PetroVietnam actively prepares for construction of nation's second refinery


HANOI -- State-run Vietnam Oil and Gas Group, or PetroVietnam, said Thursday that it is actively making preparations for construction of the country's second oil refinery but there are still issues to be resolved before work can begin.

"We're actively preparing for the project, and once the preparation is completed, we will start construction," said PetroVietnam CEO Do Van Hau.

Plans to build the 200,000-bpd Nghi Son refinery in Thanh Hoa province by investors from Kuwait, Japan and Vietnam have been delayed several times. PetroVietnam earlier said the refinery could cost $8 billion-$10 billion.

"We're still in talks and haven't made a final investment decision," a spokeswoman for Idemitsu Kosan Co., one of the partners in the project, said Thursday.

Vietnamese state media cited PetroVietnam Chairman Phung Dinh Thuc as saying earlier this week that there are still minor issues that he hopes can be resolved in the fourth quarter so the project can progress well.

Mr. Thuc didn't clarify what the issues are but said the foreign investors in the project must take careful steps in the wake of difficult world economic conditions, online news provider VnEconomy reported.

PetroVietnam said in July that it expected to sign an engineering, procurement and construction contract as well as begin building the refinery in the third quarter, but that didn't happen.

Mr. Hau said in August that the Vietnamese government would act as the guarantor for some liabilities of the project but added that the government wouldn't provide a guarantee for any of the loans to be taken for the project.

Shunichi Kito, finance director for Idemitsu Kosan, also said in August that a financing problem that had long hampered talks with banks had been resolved.

"We have agreed at some level" of underwriting from the Vietnamese government, Mr. Kito said, but he declined to give details. Banks had been unwilling to lend to the project without underwriting from the Vietnamese government.

Idemitsu Kosan and Kuwait Petroleum International each hold a 35.1% stake in the planned refinery, to be built 180 kilometers south of Hanoi, while PetroVietnam and Mitsui Chemicals own 25.1% and 4.7%, respectively. KPI is a unit of state-owned Kuwait Petroleum.

The Nghi Son refinery is being designed to process Kuwaiti crude, and Kuwait Petroleum is to supply all of its feedstock.

Dow Jones Newswires

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