Gazprom deal in the pipeline

By Viet Investment Review, September 18th, 2013.

Russian gas giant Gazprom Neft subsidiary, the oil arm of the group, is looking at joining in the expansion of Vietnam’s first oil refinery  Dung Quat.

In the recent meeting in Hanoi with the Ministry of Planning and Investment (MPI), Gazprom Neft’s CEO Alexander Dyukov laid out the company’s interest in expanding the Dung Quat refinery to an output of 10 million tonnes a year from the current 6.5 million tones.

The Moscow-based PR division of Gazprom Neft failed to comment when contacted by VIR reporters.

However, VIR’s source in the MPI did say that MPI Minister Bui Quang Vinh was very optimistic about the potential Gazprom-PetroVietnam deal.

Vinh added that expanding production at the Dung Quat refinery was an important step for Vietnam, and that he supported Gazprom Neft’s ideas for the project, though he wanted the company to commit to supplying a stable supply of raw materials for the expanded Dung Quat before the project was approved.

The refinery currently processes crude oil from Vietnam’s offshore Bach Ho field. Despite the declining output from the Bach Ho field, state-run PetroVietnam plans to upgrade Dung Quat to refine crude oil from other sources.

Gazprom Neft executives explained that they would bring an important element to the table – experience in modernising and expanding refineries all over the world.

Gazprom Neft has worked with PetroVietnam in other areas for over 10 years, mostly in exploring and exploiting offshore fields.

The company holds more than 70 licences for oil fields and five for refineries in Russia, with the total capacity of nearly 60 million tonnes and 40 million tonnes per year respectively, as of 2012.

In 2011, PetroVietnam started searching for international investors to take a 49 per cent stake in the Dung Quat oil refinery.

The expansion for the refinery is already in the development stage with the aim of having it operational by the beginning of 2018.

Japan’s JGC, in 2010, was selected as the consultant for the expansion project.

According to PetroVietnam, several key partners in Vietnam’s oil and gas industry have requested information on the expansion of the Dung Quat refinery including giants from Venezuela, Japan, Malaysia, Korea, and Russia.

In terms of Vietnam-Russia relations, the energy sector plays a central role, particularly the oil and gas sector.

In addition to Gazprom, Russian oil company Rosneft recently signed a memorandum of understanding (MOU) with PetroVietnam that would strengthen cooperation between the two sides. Rosneft entered Vietnam to join the Nam Con Son pipeline transporting gas and condensate from offshore blocks to Dinh Co Terminal and Phu My Power Complex for fertiliser and electricity production.


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