Billion-dollar Victory oil refinery remains uncertain

The fate of $22 billion Victory Oil Refinery project, invested by Thailand’s PTT Public Company Limited (PTT) and Saudi Arabian Oil Company (Saudi Aramco), remains uncertain in the face of a global slump in oil prices.

Nguyen Ngoc Toan, deputy director of the Nhon Hoi Economic Zone Management Authority, said that the investors had yet submitted the necessary application dossiers of the proposed project to the local authorities for approval.

“Representatives of the management board had a working session with the investors. The investors are currently hiring experts to study and adjust the scale of the project. Simultaneously, they requested an extension of the deadline of submitting documents for the investment certificate to June 2016,” Toan said.

At present, the investors have not completed the application procedures for an investment certificate due to the world oil price being in a slump without showing signs of recovery. The world oil price is currently at $37 per barrel, almost half of the $60 per barrel breakeven price.

Additionally, the price is forecasted to drop to $20-25 per barrel. As the world’s largest oil and gas companies, including BP Plc, Statoil ASA, and Total SA, are facing difficulties due to the oil price slump, PTT and Saudi Aramco must consider reducing their investments.

Last year, the project’s investment certificate was delayed by the investors’ failure to complete the procedures, despite the local authorities’ commitment to create favourable conditions for the completion and implementation of the project.

PTT and Saudi Aramco wanted to look for a Vietnamese partner to take part in the joint venture, as mentioned earlier by PTT.

The Thai firm proposed partnering with state-run Vietnam National Petroleum Group (Petrolimex) to develop the project and held working sessions with the provincial authorities  and Petrolimex representatives but failed.

While PTT confirmed that the involvement of a local partner was not an essential condition for PTT’s investment, Saudi Aramco insisted on having a Vietnamese enterprise in the project. This is why the investors have not yet applied for an investment certificate.

The uncertainty in implementing the project will impact Binh Dinh’s foreign investment prospects as the opportunities from the Victory project remain vague. Last year, two Thai companies, namely Ratchburi Electricity Generating Limited and KST Energy Development Joint Venture Co., Ltd, arrived to Binh Dinh to find investment opportunities in supporting industries, with the direct intention of working under the Victory complex.

The Victory complex is planned to cover 1,400 hectares in Nhon Hoi Economic Zone and is designed to refine around 20 million tonnes of crude oil per year. The investors are expected to increase the designed capacity to 30 million tonnes and the total investment capital to some $30 billion after 2021, and complete construction in the 2021-2025 period.


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