Vietnam inks refinery deal with Japan, Kuwait firms

HANOI -- Vietnam on Sunday signed a deal with firms from Japan and Kuwait to build an oil refinery complex worth nearly $9 billion as part of efforts to meet its growing energy needs.

The Nghi Son refinery, which is due to start operating by 2017 in Thanh Hoa province, about 125 miles south of Hanoi, will turn Kuwaiti oil into gasoline and other petroleum products.

It will be able to process 10 million tpy of crude oil, the government said.

State-owned PetroVietnam will own a 25.1% stake in the joint venture while Japan's Idemitsu Kosan and Kuwait Petroleum International will each hold 35.1%. Mitsui Chemicals of Japan will own the remaining 4.7%.

Speaking at the signing ceremony, Vietnamese Prime Minister Nguyen Tan Dung hailed the project as "very important" for the communist country's economic and social development, according to a government statement.

Vietnam has offshore oil reserves but still spends several billion dollars each year to import petroleum products to feed its growing economy.

A ground-breaking ceremony for the Nghi Son refinery was held in May 2008 but the project has suffered a number of delays.

It is still unclear when construction will start, an official from PetroVietnam said.

The country's first refinery Dung Quat -- which cost around $2.5 billion and has a capacity of 6.5 million tpy of crude -- opened in central Vietnam in 2009 after lengthy delays.

PetroVietnam has said that it hopes the two refineries would satisfy 65% of the nation's oil and gas needs. It is also preparing for a third refinery project in southern Ba Ria-Vung Tau province.

AFP via Dow Jones Newswires

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