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Vietnam Petrochemicals Report 2012
Business Monitor International, Dec 2011, Pages: 50
Additional refinery capacity is set to move Vietnam towards self-sufficiency in refined products, leading to significant potential in downstream production, according to BMI’s latest Vietnam Petrochemicals Report.
Current plans mean that until 2016 at the earliest most downstream production will be reliant on propylene, butadiene and aromatics streams produced by refineries, although naphtha streams could supply feedstock to domestic cracker capacity. PetroVietnam plans to expand the Dung Quat refinery’s capacity to around 200,800 barrels per day (b/d) by 2017 while the 200,000b/d Nghi Son refinery is due for completion in 2014, with an option to scale it up to 400,000b/d. The Nghi Son complex will have 150,000 tonnes per annum (tpa) of propylene capacity to supply a 150,000tpa PP facility, as well as 150,000tpa benzene capacity which will supply a paraxylene plant with 480,000tpa capacity. The third refinery due onstream is the Long Son project. The 200,000b/d plant is due to become operational in 2014-2015, and in our forecasts we have assumed that the latter date is the more likely.
In Q311, Siam Cement Group (SCG)'s petrochemical project in Vietnam was reportedly attracting foreign investor interest, according to the company, although it refused to disclose any details. SCG said it expected to finalise funding by early 2012. Once the funding is in place, the company is optimistic that construction can begin sometime in 2012. The complex is to be located on the island of Long Son and is to come onstream in 2015, using liquefied petroleum gas (LPG) supplied by Qatar. The plant has planned capacity of the 1.4mn tpa, which will include PE and PVC, and will cost US$4bn.
According to reports in September 2011, site preparation work for the proposed Nghi Son Petrochemical Refinery Complex, which is jointly owned by Kuwait Petroleum International (35.1%), Idemitsu (35.1%, PetroVietnam (25.1%) and Mitsui Chemicals (4.7%), was proceeding as scheduled, with operations due to begin in 2014. However, it is of note that financial backers of the project are exploring the possibility of cutting the level of investment.
By Q411, the joint venture (JV) partners had not issued an engineering, procurement and construction (EPC) contract and had expressed hope that costs could be reduced from an initial estimate of US$6bn. The project is expected to be financed at a debt-to-equity ratio of 70:30, according to the initial plan. Idemitsu said the participating companies were in talks with the government-affiliated Japan Bank for International Cooperation (JBIC) and other banks to secure funds.
BMI believes that, until more fully integrated petrochemicals complexes come online, Vietnam will remain heavily dependent on imports for domestic demand. By 2011, it had no cracker units and downstream units were relatively small with most capacity concentrated in PP and PVC production. Even with the planned projects, Vietnam will not be a major producer to rival other Asian markets and output will be dedicated to meeting growing demand from domestic industry.
Business Monitor International's Vietnam Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Vietnam's petrochemicals industry.
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