VietNamNet Bridge - Investors in the long-delayed Vung Ro oil refinery and seaport project in central Phu Yen province are calling for a new partner to ramp up the project’s progress.

Director of the province’s Department of Planning and Investment Nguyen Chi Hien said Vung Ro Petroleum LLC – the joint venture between UK’s Technostar Management Limited and Russian Telloil – had reported there would be a change to the company’s founding members.

“The change is said to make the project more viable,” said Hien.

A source from the joint venture said a Moscow-based firm would buy a stake in the project. “The sides are in negotiation. I think we will have the final result shortly.”

However, the source declined to name the Russian firm or how much a stake it would acquire.

The $1.7 billion Vung Ro project was licenced in November, 2007 with a total refining capacity of 4 million tonnes of crude oil per year. The investor also planned to build a seaport closed to the refinery.

However, the project construction has been delayed many times because of slow site clearance. In a bid to speed up the progress, Vung Ro Petroleum has agreed that it would give about $7 million to provincial authorities to assist in the building resettlement areas and site clearance completion.

“We saw the investor is very committed,” said Hien.

The joint venture source said the involvement of a new Russian partner would strengthen the financial ability of Vung Ro Petroleum.

In the latest move, Vung Ro Petroleum proposed raising annual production capacity to eight million tonnes of crude oil.

“The instability of the global economy is a great opportunity for us. Investment costs are now lower than our initial estimate so we should take this chance to raise production capacity,” said the source.

He revealed that the capacity hike would push the investment cost for the Vung Ro project to a maximum $2.5 billion.

However, the capacity adjustment could only be implemented once the investors receive the prime minister’s approval. “We submitted the proposal to the prime minister and are waiting for his response,” Hien added.

The joint venture source said because of the change of stakeholders and the upward shift in capacity, project construction could be delayed until the end of this year or early next year.

Currently, Vietnam has only one oil refinery in operation – in the Dung Quat Economic Zone. Nghi Son oil refinery in north-central Thanh Hoa province is under construction, while the government is calling for investment into Long Son refinery in southern Ba Ria-Vung Tau province.

Two weeks ago, Can Tho People’s Committee urged domestic Vien Dong Investment and Trade Corporation to prove the feasibility of a $350 million oil refinery project in Can Tho city before June this year.

The Vung Ro project is one of five oil refinery projects licensed in Vietnam to date. These refineries are expected to ensure the long-term energy security of the country.

Source: VIR