Vietnam's sole oil refinery gears up for IPO

Vietnam's sole oil refinery gears up for IPO

The Binh Son Refining and Petro Chemical Co. (BSR), the operator of the sole
operational oil refinery in Vietnam - the Dung Quat Oil Refinery in central
Quang Ngai province - has invited 15 domestic and foreign investors to
become the company's strategic partners.

Its initial public offering (IPO), which was previously set to take place
during the third quarter of this year, will now be held by the end of the
year, with the aim of funding strategic projects and increasing transparency
in corporate governance, BSR said in a statement on its website.

The company will focus on petrochemical operations and expects investors to
join it in ramping up the petrochemical market, CEO Mr. Tran Ngoc Nguyen
said in the statement.

The number of shares to be offered to strategic investors and to the public
were not specifically mentioned in the statement.

However, in an interview with VET late last year, BSR Chairman Mr. Nguyen
Hoai Giang said the company was keen to have 35 per cent go to strategic
investors, adding that a host of foreign oil giants, including Thailand's
State-run PTT and Russia's Gazprom Neft, had expressed interest.

At the time, the Russian investor was staying with its plan to purchase
shares in BSR despite dropping talks over it acquiring 49 per cent earlier
last year, citing unfavorable conditions, according to Mr. Giang.

He was not available for further comment at the time of writing.

BSR has a plan to expand capacity at Dung Quat by 30 per cent while reducing
production costs due to cheaper oil prices.

After completing its expansion in 2021, Dung Quat will be able to meet half
of Vietnam's fuel demand.

Its current capacity is 148,000 barrels per day, which can satisfy one-third
of the domestic needs.

The country's demand for oil and petroleum products has increased every year
and the volume imported in 2015 rose 18.7 per cent, according to data from
the General Department of Customs under the Ministry of Finance.

According to BSR, it earned estimated total revenue of $80 million in the
first quarter of this year.

Pre-tax profit has not been revealed. It earlier set a pre-tax profit target
of VND1.68 trillion ($73 million) for the year as a whole, which is
significantly lower than its actual pre-tax profit of VND5 trillion ($219.45
million) in 2016.

2016 was viewed as a successful year for BSR, as total revenue reached more
than $3.1 billion and it contributed over $483 million to the State budget,
exceeding its plan by $88 million.

Production was estimated at 6.84 million tons and sales at 6.8 million tons.

The $3-billion refinery became operational in 2009 with a designed
processing capacity of 6.5 million tons of crude oil per year, meeting 30
per cent of domestic demand for distillates.

It plans to expand its annual capacity by 30 per cent to 8.5 million tons at
a cost of $1.8 billion.

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Link to Original Article:
http://english.vietnamnet.vn/fms/business/178259/vietnam-s-sole-oil-refinery
-gears-up-for-ipo.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com