Thursday, July 31, 2008

PetroVietnam and Gazprom may build fertilizer plant

Yesterday, PetroVietnam's international and legal relations chief, Vu Khanh Truong, said his company could cooperate with Gazprom in building a nitrogen fertilizer plant in Russia within the framework of the joint venture Gazpromviet.
Currently, only one nitrogen fertilizer plant, with production capacity of 740,000 metric tons a year, is operational in Vietnam. To satisfy growing demand, another 800,000 tons a year are needed.
Troika Dialog analysts say $800 million would be needed to build a plant with this capacity.
PetroVietnam representatives say the idea of building a fertilizer plant in Russia resulted from the absence of free nitrogen, the raw stock for fertilizers, in Vietnam, as the country consumes all the annual output of 7 billion cubic meters. Exploration of the Vietnamese continental shelf is underway for Vietgazprom, a joint venture by PetroVietnam and Gazprom. "By the fall, we should have completed the feasibility studies for the development of three blocks in the country's south," a source at Gazprom said.
In May, 2008 Gazprom and PetroVietnam signed an agreement to create Gazpromviet, a joint venture for oil and gas projects in Russia, the CIS, North Africa and Latin America. The 100% Gazprom-owned Zarubezhneftegaz confirmed that in June that a PetroVietnam delegation had held talks in Moscow on the creation of the joint venture.
"We are satisfied with our PetroVietnam partnership and look forward to an effective cooperation. The new company is being established primarily for oil and gas production, but other activities are also possible", said Ivan Gogolev, head of Zarubezhneftegaz public relations department.
Gazprom refused to comment.
Mikhail Stiskin of Troika Dialog pointed out that today's discussion featured many new projects for nitrogen fertilizer manufacturing. "These projects depend on whether Gazprom grants its Vietnamese partners access to its pipelines," the analyst added. "Not confirming the negotiations being held does not mean Gazprom is not interested in cooperation with a certain Vietnamese company."
The project could be carried out as a Russian-Vietnamese interstate partnership, Maxim Shein of BrokerCreditService added.
In May, the state-owned Zarubezhneft won a tender to develop four oil blocks estimated at 80 million metric tons in the Nenets Autonomous Area. The company established the Rusvietpetro joint venture to cooperate with PetroVietnam, which was the predetermined winner of the tender despite bids from Rosneft, TNK-BP and Surgutneftegaz. This agreement was a kind of exchange for the extension of another joint venture between the two companies, Vietsovpetro, which produces oil on the Vietnamese shelf, after 2010.