Photo: Duc Anh
Binh Dinh province calls an end to long-delayed project.
The Binh Dinh Provincial People’s Committee has officially announced that the Victory Nhon Hoi Oil Refinery and Petrochemical Complex has been cancelled after long periods of delay.
“The province and the Thai partner, the Petroleum Authority of Thailand Company (PTT), agreed to end the project because of the latter’s inability to implement,” Mr. Nguyen Ngoc Toan, Deputy Manager of the Nhon Hoi Economic Zone, told VET. “PTT was unable to proceed because of the project’s unfeasibility given the low global crude oil price compared to when the investment decision was made.”
According to Mr. Toan, the province will not appeal to other strategic foreign investors. “We will conduct research and act on other projects,” he said.
When PTT decided on the investment in 2012 it was the first petrochemical refinery complex in Vietnam, with a total capacity of 20 million tons per year and was to contribute about 40 per cent to Binh Dinh’s GDP once operational. It was also expected to provide about 30,000 jobs.
Given the difficult economic situation, PTT and the other partner, Saudi Aramco from Saudi Arabia, asked for a reevaluation of the project in February, with investment to be cut from the initial $28 billion to $22 billion and capacity to 400,000 barrels a day.
Binh Dinh province threatened to revoke the investment license in June due to delays in reimbursing the Nhon Hoi Economic Zone for infrastructure investment.
If the project was implemented it would have benefited from corporate income tax and property tax preferences well as reductions on import taxes on crude oil and equipment, machinery, and materials that cannot be produced domestically. Once completed its products were to also be sold domestically.
PTT initially proposed having its own seaport and had sought other special incentives.
The project has not moved forward since 2012. The investment was subsequently cut to $22 billion and then $20 billion and Binh Dinh had yet to receive any licensing documents for the project.
Global crude oil prices then tumbled, which has put many global giants in the oil and gas field into difficulty, with PTT and Saudi Aramco being no exception.
Vietnam’s oil and gas industry has recently seen the withdrawal of major oil companies due to recalculations of their investment decisions, including Qatar Petroleum International at the Long Son Oil Refinery project in southern Ba Ria Vung Tau province and Russia’s Gazprom Neft at the Dung Quat Oil Refinery and Petrochemical Complex project in central Quang Ngai province.