Nearly $1.5 billion for upgrades and expansions.

The Ministry of Industry and Trade has assessed the revised investment feasibility study report for the Dung Quat Refinery Upgrade and Expansion Project as fundamentally meeting current regulations and being ready for the investor to proceed with the next steps.

After upgrading and expanding, the Dung Quat Refinery will have a processing capacity of 171,000 barrels per day. Photo: DM

Total investment increased by over $200 million.

The Ministry of Industry and Trade has just announced the results of the appraisal of the revised investment feasibility study report for the upgrading and expansion project of the Dung Quat Refinery, submitted by Binh Son Refining and Petrochemical Joint Stock Company ( BSR ).

As a Group A, Level I project, a construction project with a significant impact on public safety and interests using other sources of funding, the appraisal of the revised Feasibility Study Report is carried out in accordance with Clause 15, Article 1, Construction Law No. 62/2020/QH14 and Article 58, Construction Law No. 50/2014/QH13.

Regarding compliance with legal regulations on the preparation of investment construction projects and basic designs; and the capacity requirements for construction activities of organizations and individuals practicing construction, the Appraisal Report states that all organizations, individuals, or contractors involved in this stage meet the capacity requirements as prescribed by law.

The project's basic design is also consistent with approved plans from competent authorities, such as the detailed construction plan for the Eastern Dung Quat Industrial Park and the general construction plan for the Dung Quat Economic Zone until 2045. The investment and construction of the project aligns with the orientations/directives in the Politburo 's resolutions on the development of the oil and gas industry; Vietnam's National Energy Development Strategy to 2030, with a vision to 2045…

The Ministry of Industry and Trade considers the project's objectives and scale to be consistent with the investment policy approved by the Prime Minister in Decision 482/QD-TTg dated May 5, 2023.

However, the Ministry of Industry and Trade stated that the total investment for the project is VND 36,397 billion (equivalent to USD 1.489 billion), an increase of 18.55% compared to the total investment in Decision No. 482/QD-TTg dated May 5, 2023 (VND 31,240 billion, equivalent to USD 1.257 billion).

However, the Appraisal Report concluded that the Project does not fall under the category requiring adjustment of the investment policy.

The Ministry of Industry and Trade also concluded that the investor is responsible for the accuracy and truthfulness of the reported data and bears full responsibility for the investment efficiency of the Project; the design consultants and verification consultants are responsible for the data in the revised investment feasibility study report and the appraisal report. At the same time, the investor is required to clearly explain to the competent state agencies the selection of the optimal technology for the project; to research solutions to optimize investment costs and improve the economic efficiency of the Project; and to implement solutions to strictly control and manage investment costs, ensuring optimal economic efficiency.

The investment opportunity has arrived.

On March 29, 2024, BSR announced information regarding the Decision approving the adjustment of the Dung Quat Refinery Upgrade and Expansion Project at the Hanoi Stock Exchange.

The Ministry of Industry and Trade considers the project's objectives and scale to be consistent with the investment policy approved by the Prime Minister in Decision 482/QD-TTg dated May 5, 2023.

Accordingly, the Dung Quat Refinery will be upgraded to increase its processing capacity from 148,000 barrels/day to 171,000 barrels/day; its products will meet Euro V standards; it will meet environmental standards according to the mandatory roadmap set by the Government; and it will enhance the flexibility in selecting crude oil, ensuring a long-term and efficient supply of crude oil for the refinery.

To meet these objectives, a series of technological workshops will be newly invested in or upgraded and renovated. The implementation period for this upgrade and expansion investment is 37 months from the date of signing the EPC contract, and the goal is to put the Project into operation in 2028.

To secure funding, BSR stated that the equity/debt ratio is 40/60, but this will be reviewed and adjusted to suit the actual availability of resources.

BSR hired consultants to arrange financing in the form of export credit and loans from domestic and foreign commercial banks.

Previously, when reporting on the request to adjust the investment policy, BSR stated that the project would use equity capital arranged from the company's internal sources, from retained earnings after tax each year (2020-2025), after deducting funds and distributing dividends, depreciation funds after repaying long-term loans, and issuing shares to existing and new shareholders in case the above sources are insufficient.

Approximately $660 million USD was included in the financing plan proposed by BSR before the approval of the adjusted investment policy in Decision 428/QD-TTg, along with information on credit institutions that expressed interest. These included KooKmin Bank ($100 million), BIDV ($200-300 million), Bangkok Bank ($200 million), and OCBC Bank ($75 million).

According to the Ministry of Finance, if BSR meets the requirements of the banks and the banks fulfill their commitments, it could borrow $575-$675 million, not including interest from other banks that will be considered at a later stage.

Thus, 10 years have passed since BSR was approved for the Dung Quat Refinery Upgrade and Expansion Project in December 2014, with the goal of processing 192,000 barrels/day and producing products meeting Euro V standards. Now, with a lower target of 171,000 barrels/day, the opportunity for the Dung Quat Refinery to carry out the upgrade and expansion is closer.

Source: https://baodautu.vn/nha-may-loc-dau-dung-quat-gan-15-ty-usd-nang-cap-mo-rong-d211992.html