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Building oil refinery factories to ensure energy security
Although Vietnam has been a crude oil exporter for the past 20 years the oil refinery industry is still very much in its infancy. At present, 100 percent of petroleum on the domestic market is imported.
Vietnam imported 7.533 million tonnes of petroleum in 2000, 8.013 million tonnes in 2001, 8.960 million tonnes in 2002, 9.841 million tonnes in 2003 and 12 million tonnes in 2004. The amount of imported petroleum has increased quickly in recent years. At the current pace of consumption and with the population growing to around 100 million people in the next ten years, Vietnam will need about 70 million tonnes while the volume of domestic oil is estimated to reach only 31 million tonnes. In order to be less independent on oil imports to meet domestic consumer demands, Vietnam needs to have at least three oil refinery factories by 2020.
Neighbouring countries such as Singapore, the Philippines and Thailand have at least five oil refinery factories, each which not only meet domestic consumer demand but also export demand. This figure only accounts for energy use but, in modern society people need oil and gas to make materials such as plastics, fertilizers, synthetic fibres, detergents and pharmaceutical products.
According to market research, by 2010 Vietnam will consume around 4.5 million tonnes of plastics, 4 milion tonnes of urea fertilizer and 700,000 tonnes of polyester annually. Therefore, to meet the domestic consumer demand, the country needs to build an additional oil refinery factory by 2010.
Aware of the importance of building oil refinery factories in the country’s economic development strategy, the Government has agreed to build three: the Dung Quat Oil Refinery Factory expected to be put into operation in February 2009, the Nghi Son Refinery and Petrochemical Complex by 2013 and the Oil Refinery Factory No3 by 2015.
Nguyen Viet Son, head of the Processing Department of the Vietnam National Oil and Gas Group (PetroVietnam): Vietnamese oil refinery factories will compete well.
PetroVietnam has built a plan for development until 2015 and 2025, aimed at meeting both domestic consumer demand and export demand. From now to 2010, PetroVietnam will put the Dung Quat Oil Refinery Factory into operation with an annual capacity of 2.6 million tonnes to meet 30 percent of domestic demands. In 2011-2015 period, the Nghi Son Refinery and Petrochemical Complex with an annual capacity of 10 million tonnes and the Oil Refinery Factory No3 with an annual capacity of 10 million tonnes will also be put into use to meet around 80 percent of domestic consumer demand. In the 2016-2025 period, PetroVietnam will expand the Dung Quat factory and double the capacity of the Nghi Son and Factory No3 with a view to exporting to Laos, Cambodia and Thailand. Therefore, by 2025 the total capacity of Vietnamese oil refineries will be 50-55 million tonnes annually. PetroVietnam is strictly directing the implementation of the three oil refinery factories.
Some have said that as a member of the World Trade Organisation (WTO), competition for product distribution will be fiercer. The depreciation period for most oil refinery factories in other countries is at an end so their products are cheap. Profits from newly built factories in Vietnam will be reduced significantly. As many oil refinery factories in the rest of the world have been used for a long time, they have invested large sums of money in upgrading and improving the quality of products and to avoid environmental pollution. Vietnamese factories which apply advanced technologies will soon market high quality products at reasonable prices.
PetroVietnam will apply advanced technologies in running and maintaining these factories. In addition, the Vietnamese State has offered supporting policies to investors in the initial operation period. Thanks to these favourable conditions, Vietnamese oil refinery factories can compete with others in the world.
Cao Hoai Duong, deputy director of Nghi Son oil refinery joint venture: It is important to pay attention to ensuring the progress of the project.
The Nghi Son Oil Refinery and Petrochemical Complex is located in the Nghi Son Economic Zone in Thanh Hoa province with a total investment of US$6.2 billion. The PetroVietnam contributed 25.1 percent of the capital, Kuwait International Oil and Gas Group (KPI) 35.1 percent, Idemitsu Kosan (IKC) of Japan 35.1 percent and Mitsui Chemical Company of Japan 4.7 percent. The project has an oil refinery capacity of 200,000 barrels per day (equivalent to 10 million tonnes per year). The project not only ensures energy for the country but also sets an important standard for the oil refinery industry, supporting industries and other services. The project also helps boost economic development in the southern region of Thanh Hoa and the northern region of Nghe An province and generate thousands jobs for labourers.
The main objective of the project is to meet domestic consumer demand. It is expected that the plant enough oil and gas for all consumers in the north. Through co-operation with foreign experts, the project will help produce high quality products to meet the environmental standards put forth by advanced countries.
It is very important to ensure the progress of the project. We have studied various issues relating to the development of the market such as workforce, machines, and materials to limit unexpected problems. We have also reduced the time for bidding. Our partners are experienced companies, which can take proper measures to ensure the progress of the project. Thanh Hoa province’s People’s Committee has also lent support in clearing space needed to implement the project.
Nguyen Tan Hoa from the Centre for Technology Application and Transfer under the Vietnam Petroleum Institute: There is a plan to train human resources
Building oil refinery plants is very important in ensuring energy security and is very useful to produce nitrogenous fertilizers, plastics, synthetics, and pharmaceuticals. Over the past years, Vietnam Petroleum Institute has always provided timely support in terms of technique and technology for projects to build oil refinery factories. We also provided consultancy to the PetroVietnam in selecting bidders, which met three main criterions namely ensuring the supply of crude oil to the project in the long-term, having financial resources and experience in operating oil refinery plants.
The Institute also provided consultancy to other oil refinery plants to develop in accordance with the world’s trend which pay attention to light product such as high quality petrol, airplane fuel, the reduction of FO fuel or kerosene in order to improve the quality of products and reduce environmental pollution.
The Nghi Son Oil Refinery and Petrochemical Complex is a record-holder in many aspects. It is the factory, which had the longest time to seek partners and has the biggest capacity at 10 million tonnes per year, the highest investment capital at US$6 billion, and the quickest time spent on negotiating with partners (only 10 months).
Oil refinery and Petrochemical unions are equipped with modern facilities, requiring highly qualified human resources. Each oil refinery plant has around 1,000 operators, so it is very important to train human resources. We have a plan to train human resources to ensure that when operating, the local staff can work with foreign experts and replace them gradually in mastering technology and operating plants safely.
VOV
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