Announcement on the Establishment of a Joint Venture Company for Nghi Son Refinery & Petrochemical Complex in Vietnam

abarrelfullabarrelfull wrote on 21 May 2012 10:34

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Vietnam Oil and Gas Group (hereafter PVN), Kuwait Petroleum International (hereafter KPI), Idemitsu Kosan Co., Ltd. (hereafter IKC) and Mitsui Chemicals, Inc. (hereafter MCI) hereby announce that each company has reached an agreement to establish the joint venture company to implement "Nghi Son Refinery & Petrochemical Complex Project".

1. Overview of the Joint Venture

  1. Company Name - Nghi Son Refinery & Petrochemical Limited Liability Company
  2. Location - Nghi Son Economic Zone, Thanh Hóa Province, Socialist Republic of Vietnam
  3. Established - To be established after acquiring an investment certificate in June 2008
  4. Total Investment Costs - Approximately 6 billion USD
  5. Debt-to-equity ratio - Targeted at 70:30
  6. Initial Paid-in Capital - 200 million USD
  7. Investment Ratio - PVN 25.1%, KPE (for and on behalf of KPI) 35.1%, IKC 35.1%, MCI 4.7%
  8. Refining Capacity - 200,000 bbl./day (equivalent to 10 million tons/year)
  9. Implementation Schedule is planned as follows
    1. FEED completion: October 2009
    2. EPC contract award: July 2010
    3. Commercial operation by 2013

2. Rationale for each joint venture partner

All the joint venture partners wish to earn benefits for the investors, for the robust development of Vietnam, and promote the already-friendly relations among three nations (Vietnam - Kuwait - Japan) to a higher level.

(1) PVN

  • To implement the development strategy of oil downstream sector, including refining and petrochemical, for PVN and for the nation.
  • To contribute to secure energy security for the nation, particularly the security of petroleum products.
  • To pave the way for the development of the petrochemical industries, associated industries and other related services.
  • To contribute to the realization of socio-economic objectives for the area of the south Thanh Hoa and north Nghe An provinces and vicinities.

(2) KPI

  • The Project is in line with Kuwait Petroleum Corporation (KPC), who owns the KPI group, and KPI long term strategy and plans for investments in the oil downstream (refining, petrochemical and distribution), particularly in Asia. The Project represents KPC/KPI's first successful step in the implementation of such strategy.
  • The move has recently approved by the Kuwait Supreme Petroleum Council (SPC), and the presence of H.E. Minister of Oil of Kuwait in the signing ceremony, on behalf of H.E. Prime Minister of Kuwait, is an evidence for the supports of the State of Kuwait to the Project.
  • Kuwait committed to secure long-term 100% crude supply for the Project, with the volume of about 10 million tons/year for the current stage, and 20 million tons/year for the future expansion.

(3) IKC

  • To establish a firm business footing in Vietnam, and capture the rapidly increasing domestic demand for petroleum products for this emerging economy, leveraging the development and transfer of its advanced technologies accumulated in its petroleum and petrochemical businesses.
  • To capitalize on further expected business expansion opportunities in Asia, including the petrochemical business and retail businesses dealing with petroleum products.
  • To contribute to stable crude oil procurement by further strengthening the relationship with the oil producing countries (Kuwait and Vietnam).

(4) MCI

  • To further develop strategic relation between IKC and MCI, and to build up trustworthy business relations with PVN and KPC/KPI.
  • To ensure stable procurement of aroma raw materials in order to achieve stability and profit expansion in the phenol and PTA businesses.

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