Vietnamese Prime Minister Nguyen Tan Dung has agreed in principle to the construction of a huge refinery and petrochemical complex by Thailand's PTT in the central Vietnamese province of Binh Dinh, a senior regional politician said Sunday.
"According to the latest information I have just obtained, the prime minister has formally signed a document to agree in principle the development of this project in the Economic Zone of Nhon Hoi," Ho Quoc Dung, vice chairman of the People's Committee of Binh Dinh province, said.
Big regional projects in Vietnam require a green light from Hanoi.
Nhon Hoi is close to the provincial capital of Qui Nhon which lies on Vietnam's south central coast.
Additionally, Deputy Prime Minister Hoang Trung Hai has signed a document allowing the Binh Dinh provincial government to ask PTT to carry out a feasibility study for the project, another Binh Dinh provincial official said Sunday.
"This is an important step to legally confirm the feasibility of the project," said Man Ngoc Ly, the head of the Binh Dinh Economic Zone Board of Management.
PTT's feasibility study for the project would be submitted for evaluation by the industry and environment ministries before it was sent to the prime minister for approval, Ly added, without providing any timeframe for the feasibility study.
Construction at the refinery is expected to begin in 2016, with first commercial output in 2020, he said.
PTT made the proposal to build the 660,000 b/d or 36 million mt/year project to the Vietnamese authorities in November 2012. The total cost for the project is now estimated at around $27 billion, slightly lower than the $28.7 billion that the Binh Dinh officials announced last year.
That huge funding demand has raised concerns in Vietnam that PTT -- whose 2012 net profits were $4.2 billion on revenues of $93 billion -- might be unable to finance the project, Dung said.
Moreover, the project has been opposed by Vietnam's biggest energy company, state-owned PetroVietnam, which fears that the construction of the mega plant might lead to a glut of oil products in Vietnam.
PetroVietnam runs the country's only 6.5 million mt/year (130,000 b/d) refinery at Dung Quat, which meets around 30% of Vietnam's oil-product demand.
PetroVietnam is planning to build two more 10 million mt/year plants (200,000 b/d), one at Nghi Son in the northern province of Thanh Hoa and another at Long Son in the southern province of Ba Ria Vung Tau.
The Nghi Son unit, which is scheduled to start commercial operations in mid 2017, would be owned by PetroVietnam (25.1%) along with Kuwait's Q8 (35.1%), Japan's Idemitsu Kosan (35.1%) and Mitsui Chemicals (4.7%).
PTT had the financial muscle to implement the project, and most of the concerns about the project had been addressed, Dung said, without giving further details.
There is much work to do after the prime minister's approval in principle, including talks about possible government assistance for the project, said Vu Dai Thang, head of the Department of Economic Zones Management, which is part of Vietnam's Ministry of Planning and Investment.
PTT was unavailable for comments Monday as its offices were closed for a public holiday Monday.
