Project Financing for Nghi Son Oil Refinery and Petrochemical Complex Project in Vietnam

abarrelfullabarrelfull wrote on 07 Jun 2013 11:48
Tags: asia jbic refinery vietnam

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The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) signed on June 4, a loan agreement totaling up to 1.65 billion U.S. dollars (JBIC portion) with Nghi Son Refinery and Petrochemical Limited Liability Company (NSRP), a company in the Socialist Republic of Vietnam, for a construction project of Nghi Son Refinery and Petrochemical Complex. The loan, provided in project financing1, is cofinanced with The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, Mizuho Corporate Bank, Ltd. and other financial institutions, which brings the overall cofinancing amount to 5 billion U.S. dollars. The cofinanced portion is either guaranteed or insured by Nippon Export and Investment Insurance (NEXI) and other foreign export credit agencies.

In this project, NSRP, established by Idemitsu Kosan Co., Ltd., Mitsui Chemicals, Inc., Kuwait Petroleum Europe B.V.2, a Dutch company, and Vietnam Oil and Gas Group (PVN), will construct and operate the oil refinery and petrochemical complex in Nghi Son Economic Zone, Thanh Hoa Province, Vietnam, to produce petroleum products such as gasoline, paraxylene and polypropylene. This loan is intended to finance one of the largest oil refinery and petrochemical projects in Vietnam's history, and is expected to contribute to development of Vietnam's social and economic infrastructure, diversification of industries and creation of employment, which are promoted by the Government of Vietnam.

In JBIC's "FY2012 Survey Report on Overseas Business Operations by Japanese Manufacturing Companies"3, Vietnam ranked 5th in the category of Promising Countries/Regions for Overseas Business Operations over Long- and Medium-Term, and expected to be the promising sales market, as well as the promising manufacturing base by Japanese companies. This loan is intended to support the Japanese companies' overseas expansion of manufacturing base through the entry to Vietnam's petroleum and petrochemical products market, and thereby, contribute to maintaining and improving the international competiveness of the Japanese oil refinery and petrochemical industry.

The Government of Vietnam regards this project as an important replacement for import of petroleum products from its national energy security perspective. This year is the 40th anniversary of re-establishment of the diplomatic relationship between the two countries, and supporting of this project by JBIC, who is a policy-based financial institution wholly owned by the Japanese government, will help to deepen the relationship between the two countries based on mutual understanding.

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