Vietnam to Privatize Dung Quat Refinery by June 2017



Vietnam aims to privatize its $3 B Dung Quat oil refinery by June 2017, with energy firms from Russia, Thailand and Kuwait expressing interest in taking a strategic stake, the head of the refinery's operator said Wednesday.


Vietnam is trying to accelerate the sale of stakes in state firms, including an initial public offering (IPO) of the firm that runs the country's sole refinery, which has been meeting about 30% of local oil product demand since it began operating in 2011.


"We have not decided how much will be sold at the IPO because it will depend on the market situation," Tran Ngoc Nguyen, Chief Executive Officer of state-owned Binh Son Refining and Petrochemical Co, told Reuters.


However, a strategic investor could buy up to 49% in Binh Son, he said.


Nguyen said the government has set a timetable for the domestic IPO to be completed by June 30 next year.


Binh Son, an affiliate of state oil group PetroVietnam, has registered capital of $1.57 B.


Nguyen said Rosneft, Russia's biggest oil producer, Gazprom Neft (GPN), Thailand's top energy company PTT and the Kuwait Petroleum Corp. have expressed interest in buying stakes in Dung Quat.


"We have not picked any strategic partner yet. We need a partner who can guarantee a crude oil supply for 50 to 100 years," said Nguyen, who took up his post last October.


Gazprom Neft had earlier halted negotiations to buy a 49% of stake in Binh Son.


The refinery, located in the central province of Quang Ngai, far from Vietnam's offshore oil production hub, has a processing capacity of 130 Mbpd.


Nguyen said the government had cut the tariff on Dung Quat's petrol to 10% from 13%, which would be maintained to year-end, putting it on an equal footing with fuel imported from South Korea.


"The new rate will help us compete better," he said, noting that Vietnamese oil product distributors could avoid foreign currency risk by using Dung Quat petrol and cut the size of stockpiles.


Dung Quat was targeting 2016 output of at least 6.8 MMtpy of oil products, matching last year.


However, it would maximize its processing to 110% of design capacity in the remaining months of 2016, Nguyen said, potentially reducing Vietnam's oil product imports.


Vietnam imported around 10 MM tons of oil products in 2015, up 18.7% from a year earlier, according to government data.


"The ratio of domestically produced products per imports could be changed to 40%/60% from 30%/70% now," Nguyen said.

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