PetroVietnam Power, a unit of state-run Vietnam Oil and Gas Group, has announced plans to build an oil refinery and petrochemical complex in the country. The total investment is expected to be up to $18.5 billion.
The company informed Prime Minister Pham Minh Chinh of its construction plans, according to local media reports. If the plan materializes, it would be the third refinery in the nation.
The refinery will be built in the southern province of Ba Ria-Vung Tau. Upon completion, it will be able to process 24 million to 26 million tons of crude oil per year.
The construction period is divided into two phases. The investment for the first and second phase is expected to be up to $13.5 billion and $5 billion, respectively. The company will also construct a facility for storing petroleum products.
The crude oil and other resources needed for the refinery will be sourced domestically as much as possible, and any shortfalls will be imported from the Middle East and the U.S., according to the company. The timing of operation has not been divulged.
Currently, Vietnam has two operating refineries -- the Nghi Son Refinery in the northern province of Thanh Hoa, operated by Japanese oil wholesaler Idemitsu Kosan, and the Dung Quat Refinery in the central province of Quang Ngai, operated by PetroVietnam.
But the nation does not have any refineries in the south, where Ho Chi Minh City, its largest city which accounts for about 45% of total domestic demand for petroleum and petrochemical products, is located.
PetroVietnam says the transportation of petroleum products is "costly" and its plans to build refineries and other facilities in the south "are reasonable."
However, the Southeast Asian country already meets over 70% of its petroleum product demand at the two existing refineries. Concerns have been raised over gasoline demand possibly becoming stagnant as environmental regulations become stricter and the use of electric vehicles spreads, leading to an oversupply of gasoline. Raising the massive funding is also likely to be an issue.