Gazprom Neft has exclusive right to negotiate with Petrovietnam on buying shares in Dung Quat refinery
MOSCOW. April 6 (Interfax) - Gazprom Neft CEO Alexander Dyukov and Petrovietnam Chairman Nguyen Xuan Son have signed a document outlining key provisions of an agreement allowing Gazprom Neft to acquire shares of Vietnam's Dung Quat refinery, Gazprom Neft said in a statement.
"During the period set out by the agreement, Gazprom Neft will have exclusive rights to negotiate with Petrovietnam on acquiring its shares in the refinery," the statement says.
"In accordance with the agreement previously concluded between Gazprom Neft and Petrovietnam, Gazprom Neft plans to acquire a 49% stake in the plant which is owned and operated by Binh Son Refining and Petrochemical company," Gazprom Neft said.
"Plans to modernize the Dung Quat refinery will increase capacity from the existing 6.5m tonnes to 8.5m tonnes per year, and improve the efficiency of its technological processes enabling the plant to switch over to producing Euro-5 standard motor fuels. Gazprom Neft's share of investment in the modernization project will be proportionate to its share in the plant," the statement says.
Documents regarding Gazprom Neft's possible acquisition of 49% of Binh Son Refining and Petrochemical, the operating company for the Dung Quat refinery in Vietnam, were signed during Russian President Vladimir Putin's visit to Vietnam in November last year. Following the acquisition, Russia is to supply the refinery with oil via the Eastern Siberia - Pacific Ocean (ESPO) pipeline system through the specialized oil port at Kozmino. After buying 49% of Binh Son, Gazprom Neft will have the opportunity to increase its stake in the Dung Quat operator.
PetroVietnam has also signed an agreement with Rosneft that established the main conditions of long-term oil shipments to Dung Quat.
The Dung Quat refinery began operations in February 2009. The refinery, which has capacity to process 6.5 million tonnes of oil a year, consumes about 85% of oil produced at a field being developed by Vietsovpetro, a joint venture between Zarubezhneft and PetroVietnam. The other 15% is imported from the Middle East.
Gazprom Neft estimates that it will cost $1 billion-$1.5 billion to modernize the refinery.