The PM has given the green light to upgrades and expansions at Vietnam's first operational oil refinery.
Expansion plans for Dung Quat Oil Refinery have been approved by the Prime Minister, which will cost around $1.8-2 billion and cover upgrades to processing capacity, crude oil sources, configuration and technology, product quality, and environmental standards. The refinery will have a capacity of about 8.5-9 million tons of crude oil per year compared with the current 6.5 million tons, and the upgrade will take five to six and a half years to complete.
The PM asked PetroVietnam and leaders of the Quang Ngai province, where the refinery is located, to work together on compensation and resettlement for local residents displaced by the project, as well as land clearance and capital disbursement plans.
The PM also agreed that PetroVietnam carry out the project in parallel with negotiations with Russia’s Gazprom Neft on the transfer of a stake in the project to the latter. Previously, Gazprom Neft expressed an intention to buy 49 per cent of Binh Son Refining and Petrochemical Company (BSR), which operates Dung Quat. It has also finalized its own proposal for the expansion of the refinery, estimated at $1.5 billion to $3 billion.
Dung Quat Oil Refinery is currently producing 140,000 barrels of oil products a day, or 6.5 million tons a year. After beginning commercial operations in 2010, the refinery has supplied over 26 million tonnes of oil, petrol and gas products, meeting 30 per cent of demand for petrol nationwide. In 2013 it produced 6.6 million tonnes of petroleum products, 17 per cent higher than its initial target, and gained over VND154 trillion ($7.3 billion) in revenue and VND2.9 trillion ($138 million) in profit. It also contributed VND28.4 trillion ($1.3 billion) to the State budget.