Rosneft, PetroVietnam discuss participation in modernizing Vietnam's Dung Quat refinery
MOSCOW. Sept 3 (Interfax) - Russian oil giant and PetroVietnam have discussed the delivery of Russian oil to the Dung Quat oil refinery in Vietnam, as well as possible cooperation in modernizing the refinery, Rosneft said in a press release.
Rosneft Chairman Igor Sechin held a meeting with the chairman of the PetroVietnam (Vietnam Oil and Gas Group) board of directors, Nguyen Xuan Son, in Moscow on Tuesday, the company said.
"During the negotiations the issues of the delivery of Russian oil to Zung Kuat oil refinery in Vietnam and possible participation in its modernization were considered," the press release says.
"PetroVietnam is strategic partner of Rosneft, and we are satisfied with our cooperation under the Memorandum of Understanding signed this May to strengthen cooperation between the two oil and gas companies," Sechin said.
In May, Rosneft and PetroVietnam Oil Corporation signed an agreement, defining major terms for long-term oil supplies to Dung Quat Oil Refinery in Vietnam.
The agreement provides supply of the ESPO oil up to 6 million tonnes annually via Kozmino terminal in 2014-2039 after the accomplishment of the final stage of the refinery modernization.
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: 3 million tonnes in 2015, 3.6 million tonnes in 2016, 4.8 million tonnes in 2017, and at least 6 million tonnes from 2018 onwards.
After buying 49% of Binh Son, Gazprom Neft will have the opportunity to increase its stake in the Dung Quat operator.
Gazprom Neft estimates it will cost $1 billion-$1.5 billion to modernize the refinery. As part of the modernization program, the capacity at Dung Quat will be increased from the current 6.5 million tonnes to 10 million-12 million tonnes within one year and the plant will improve the technical efficiency of its motor fuel production to meet the Euro-5 standard. Gazprom Neft's financial contribution to the modernization project will be proportional to its stake.
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.
