Saturday, May 17, 2008

Vietnam OKs building $6.2b Kuwait-Japan joint refinery

Kuwait News Agency (KUNA) - 11/05/2008

(MENAFN - Kuwait News Agency (KUNA)) The first-ever Kuwaiti-Japanese joint refinery project in Vietnam has received an investment license to start construction one month earlier than expected, Vietnam News Agency (VNS) reported.

A ground breaking ceremony for a refining and petrochemical complex took place Saturday at Nghi Son Economic Zone in the northern province of Thanh Hoa, 180 kilometers south of the capital Hanoi, VNS said.

The joint venture, established on April 7, was initially scheduled to obtain the investment license in June, according to a joint statement from the venture.
The Nghi Son Petrochemical Refinery Complex, the largest and most important refining project in energy-hungry Vietnam, has a total investment capital of USD 6.2 billion for the first stage. Kuwait Petroleum International (KPI), an international unit of Kuwait Petroleum Corporation (KPC), and Japanese major refiner Idemitsu Kosan Co. evenly own a 35.1 percent stake in the joint project with a capitalization of USD 200 million, with state-owned PetroVietnam and Japan's Mitsui Chemicals Inc. putting up 25.1 percent and 4.7 percent. The partners aim to secure about 70 percent of the construction costs through project financing led by the government-affiliated Japan Bank for International Cooperation (JBIC).

The participating firms will provide the reminder of the funds, depends on their percentage of the stake acquisition. For instance, KPI and Idemitsu are likely to contribute around USD 650 million each.

KPI committed to secure long-term 100 percent crude supply for the refinery, which will be on stream by 2013 with a refining capacity of 200,000 barrels per day (bpd), or 10 million tons a year.

Its capacity is expected to be doubled in the future. "The plant represents Kuwait's first successful step in the implementation of long-range strategy and plans for investments in the refining, petrochemical and distribution projects, particularly in Asia," KPI has said in the statement.

The refinery will turn Kuwaiti heavy crude oil into petrol, liquefied petroleum gas, diesel, kerosene and jet fuel for Vietnam, which has offshore oil reserves but now imports petroleum products, according to KPC. "Although this kind of project usually takes around eight years to seek international partners and fulfill agreements and procedures, we only spent four years," PetroVietnam's director general Tran Ngoc Canh hailed the achievement, said VNS.

"The project's pre-feasibility research was completed four years ago. In reality, the negotiation time with KPI and Idemitsu only took over a year," Canh was quoted by VNS as saying.

"We have obtained certain successes in reaching agreements with these foreign partners because they are globally powerful groups with world-class experience." Vietnam, where demand for oil products is rapidly increasing, currently relies heavily on foreign suppliers.

Nghi Son is the country's second oil refinery after its first 140,000 bpd Dung Quat plant in central Quang Ngai Province, which will be operational early next year.

The two refineries are expected to contribute more than 65 percent of Vietnam's demand for petroleum products by 2013.

Meanwhile, in China, KPC is participating in a joint venture with Royal Dutch Shell Plc. and state-run Sinochem for the 240,000 bpd refinery in the eastern Fujian Province, which is expected to go onstream as early as January 2010.
The corporation is also in talks with China's top refiner Sinopec and Dow Chemical Co. to construct a USD 5 billion complex in the southern Guangdong Province.