By VU TRONG KHANH and JACOB GRONHOLT-PEDERSEN
Vietnam said Wednesday it has agreed with foreign investors to
begin construction of a long-delayed oil
refinery, while also stepping up
plans to build the country's first nuclear power plant jointly
with its Soviet-era ally, Russia.
The projects move ahead as confidence in Vietnam's economy
has been rocked amid surging inflation, corruption scandals and
a banking sector threatened by bad debts, mostly to the
country's vast state-owned sector.
The developing Asian nation until recently was seen as a
darling among global investors, but they have increasingly
turned their back on the country, whose economic growth is
forecast to slow to 5.2% this year, the weakest in 13
Plans to build Vietnam's second oil refinery, which comes with a price
tag of between $8 billion and $10 billion, has been hampered
for years due to financing issues between the Vietnamese
government and the two main partners, Japan's Idemitsu Kosan
and Kuwait Petroleum.
Banks had been unwilling to lend to the project without underwriting from
the Vietnamese government, but talks intensified after the
government agreed to help underwrite some of the project in August.
"We have completed talks and all the remaining issues have
been solved," chairman Phung Dinh Thuc of state-run Vietnam Oil
and Gas Group, or PetroVietnam, said Wednesday.
An Idemitsu Kosan spokesman confirmed the deal, while a
spokesman at Kuwait Petroleum was not immediately able to
The construction comes amid a refining boom in the Asia-Pacific
region to satisfy growing demand for oil products. Asia is seen
as the main driver of global growth in oil consumption in the
coming years, and the region is set to receive more crude from
the Middle East and Africa as demand slows in Europe and North America becomes
less dependent on imports.
The new 200,000 bpd Nghi Son refinery will mainly
process crude supplied by Kuwait Petroleum. Vietnam's sole Dung
Quat refinery with a capacity of 130,000 bpd runs mainly on
domestic crude, but has been mired by operational problems and
Operations at the Nghi Son refinery, which will be built 180
kilometres south of the capital Hanoi, were initially planned
to begin in 2014.
Under a new plan, the partners will sign a deal with foreign
contractors in December with operations slated to begin in the
second quarter of 2016, Mr. Thuc said.
Idemitsu Kosan and Kuwait Petroleum each hold a 35.1% stake
in the planned refinery, while PetroVietnam and
Mitsui Chemicals own 25.1% and 4.7%, respectively.
Mr. Thuc declined to name the contracted companies for the
project. But local media have earlier quoted him as saying a
consortium comprising Japan's JGC Corp., French firm Technip,
Spanish firm Technicas and PetroVietnam Construction JSC had been chosen for
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