Under the initial oil and gas development strategy by 2020, Vietnam would have only three oil refineries, Dung Quat in Quang Ngai province ($3 billion in investment capital and 6.4 million tons of crude oil in capacity), Nghi Son in Thanh Hoa province ($9 billion, 10 million tons), and Long Son in Ba Ria – Vung Tau ($4.5 billion, 10 million tons).

However, the strategy has changed with the appearance of new oil refinery projects. The number of new projects is so high that experts fear that Vietnam has too many refineries.

Nguyen Dong Hai, a former senior executive of PetroVietnam, said foreign investors “have every reason” to choose Vietnam as the place for them to set up oil refineries.

While the southern region is the rice granary of Vietnam, and the north, to some extent, has developed industries, the central region has less land.

Vietnam wants to attract oil refineries to the region in an effort to help develop the local economy in the central region.

According to Hai, China is one of the biggest markets for oil refinery developers.

“It will take one day at maximum to carry petroleum products to China,” he said, adding that by refining oil in Vietnam, investors will be able to approach the Chinese market easily with low production costs, thanks to the geographical distance.

Big investment incentives are also being offered. The most valuable offer is that they can have an opportunity to join the domestic petrol distribution market.

Local newspapers reported that Binh Dinh provincial authorities have been racing against the clock to grant licenses to the Nhon Hoi oil refinery, so that the project can kick off by the end of 2016 and become operational by 2021.

The newspapers quoted Ho Quoc Dung, chair of Binh Dinh province, as saying that the license would be granted to the investor, Thai PTT Group, in early February 2015.

The Nhon Hoi project will enjoy special investment incentives, including 10 percent corporate income tax for 15 years, a tax exemption for the first four years and a 50 percent tax reduction for the next nine years.

Dat Viet - February 14, 2015