Vietnam: Dung Quat Oil Refinery seeking loans of $1.26bn to expand

Vietnam: Dung Quat Oil Refinery seeking loans of $1.26bn to expand

The Binh Son Refining and Petrochemical Co. (BSR), the operator of the Dung
Quat Oil Refinery in central Quang Ngai province, plans to take out loans of
a combined $1.26 billion to expand its capacity, according to a plan
unveiled by the Ministry of Industry and Trade.

The loan accounts for 70 per cent of the $1.81 billion needed for the
expansion and will come from export credit and foreign and domestic banks,
with the remaining 30 per cent to come from the parent company, the Vietnam
Oil and Gas Group (PetroVietnam).

BSR has been seeking commercial loans for the upgrades after Russian oil
producer Gazprom Neft abandoned plans to acquire a stake of up to 49 per
cent in Dung Quat, the sole operating oil refinery in Vietnam.

In August 2015, the UK's Amec Foster Wheeler was awarded a contract to
provide the Front End Engineering Design (FEED) for BSR, which also
participated in the first phase of the refinery.

BSR Chairman Mr. Nguyen Hoai Giang previously told VET that the expansion
would help increase the refinery's capacity by 30 per cent as well as cut
production costs.

Once completed in 2021, the upgrades would enable BSR to meet 60 per cent of
Vietnam's demand for petroleum products, Mr. Giang said, adding that BSR now
has a capacity to process 148,000 barrels of crude oil a day, meeting
one-third of the country's demand.

BSR was valued at $3.2 billion as at end-2015, with the company preparing to
launch an initial public offering (IPO) on November 7 this year.

Under a government-approved plan, the State holding in the refinery operator
will be cut to less than 50 per cent. It will offer 5-6 per cent to the
public while at least 36 per cent will be sold to strategic investors within
12 months of the IPO.

BSR had met with Japan's JX Nippon Oil & Energy Corp., South Korea's SK
Energy Co., and Gazprom Neft, among others, on the strategic stake sale, but
discussions have not progressed.

BSR's net profit fell 27 per cent in 2016 to VND4.49 trillion ($198
million), the company's financial statements reveal.

In the first quarter of this year, it posted revenue of VND21 trillion ($923
million), or 33 per cent of its full-year target, a positive result after
the target was set at VND62.4 trillion ($2.74 billion), down 17 per cent
against 2016, with profits to plunge 66 per cent to VND1.68 trillion ($739.3
million).

In the 2016-2020 period, BSR aims to record production of 28 million tons,
of which diesel oil products will account for 50 per cent, or 14.064 million
tons, A92/E5 gasoline over 6.383 million tons, and A95 gasoline 4.14 million
tons.

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Link to Original Article:
http://english.vietnamnet.vn/fms/business/181815/dung-quat-oil-refinery-seek
ing-loans-of--1-26bn-to-expand.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com