Investor wants to expand Dung Quat oil refinery

Binh Son Refining and Petrochemical Company Limited (BSR), the operator of Dung Quat Oil Refinery, is choosing a consultant to help it borrow US$1.2 billion to expand and upgrade the refinery in the central province of Quang Ngai.

The upgrade and expansion project is expected to cost US$1.82 billion, 30% of which is BSR’s capital and the rest is borrowed, BSR general director Tran Ngoc Nguyen was quoted by news site VnExpress as saying.

Set for completion in 2022, the expansion will raise Dung Quat’s annual capacity from 6.5 million tons to 8.5 million tons and help the refinery’s products meet Euro 5 standards.

“Within this month, we will choose a consultant that will help Binh Son borrow US$1.2 billion from either a foreign lender or a local one,” said Nguyen.

“It is not too difficult to find a lender for such a loan, which is not too big for a refinery oil project. The concern is whether that lender can guarantee the loan and lend its over to BSR with a reasonable interest rate,” he said, adding that the selected consultant will find the best solution for BSR.

Regarding the equitization plan for Dung Quat, the BSR leader said the company will have the refinery launching its initial public offering (IPO) in the third quarter next year and will decide the refinery’s value within this year.

In early September, the Government had allowed BSR to become financially independent from January 1 next year.

As such, the Government will stop collecting part of its revenue from selling oil, liquefied gas and petroleum products on the domestic market, which is currently set at 13% for petrol.

At the same time, the company will not be allowed to enjoy a sum worth 3-7% of fuel import tax, and the Government cut import tariffs on diesel oil and jet fuel (Jet A1) to 0% from the current 10%.

BSR has already achieved this year’s target and from now until the year’s end, the company can produce an additional one million tons of products, raising this year’s volume to 6.91 million tons and revenue to VND12 trillion (US$528.24 million), contributing VND2 trillion more to the State’s coffers.

“The effort to achieve the year’s target 52 days earlier than the due date is to make up for the third overall maintenance of Dung Quat, during which the refinery will halt operation for a while in the middle of next year,” Nguyen said.

Covering 810 hectares of land and water surface, Dung Quat refinery has a maximum capacity of 6.7 million tons a year, or 148,000 barrels a day.

After six years of operation, the project worth US$3 billion has contributed VND133 trillion to the State budget, earned VND785 trillion in revenue and sold 43 million tons of products to the market, meeting 40% of domestic fuel demand.

Source: Saigon Times

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