Vietnam plans 2017 IPO for its first oil refinery operator Binh Son

Vietnam plans 2017 IPO for its first oil refinery operator Binh Son

Vietnam's first oil refinery operator Binh Son Refinery and Petrochemical Co
Ltd (BSR), which owns the $3-billion Dung Quat refinery, is planning an
initial public offering in 2017 for which it has reportedly attracted
interest from top global energy firms.

Binh Son is the wholly-owned of the country's oil and gas giant
PetroVietnam.

The schedule for privatisation in 2017 aligns with the government's nod for
BSR's IPO plan, says the company, adding that it is working with advisories
to decide on the corporate value.

As per an earlier government plan, the privatisation entails selling a
strategic stake of 49 per cent in BSR to a foreign investor (even as
PetroVietnam retains the controlling equity interest of 51 per cent.)

Russia's top energy firms, Rosneft and Gazprom Neft, Thailand's PTT and
Kuwait Petroleum Corp have submitted bids for the major minority stake in
the Vietnamese refiner, according to a report in Reuters.

DEALSTREETASIA had earlier reported that Gazprom Neft had dropped its
intention to acquire the 49 per cent interest in BRS.

Both Gazprom Neft and Rosneft have been PetroVietnam's long-term partners in
the Southeast Asian country's oil industry.

Reportedly, the Thai state-owned PTT also backed out of the proposed
$20-billion Nhon Hoi refinery due to declining global oil market. PTT and
Saudi Aramco had planned to hold 40 per cent each in the project.

Vietnam has been working on attracting foreign corporations to contribute
capital in BSR since 2010. The government intended to bring out an IPO for
the oil refiner by the end of 2016, (according to an earlier statement by
BSR). However, the process has taken longer than expected due to the
complexity in evaluating the company.

Investors are expressing interest in the asset again as the government has
agreed to let BSR set its own selling prices to compete with foreign
imports, commencing from January 1 next year.

The situation where BSR can regulate its own prices is expected to spur
overseas investment, based on improved transparency and better business
management.

Paving way for the 2017 IPO, BSR has partnered with Singapore's Marsh Risk
Consulting to update its risk management system.

BSR will be exempted from import taxes on diesel as well as materials for
Jet A1 fuel, a substantial cut from the initial 10 per cent tariff. In
addition, the government will also remove the regulatory charges applied for
BSR's products consumed in the domestic market, including liquefied
petroleum gas, oil and petrochemical products.

BSR's Dung Quat refinery currently covers for 40 per cent of the domestic
demand, while the remaining 60 per cent is provided by imports.

"The government's decision (on tariff cut) will enable us to compete with
imported products," said Tran Ngoc Nguyen, BSR director, putting the
company's operation in the context that free trade deals have sharply
decreased taxes on petrol imports.

According to latest data by government agencies, Vietnam imported over 2.8
million tonnes of oil products in the first quarter of 2016, and the average
imported price dropped nearly 40 per cent year-on-year, reaching $935
million.

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Ref:
http://www.dealstreetasia.com/stories/vietnam-plans-ipo-for-its-first-oil-re
finery-in-2017-52712/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com