Dung Quat oil refinery operates effectively

The Dung Quat Oil Refinery in the central province of Quang Ngai
is running effectively, helping ensure national energy security, a
conference was told on Oct. 18.

A report presented by
Minister of Industry and Trade Vu Huy Hoang at the event showed that the
plant now can meet about 30 percent of the domestic demand for
petroleum and that it has created a breakthrough in economic development
in Quang Ngai, helping boost economic growth in the central region and
the country.

Dung Quat Oil Refinery started its operation in February 2009, becoming the first petrochemical complex in Vietnam .

In a draft report on the implementation of the National Assembly
resolution on the first refinery, the NA’s Committee on Science,
Technology and Environment proposed the NA to recognise the completion
of the project at its upcoming 8th session.

The
committee also proposed that the Government map out plans to raise the
refinery’s capacity in order to develop the petrochemical industry in
conformity with the schemes to develop the Dung Quat Industrial Zone and
the central economy./.

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Importers hit as banks slap fees on dollar sales

Banks are demanding additional fees to sell dollars that take official rates almost to black-market levels, causing importers anguish.

Many complain that they are forced to pay VND19,850 - VND19,900 for a dollar while the official rate is only VND19,500.

A Ho Chi Minh City-based fashion firm owner told Tuoi Tre she plans to buy $1 million to pay for imports during the year-end peak season, but would have to pay service fees of VND400 million (US$20,500), meaning the actual dollar rate will be VND19,900 and not VND19,500.

A paper importer said he will lose some VND2.8 billion on a consignment worth $7 million this month.

Asked about the fees, several banks explained they buy dollars from exporters at negotiated prices that are quite close to black-market rates due to the dollar shortage. They earn just VND5-VND10 per dollar, they claimed.

In what is a double whammy for buyers, banks do not issue invoices for the fee. “If there are no invoices, the fees will be treated as profits and taxed,” a director of a paper import company said.

It is unclear where Vietnam will get its dollars in the remaining months this year, Lao Dong (Labor) newspaper said.

It ruled out gold exports as a source saying the country recently began to import three tons of the precious metal to meet surging demand.

Around 56 tons were exported in the first eight months for $2 billion.

Mounting demand for the greenback to repay loans that will fall due at the peak year-end season is also expected to put pressure on the dollar rate.

The Ministry of Planning and Investment forecasts the trade deficit to reach $10.1billion this year.

The Asian Development Bank revealed last Friday that Vietnam’s forex reserves are enough for eight weeks’ imports, adding that they may not rise by much in the last quarter.

The country’s traditional sources like foreign direct investment, portfolio investment, and overseas remittances have not seen robust growth, the newspaper added.

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BP sells $1.8bln of assets to Russian JV TNK-BP

Photo: Reuters

LONDON/MOSCOW - BP has agreed to sell a package of oil and gas fields in Vietnam and Venezuela to its Russian joint venture TNK-BP for US$1.8 billion as the London-based oil major raises cash to pay for its Gulf of Mexico oil spill.

BP said in a statement on Monday that the assets represented reserves of 270 million barrels of oil equivalent and production of 40,000 barrels of oil equivalent per day.

The sale brings to around $11.5 billion the amount BP has agreed from asset sales in recent months. The company has a divestment target of $25 billion to $30 billion over the next 18 months.

Analysts said the price was in line with their valuations for the assets, which they added were not strategic for BP.

"This allows BP to high-grade its portfolio," Iain Armstrong, oil analyst at Brewin Dolphin said.

The deal also sees TNK-BP realize its ambition of growing outside Russia, where it is the third-largest oil producer.

"The acquisitions in Venezuela and Vietnam mark a milestone in TNK-BP's strategic expansion in the global energy market," said Mikhail Fridman, TNK-BP's executive chairman and one of the four Russia-connected billionaires who own the other half of TNK-BP.

The sale also represents the latest pull-back by big western oil companies from Venezuela.

In 2007 US oil giants Exxon Mobil and ConocoPhillips pulled out of Venezuela following socialist President Hugo Chavez's demand for majority control of oil projects, and in March this year Royal Dutch Shell said it and others were shunning the country's licensing rounds.

BP remains in talks with potential buyers for its interests on the North Slope of Alaska, including Prudhoe Bay, and Argentina-based Pan American Energy, sources familiar with the matter said.

The assets are worth around $7 billion and $7.5 billion, respectively, analysts said.

BP shares traded up 0.2 percent at 426 pence at 0915 GMT compared to a 0.1 percent rise in the STOXX Europe 600 Oil and Gas index.

TNK-BP, which produced 1.89 million boe per day in 2009, said it would use its own funds to finance the acquisitions and expects the transaction to be completed by first half 2011.

In Venezuela, the company will buy 40 percent of Petroperija and 26.6 percent of Bouqeronin oil field projects, majority owned by Venezuela's state-owned PDVSA oil company.

It will also acquire a 16.7 percent stake in the Petromanagas upgrader project, which processes tar-like Orinoco heavy crude into lighter synthetic oil that can be processed by traditional refineries.

In Vietnam, TNK-BP will acquire BP's 35 percent stake in an offshore gas condensate project; a 32.7 percent stake in the Nam Con Son gas pipeline and a 33.3 percent stake in the Phu My 3 power plant.

All three of these assets form an integrated gas and power project with a production capacity of 30,000 barrels of oil equivalent per day, on a working interest basis.

HCMC office building market sees partial recovery

Grade A office rents in Ho Chi Minh City continued to slip in the third quarter but that of grades B and C increased for the first time since the end of 2009, real-estate consultancy CB Richard Ellis reported.

While average rent for grade A offices fell to US$36.70 per square meter per month from $37.51 in the second quarter, it rose from $19.3 to $20 for grade B offices.

The total area leased in the 3rd quarter was 62,000 sq. m, taking the total for the year to 194,000 sq. m, or higher than in the whole of 2009 when the number was around 154,500 sq. m.

HCMC’s economic recovery, which remains on track, is persuading companies to move to large office buildings.

Banks, schools, and service providers are among the main customers for grades B or C in the downtown area.

Although eight new grade C and one grade B buildings opened in the 3rd quarter with more than 63,000 sq. m of space, the rate is still climbing. On the other hand, no new grade A building came into the market but the rental is still falling.

Another reason for the declining demand and rent for grade A offices is the competition from some tenants who buy space in the buildings at preferential prices and lease it out at 15-35 percent lower than the building owners.

Though the economic recovery will mean higher demand for office space in the coming future, rates will decrease as a result of huge supply coming into the market.

In the final quarter of this year alone, 100,000 sq. m will be available, including at the Bitexco Financial Tower which will have 37,000 sq. m of grade A space.

In the next three years, 1.2 million sq. m of new office space for lease will be available.

Old buildings will face tough competition and, though many are planning to upgrade, will find it hard to maintain current rentals.

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Confab examines new housing policies

by Xuan Huong

A new apartment building in Phu My Hung Area in HCM City. New housing policies on residential real-estate transactions were introduced to housing companies at a conference yesterday. — VNA/VNS Photo Van Khanh

HCM CITY — More than 200 representatives from property companies learned about new housing policies during a meeting held yesterday in HCM City with the Viet Nam Real Estate Association and the Ministry of Construction.

The ministry explained that Decree 90, which took effect four years ago, was replaced with Decree 71.

The new decree contains detailed regulations covering different sectors in the local property market, and guides the implementation of the Law on Housing, according to Nguyen Trong Ninh, deputy director of the Housing and Real Estate Market Management Department.

In addition, Circular No 16 issued by the Ministry of Construction provides detailed guidelines for the implementation of Decree 71 regarding residential real estate transactions. The circular came into effect October 16.

Decree 71 contains regulations on the selection of developers, the appraisal and approval process of housing, commercial housing, individual housing, social housing projects and housing projects for public employees.

It also describes ways that project developers can raise capital for their projects.

Unlike the previous decree that contained vague language, the new decree allows developers to raise capital from banks, credit institutions, investment funds, corporate bonds, secondary investors and other organisations or individuals.

Under Decree 71, housing developers will be permitted to sell in advance a maximum of 20 per cent of the total number of apartments in a property project before finishing the foundation of the building.

The remaining sales must be traded via property exchange floors when the projects' foundations are completed.

The decree also outlines regulations and preferential policies for investors who develop social housing projects.

The aim is to encourage them to develop more housing projects and meet the housing demand of low-income earners.

In addition, Decree 71 has detailed guidance concerning housing transactions of Vietnamese residing abroad and of foreigners leasing houses in Viet Nam.

Regulations in previous decrees on housing policies that conflict with the new decree are no longer valid, according to Ninh.

Housing proposals submitted before August 8, the effective date of Decree 71, to provincial governments will be considered in several ways, he explained.

If the project has fewer than 2,500 apartments and is being built with State funds, the provincial People's Committee will make a decision based on Decree 90.

If it is being built with non-State funds, the local authority can issue an investment approval document to developers without asking them to submit a statement again.

If the project proposal has more than 2,500 apartments but does not mention investment sources, the provincial authority must send a statement to the Government for approval before it is turned over to the provincial government for final approval. — VNS

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Finance Ministry to control prices

Customers buy bread at Big C supermarket in Ha Noi. — VNA/VNS Photo Tran viet

HA NOI — The Ministry of Finance has said it will step in to control prices on the domestic market following predictions that they are expected to rise by the end of the year.

Nguyen Tien Thoa, director of the ministry's Pricing Management Department, said the recovery of the world economy and increasing demand for materials for production and business would push prices up on the world market by the end of this year.

He said the department should be able to keep the expected increases down to a modest level. However, the high demand for goods and services before Tet, plus any diseases in livestock would keep the pressure on prices.

Difficulty in raising capital for production and electricity costs would also add to the pressure.

Thoa said the State would check on the amount of goods in stock and register sales prices of 17 essential goods to avoid speculation.

By the end of December, prices of electricity, coal, paper, cement, tap water, transport would be stabilised.

Last week, Prime Minister Nguyen Tan Dung called on ministries, agencies and municipal and provincial authorities to implement strategies to stabilise the market and boost production.

Directive No1875/CT-TTg has been designed to ensure Viet Nam's growth rate reaches 6.5 per cent and the consumer price index (CPI) does not rise above 8 per cent. — VNS

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Province lures investors

Zinc-plated corrugated steel is rolled at the Hoa Sen Group factory in the southern province of Ba Ria – Vung Tau. — VNA/VNS Photo The Anh

HCM CITY — Southern coastal Ba Ria – Vung Tau Province has attracted an increasing number of investment projects over the last five years, according to the province's Department of Planning and Investment.

From 2006 through 2010, the province issued 196 new investment licences with total committed capital of US$24.26 billion.

The investment projects now number at 280, with total committed capital of $27 billion.

Most investment projects are in the tourism and industry sectors.

The number of projects has doubled, while committed capital has increased 10 times compared to the target set for the 2006-10 period, according to the department.

Implemented capital reached $3.39 billion, a rise of 1.5 times compared to the 2001 – 05 period, about $650 million higher than the target.

According to the department, foreign investment projects, mostly in the tourism sector, have accounted for 60 per cent of total investment capital and 50 per cent of export turnover.

During the 2006-10 period, foreign-invested projects made up 20 – 30 per cent of the total budget and created more than 20,000 jobs.

Local investors have focused on projects to develop seaports, residential areas and other infrastructure projects.

They include projects to develop Long Son Oil and Gas Industrial Park ($169.7 million), An Phu shipbuilding factory ($144.1 million), Chau Duc residential area ($63.43 million) and Nui Lon – Nui Nho tourist resort ($71.79 million).

Tan Thanh District in the province has attracted 127 projects with total investment capital of VND86,357 billion ($4.4 million).

Vung Tau City ranked second in the number of projects, with 76, and a total investment capital of VND24,099 billion ($1.2 million).

Viet Nam's membership in the World Trade Organisation (WTO) in 2007 has helped spur foreign investment growth, especially in Ba Ria – Vung Tau Province.

In 2007, the province attracted investment capital of only $1.4 billion, but capital rose to $11.6 billion in 2008.

Le Kim Huong, director of the province's Department of Planning and Investment, said the province wanted to create the most favourable conditions for both local and foreign businesses to invest.

The executive director of Ho Tram Beach Resort, Le Ngoc Quynh, noted that when his company invested in tourism in Phuoc Thuan Commune in Xuyen Moc District, local authorities supported them by improving infrastructure, such as power and telephone lines.

Because of the global recession, investors have also faced challenges in luring capital, particularly for large projects.

In addition, frequent changes in Government policies about land-use have postponed site clearance work because of lawsuits on compensation for displaced residents. This, in turn, has delayed progress on large projects.

Located in the major southern economic zone more than 100 kilometres from HCM City to the southeast, Ba Ria – Vung Tau Province is a major tourism site, favoured by nature with a long, beautiful coast.

The coastal province is also the country's only site for the offshore oil and gas industry. — VNS

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