It was
recently announced that the construction of the $4.5 billion Long Son
petrochemical complex will be restarted in the fourth quarter of 2016 after
eightyears of delay.
According
to Dhep Vongvanich, advisor to the president of SCG cum executive director of
SCG in Vietnam, as of now, the consortium has finished the site clearance and
is working on completing the remaining procedures to restart in the fourth
quarter of this year.
SCG also
revealed that the project found a new investor replacing QPI, but the name of
the new investor has yet to be disclosed.
Once the
complex comes into operation, it will be the biggest of its kind in Vietnam
and is intended to meet the growing demand of local industries for
high-quality plastic resins, valued at $2 billion annually.
The complex
will consist of a factory capable of turning out 1.65 million tonnes of
olefins, 1.45 million tonnes of poly-olefins, 280,000 tonnes of chloralkali,
and other materials each year. The site will also include supporting
facilities, such as a port, warehouses, and a power plant.
Compiled
by Khuyen Bui, VNN
|
Thứ Tư, 3 tháng 8, 2016
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