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Refinery: A development milestone
The Viet Nam Oil and Gas Group (PetroVietnam) officially inaugurated on January 06, 2011, the nation's first oil refinery built in Binh Son District, Quang Ngai Province. Nguyen Hoai Giang, General Director of Binh Son Refining and Petrochemical Company Ltd (BSR), told Viet Nam News the event was a milestone in the development of the country's oil and gas industry.
The refinery was put in use on September 2nd 2009. Why was the inauguration ceremony only held today?
Many people have asked me this question. This is one of the nation's most important projects, so every decision related to it had to be taken after careful consideration.
Following the Government decision to build the refinery, in mid-2005, PetroVietnam signed a contract with the Technip Contractor Consortium to build the plant. It was very difficult to develop the refinery, given the technological requirements, the natural conditions and the need for human resources. The global economic crisis in 2008 and 2009, which hiked expenses on equipment and payment for workers, was an especially difficult time.
However, thanks to timely guidance and support from the Party, National Assembly and the Government, we finally completed the project after four years of construction and released products that could be traded in the market.
Covering 337ha of land and 471ha of seawater surface, the US$3 billion oil refinery is designed to process 6.5 million tonnes of crude oil a year.
Its products include gasoline A92, A95, liquefied petroleum gas (LPG), kerosene, diesel and jet fuel, fuel oil as well as Polypropylen (PP). The PP production facility costs over US$230 million and has a production capacity of 150,000 tonnes per year.
How has the refinery operated so far?
The refinery was put in use successfully in February 2009. During the testing period, the investor cooperated with the contractor to correct some technical failures. On May 25th 2010, the investor granted an inspection certificate to Technip, the contractor, who will carry out maintenance task for the next two years.
Has the Dung Quat Oil Refinery started earning profits?
Yes, it has. From the testing period to December 2010, the plant received 8.3 million tonnes of crude oil and produced 7.2 million tonnes of refined products. Seven products were awarded the gold medal at Vietnam Expo-2010. Since 2010, the plant has earned revenues of VND60 trillion (US$3 billion). After contributing VND10 trillion (US$500 million) to the State budget, profit is estimated VND237 billion (US$11.8 million).
What are the production and trade targets for 2011? Is there any plan to upgrade and expand the refinery and to have Vietnamese experts run it independently?
This year, the oil refinery plans to earn total revenues of VND77 trillion (US$3.8 billion), contribute VND15 trillion (US$750 million) to the state budget and earn VND550 billion (US$27.5 million) in profits. We expect to meet 30 per cent of the country's fuel demand.
In October last year, PetroVietnam and Japan-based JGV so study the possibility of raising the refinery's capacity to 10 million tonnes per year. We plan to invest an additional $1 billion in the expansion plan which is expected to be completed in 2016.
For the oil and gas sector, planning and operating such a modern oil refinery efficiently is a good opportunity for Vietnamese staff to access high technology. Since the end of 2008, more than 1,000 Vietnamese operating and technical engineers have been recruited and trained. More than half of them are residents of Quang Ngai Province.
In October 2009, the investor employed 141 foreign operating engineers from South Korea and Britain to help operate the plant and transfer technology to the local engineers. After one year, engineers and staff of Binh Son Refining and Petrochemical Co. Ltd have been able to replace, step by step, key positions in operating the refinery. There are only 81 positions that require foreign experts and this year, the number will be reduced to 40 soon.
How has the refinery contributed to the development of Quang Ngai Province?
The construction of Dung Quat Oil Refinery stimulated foreign and domestic investment into the Dung Quat Economic Zone. By the end of last year, 157 projects were licensed with a total investment of US$10.3 billion. About 44 of these projects are operating well.
Of the province's budget income of VND16 trillion (US$800 million) last year, more than VND14 trillion (US$700 million) was contributed by the Dung Quat Oil Refinery. The budgetary income for the province was just VND376 billion (US$18.8 million) in 2004.
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