Many oil refinery and petrochemical projects worth billions of US dollars have obtained the agreement in principle from local authorities for their investment.

But experts are extremely concerned that Vietnam may face “refinery inflation”, or worse, become a place where foreign investors dump their obsolete, pollution-causing technology and machinery.

Of the future oil refineries, the Nghi Son project will be the first constructed-- by the end of this month, according to schedules.

The Thanh Hoa-based $9 billion construction is expected to be complete by the end of next year, and begin commercial operation in 2017.

Similarly, the Vung Ro Oil Refinery, located in Nam Phu Yen Economic Zone in central Phu Yen Province, is completing its initial steps to begin construction.

Earlier this year, the Prime Minister gave the investor Britain-based Tachnostar Management Ltd the go-ahead to double the plant’s design capacity to 8 million tons of product per year, and increase investment from $1.7 billion to $3.18 billion.

Another noteworthy player to join the market is the Nhon Hoi Refinery, based in the Economic Zone of the same name in the coastal province of Binh Dinh.

The $27.5 billion project, invested by Thai state-owned oil and gas company PTT Public Company Limited, is in fact not included in the development plan of the country’s oil and gas sector.

But local authorities and other ministries and agencies have strongly proposed to have the project added into the national master plan.

Elsewhere in Ha Tinh Province, the local government has also planned to green-light the Taiwanese Formosa Group to start a $12.5 billion refinery and petrochemical project in the province.

Exceeding demand

The country’s sole refinery Dung Quat currently accounts for 30 percent of the domestic demand for fuel consumption.

A capacity upgrading plan has also been approved; it will enable the plant to produce up to 10 million tons of oil products per year by 2015.

Phung Dinh Thuc, chairman of PetroVietnam, the state-run oil and gas giant, said under the strategic development plan of the oil and gas sector, Vietnam will have only three refineries, namely Dung Quat, Nghi Son, and Long Son, based in Vung Tau.

Thuc said other projects such as Vung Ro and Nhon Hoi should submit an investment report so that relevant agencies can assess their feasibility.

Last year PetroVietnam rejected the proposal to set up the Nhon Hoi project as it would result in a supply surplus in the oil and gas sector.

According to the Ministry of Industry and Trade, in case the Long Son, Nam Van Phong refineries are put into use after 2020, and the Nhon Hoi facility begins operating by 2020, the total supply of oil products will be 36 million tons, while total demand is only some 29 million tons.

The surplus will rise to 11 million tons in 2025, the ministry said.

This is not to mention the Vung Ang project that Ha Tinh is seeking permission to start constructing.

Tuoi Tre News - October 17, 2013