The Vietnam Oil and Gas Group (PVN) is seeking approval from the government to invest more than US$18 billion in an oil refinery project in the southern province of Ba Ria-Vung Tau.

The Long Son Petrochemicals (LSP) Complex in Long Son Commune, Vung Tau City of Ba Ria-Vung Tau has been earmarked as the location for the project, which comprises two parts -- a petrochemical and refinery plant and a national storage for crude oil and petrol products.

In the first phase, the petrochemical and refinery plant is expected to process 12-13 million metric tons of crude oil per year, along with 0.66 million metric tons of condensate, LPG, and Ethane. 

The output of the plant will be 7-9 million metric tons of petroleum and 2-3 million metric tons of petrochemicals each year.

In the second phase, the plant will receive additional investment to increase its output by 3-5 million metric tons of petroleum and 5.5-7.5 million metric tons of petrochemicals per year.

PVN plans to finalize and submit dossiers of the project to the government in January next year. 

The firm will prepare a feasibility study report from June to December 2023 and expects to receive the green light in the first quarter of 2024. 

PVN will select the engineering-procurement and construction contractors from January 2024 to December 2027.

Vietnam’s gasoline consumption demand was 18 million metric tons in 2020 and is forecast to reach about 25 million metric tons in 2025, according to PVN.

The amount is projected to hit 33 million metric tons in 2030 and continue to increase in the future.

Meanwhile, the current domestic petrol supply is about 12.2 million metric tons, meeting only about 70 percent of the present demand, 40 percent of that in 2030 and 20 percent in 2045.

Besides, domestic petrol reserve can currently meet less than 10 days of domestic consumption.

These figures showed that the domestic production capacity of petrol products is much lower than the consumption demand and the country is still largely dependent on overseas sources. 

Although Vietnam is spending billions of dollars importing fuel products every year, PVN forecasts that the domestic market would face a shortage of 19.5 million metric tons of petroleum products every year by 2030, and the figure could rise to 25 million metric tons by 2035.

Workers walk inside Long Son Petrochemicals (LSP) Complex in Ba Ria-Vung Tau Province, Vietnam. Photo: Dinh Thin / Tuoi Tre

The southern region is the largest consumer market in the country, accounting for 45 percent of the demand, according to PVN.

However, there are currently no oil refinery projects in the region, with the supply for this market mainly transported from the country’s two only refinery plants in the central area, Dung Quat and Nghi Son, leading to higher costs.

The construction of an oil refinery plant at the LSP Complex in Vung Tau, the third of its kind in Vietnam, would therefore help save costs and resources while meeting the high demand for national energy reserves, PVN stressed.

Backed by experts

As a leader of the Ministry of Industry and Trade told Tuoi Tre (Youth) newspaper earlier this week that the agency is working with related units to discuss the project, many experts have showed their supports for PVN’s proposal.

Prof. Dr. Ho Si Thoang, an oil and gas expert, said that developing a national underground oil facility to store crude oil and petroleum is necessary to ensure energy security and respond to market fluctuations.

Thoang highlighted the necessity of calculating the appropriate capacity scale, balancing capital sources from the State budget and private sector, and selecting suitable investment formats before the implementation of the project.

In addition, Dr. Nguyen Quoc Thap, chairman of the Vietnam Oil and Gas Association, advised PVN to carefully calculate imports of raw materials in order to ensure the supply for the new refinery in the context of decreasing domestic crude oil production.

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