Laos: Oil pipeline project to cut petrol prices

Laos: Oil pipeline project to cut petrol prices

A planned oil pipeline project connecting a Vietnamese harbour to the
central province of Khammuan will reduce oil prices significantly, a
feasibility study has shown.

The price of gasoline in Khammuan province could be reduced as much as 600
kip per litre - from 7,500 kip per litre to 6,900 kip - once the project is
fully operational by 2026, as expected.

Meanwhile, diesel prices could be reduced from 6,500 kip to 6,200 kip per
litre, according to the study, which is calculated based on current rates in
Khammuan.

Last month, the Lao and Vietnamese governments signed a Memorandum of
Understanding for the construction project of the Hon La Oil Stockpile and
an oil pipeline from Hon La Harbour in Vietnam's QuangBinh province to
Khammuan province in Laos.

The signing ceremony took place during the official visit to Laos by
Vietnamese Prime Minister Nguyen XuanPhuc.

The feasibility study of the project has now been finished and submitted to
the Lao government for consideration and approval, a senior technical staff
of Petro Lao Company, project developer, MrVethMalavong told Vientiane Times
on Friday.

Petro Lao had also recently submitted a proposal to the Ministry of Industry
and Commerce to present a report around the findings of the feasibility
study and the project's concept next month.

"We are now waiting to present our report," said MrVeth, who is in charge of
the project which is estimated to cost US$380 million, according to the
feasibility study which British and Vietnamese consulting firms have also
certified.

The study identified that four main facilities would be developed under the
project. They are Hon La Harbour and Hon La Oil Stockpile in Vietnam, a 306
km oil pipeline from Hon La to Thakhek, capital of Khammuan province and an
oil stockpile to also be built in Thakhek district.

Once the government gives the green light to develop the project, Petro Lao
says it will then look to take the next steps including finding its join
venture partners. The project is expected to be 100-percent invested in by
Lao petroleum companies, said officials.

"Some companies have expressed their interests in joining the project
development. We are currently opened to welcoming business partners,"
MrVeth.

Asked if Petro Lao is capable of solely investing in the project in the case
that there are no other companies interested in a joint venture, MrVeth said
the company is financially capable.

Once the project is fully operational, it could import as many as 2.5
billion litres of refined oil annually, doubling the amount of current Lao
needs. Data collected from 22 petroleum companies around the country have
shown that just 1.2 billion litres of oil were imported to Laos in 2015.

The project will comprise of two phases, with Phase I the construction of
the harbour and Hon La Oil Stockpile, which are set to complete in 2019
while the Hon La Oil Stockpile under Phase I is designated to be capable of
storing 50,000 tonnes of oil.

Phase II will see the construction of an oil pipeline and oil stockpile in
Thakhek, which will be able to store 90,000 tonnes of oil. The Hon La Oil
Stockpile will then be expanded to store up to 80,000 tonnes of oil under
Phase II.

Once Phase I is complete, oil can be imported directly from Singapore to Hon
La Stockpile then imported to Laos by land which would see oil prices
reduced as importers would save on transport costs and would not have to
import through middlemen, MrVeth explained.

He added that once the Lao government approves the project, the project
developer will inform the Vietnamese side and construction work could then
begin.

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Link to Original Article:
http://www.vientianetimes.org.la/FreeContent/FreeConten_Oil_115.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com