Kuwait Petroleum, Vietnamese government sign contract for refinery project

January 28, 2013 - 12:38:41 pm

HANOI: Kuwait Petroleum International (KPI) and its partners of a joint refinery project in Vietnam have resolved all outstanding issues with the Vietnamese government, including foreign currency guarantee, KPI President Hussain Esmaiel said Monday.

"We thank the Vietnamese government for showing the commitment to our refinery and petrochemical project by supporting essential requirement from co-lenders and sponsors," Esmaiel told Kuwait News Agency (KUNA) in the Vietnamese capital, Hanoi.

Esmael is here with Kuwait Petroleum Corporation (KPC) Chief Executive Officer Farouk Al-Zanki after attending the signing on the previous day of an engineering, procurement and construction contract for the USD 9 billion project involving Kuwait, Vietnam and Japan.

Nghi Son Petrochemical Refinery Complex will be based in the northern province of Thanh Hoa, some 180 kilometers south of Hanoi.

The first phase of the state-of-the-art refinery will have an oil processing capacity of 200,000 barrels per day (bpd) when operational in 2017.

The joint venture will possibly double the volume to 400,000 bpd after the project is expanded in the second phase.

According to KPI's top official, the Vietnamese government has provided many facilitations for KPI and its joint venture partners, such as allowing the tax-free import of crude oil for the refinery and pledging to purchase all the petroleum products of the refinery. "This is part of the package that the Vietnamese government has provided us," he said.

KPI established the joint venture in 2008 with PetroVietnam, Japan's Idemitsu Kosan Co. and Mitsui Chemicals Inc. It is Vietnam's second refinery and the first one with foreign investors' participation.

KPI and Idemitsu each own a 35.1% stake in the joint project, while PetroVietnam and Mitsui Chemicals Inc. hold 25.1% and 4.7%, respectively.

The joint venture has already launched syndication procedures of a co-financing arrangement with international and domestic banks, export credit agencies and multilateral agency, with completion of financial documentation expected within four months.

The final investment decision will be made after that, Esmaiel said. Up to USD 5 billion for the project will be received from such lenders as the government-backed Japan Bank for International Corporation, Nippon Export and Investment Insurance, Korean Bank for Import Export, the World-Bank unit International Finance Corporation.

KPI's parent company KPC is to supply all the feedstock for the facility, which will also include petrochemical units, energy facilities, a pipeline and storage systems, along with information management systems. (QNA)