South Korea’s Daelim Industrial Company is in the final steps of conducting a feasibility study to build a $3 billion mega oil refinery and petrochemical project in central Vietnam.
Daelim will develop the project, in central Khanh Hoa province’s Van Phong Economic Zone, through a joint venture with Vietnam’s state-run Petrolimex. Nguyen Trong Hoa, director of Van Phong Economic Zone Management Authority, told VIR that Daelim would complete the feasibility study before the end of this quarter.
“We are informed that Daelim is going to finish the study. This will set a milestone for Daelim and Petrolimex to further develop the project,” said Hoa.
The South Van Phong oil refinery and petrochemical plant is among Vietnam’s largest oil refinery and petrochemical projects and Petrolimex last year announced the refinery would have the total capacity up 10 million tonnes of crude oil per year, similar to the capacity of Nghi Son project jointly developed by PetroVietnam with Japanese and Kuwait partners. The first phase of the South Van Phong oil refinery will have capacity of four million tonnes of crude oil per year.
The two firms last year signed a memorandum of understanding in Hanoi for jointly investing into this project. In the first stage, Daelim would provide engineering-procurement-construction services to develop the refinery.
Daelim is one of the leading Korean firms operating in engineering, construction and petrochemical sectors and has an overseas network in 11 countries including Saudi Arabia, Kuwait, Iran, India, China and the United States. Daelim has already had a footprint in Vietnam with a motorbike manufacturing plant.
In July 2011, at the time of its initial public offering, Petrolimex announced the South Van Phong oil refinery and petrochemical plant would go on-stream by the end of 2013 to produce a range of products like LPG, high-octane unleaded gasoline, kerosene, diesel, polypropylene and benzene.
But Hoa said the joint venture could miss this deadline as it had not yet finished necessary investment procedures. “However, the involvement of Daelim will ensure the development of this project as Petrolimex is facing difficulties in mobilising funds for this project,” he said.
Petrolimex is now the biggest fuel supplier in Vietnam, accounting for a 55 per cent share of the market. The company’s leading position comes thanks to its nationwide distribution network of 2,100 retail outlets.
In a bid to ensure energy security, Vietnam is now developing several oil refinery and petrochemical projects. The first, Dung Quat refinery is operating in central Quang Ngai province. Four others are under construction or in preparation stages in Thanh Hoa, Phu Yen, Ba Ria-Vung Tau provinces and Can Tho city.