Vietnam remains an attractive destination for oil refineries, with numerous business benefits and investment incentives advantages, experts said.
Tien phong (the Vanguard) online news reported that Vietnam's intial oil and gas development strategy by 2020 involved the setting up of three oil refineries: the proposed 3 billion USD Dung Quat refinery in central Quang Ngai province, with an annual capacity of 6.5 million tonnes of crude oil; and the proposed 9 billion USD Nghi Son refinery in central Thanh Hoa province and the proposed 4.5 billion USD Long Son refinery in southern Ba Ria-Vung Tau province, each with an annual capacity of 10 million tonnes.
The State later added to the plan two oil refineries: the 3.18 billion USD Vung Ro refinery in central Phu Yen province with an annual capacity of eight million tonnes, and the 2 billion USD Nam Van Phong refinery in central Khanh Hoa province, with an annual capacity of 10 million tonnes.
Now, central Binh Dinh province has proposed the addition of the 22 billion USD Nhon Hoi refinery, with an annual capacity of 20 million tonnes, to the plan.
Tran Viet Ngai, Chairman of the Vietnam Energy Association, said the Dung Quat refinery is expected to meet 30 percent of domestic petrol and oil demand, so Vietnam needs only one more refinery with an annual capacity of 15 to 20 million tonnes to supply enough petrol and oil to the domestic market.
Ngai attributed the increase in oil refinery investments to the country's political stability and security, strategic location for transporting goods to and from Asia-Pacific countries, numerous deep seaports, and investment incentives.
He noted that deep seaports are quite important in transporting oil products mainly by sea, and for oil refinery projects, Vietnam is granting large tracts of land, site clearance, and preferential incentives for land use fees and taxes on corporate income, imported crude oil and exports.
The refineries usually export their products, including petrol, oil and oil chemical products, said Ngai, adding that investors of refineries will gain profits mainly from chemical by-products such as polymer, asphalt and fibre, and only partly from petrol and oil products.
For instance, Formosa's oil refinery in Taiwan , with an annual capacity of 20 million tonnes of crude oil, has been exporting its polymer all over the world, Ngai noted.
Economic expert Le Dang Doanh said Vietnam will soon be signing numerous free trade agreements that are advantageous to refineries, such as the TPP, ASEAN+6, ASEAN Economic Community, Vietnam-EU and Vietnam-Customs Union agreements.
Refineries in Vietnam will be able to export their products to other countries and territories at reduced or zero tariffs after the signing of these agreements, Doanh noted, adding that a large and cheap work force is also an advantage for the refineries.
Ngai said the refineries will provide jobs for local residents, especially skilled workers, as well as high-technology resources and a bigger budget for the nation.
Refineries will also create competition in the domestic market for products such as petrol, oil, asphalt, polymer and fibre, and reduce the import volume and selling price of these products.
However, Doanh said, the refineries are using old and polluting technologies that could harm the environment, and these should be regulated.
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