Though the country’s first oil refinery was completed nine years behind schedule, its cost was eventually lower than estimated and it remains a breakthrough for the oil industry, a government report to the National Assembly said.
The Dung Quat Refinery only cost VND40 trillion (US$2.05 billion at current value) when it was built this year, VND10 trillion less than estimated, said the report.
But according to a report released by the House Committee of Science, Technology and Environment, the refinery’s cost was estimated at $1.5 billion in 1997, raised more than once, and finally ended at $3.05 billion (VND51.7 trillion) in 2009.
The government attributed the difference of around $1 billion between the two reports to the fact that the committee report included revenue expenses like salaries and taxes.
Regarding the criticism that the plant’s capacity is too low at 6.5 million tons a year compared to 10-12 million tons for other refineries worldwide, the government said the project was executed at a time when there were no strategy or planning for oil refineries making it difficult to make a decision on the capacity.
The report admitted that PetroVietnam, which built the refinery, did not have a long-term vision for refining and therefore had to amend the design two times to add two more workshops. Meanwhile, official agencies had been slow in issuing legal documents on quality.
The government said PetroVietnam is considering importing crude oil of better quality to replace the oil from its offshore Bach Ho field, and expanding the refinery to increase its capacity to 8-10 million tons.
Many legislators questioned the competitiveness of the plant’s products and the economic benefits to the country.
Vietnam’s first refinery - an overview
It took 13 years for the Dung Quat Refinery to be built. Work began in 1997 and the plant was initially expected to go on stream in 2001, but it took until January 2010 for it to be actually completed.
Around 75 percent of the work was carried out by Vietnamese sub-contractors.
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PetroVietnam, the nation's state-owned oil and gas group, has said that its Dung Quat refinery will face a surplus of around 157,200 cubic meters this year even if local fuel traders try their best to purchase its products.
Vietnam’s first oil refinery is facing the problem of having huge stockpiles of products that it has no place to store.
