State-run Vinachem has announced to pull out of the $4.5 billion Long Son petrochemical project in southern Vietnam.
Vinachem general director Nguyen Dinh Khang said the move would help prevent it from competing with the complex’s products in the future. Tran Thi Binh, vice general director of PetroVietnam, one key partners in the complex together with Thailand’s SCG and Qatar Petroleum International - said they were considering buying Vinachem’s 11 per cent stake in the giant project.
Binh said PetroVietnam had priority to buy the stake, but no final decision had been made yet. Meanwhile, SCG also expressed its willingness to take over the stake. The opportunity will be open for all three partners and if stake transfer negotiations failed, Vinachem’s stake would be divided by percentage to each party, said an industry source, adding the deal could start this month.
The Long Son petrochemical complex, located on Long Son island in Ba Ria-Vung Tau province, is Vietnam’s first petrochemical complex. It was licenced in 2008 with SCG holding 71 per cent, PetroVietnam 18 per cent and Vinachem 11 per cent. In 2011, Qatar Petroleum International jumped into the project after signing a joint venture agreement with the partners.
However, after the ground was broken in 2008 the project was delayed due to the land clearance and compensation issues on its 400 hectare site. The local authorities planned to define the land rental rate at $20 per square metre for the project’s lifespan. However, investors complained it was higher than $10 per square metre applied for surrounding projects. Meanwhile, Ba Ria-Vung Tau Provincial People’s Committee claimed that with the rental of $10 per square metre the provincial authority could not afford to develop infrastructure such as roads, electricity and water supplies.
Binh said the government would soon offer reasonable land rentals for the complex’s developer.
“We also expect to start land clearance and compensation at the end of this year, as well as choosing an engineering, procurement and construction contractor,” Binh said.
The complex will have a capacity of 1.4 million tonnes olefins from a flexible cracker utilising feedstock as ethane, propane and naphtha, with supporting infrastructure, such as storage facilities, port, jetty, power plant and other utilities.
The complex offers excellent synergy with a wide array of Vietnamese industries such as consumer goods packaging, PVC pipe and profiles, electrical appliances and auto industry.