'Super project' of oil refinery and petrochemicals worth over 20 billion USD: Need to avoid mistakes

Avoid the "mistakes"

The Ministry of Industry and Trade is developing a project to build a national oil refinery and energy center in Dung Quat Economic Zone. The project has a total estimated investment capital of 16.1 - 20.5 billion USD, divided into two phases. From 2025 - 2030 is the key phase, with an investment of 14.1 - 17.5 billion USD. From 2031 - 2045, an additional investment of 2 - 3 billion USD will be made.

This center is expected to meet at least 30% of the country's petroleum demand, ensuring reserves equivalent to 30 days of production and consumption. By 2050, this will not only be the national energy locomotive but also become one of the largest petrochemical refining centers in Southeast Asia.

Once operational, the National Oil Refinery and Energy Center will create about 30,000 jobs, contributing about 30% of Quang Ngai ’s GRDP. In addition, the logistics, high-tech, human resource training and urban development sectors will also be boosted by secondary investment flows.

Speaking to Tien Phong reporter, an expert from the Vietnam Energy Association said that in the context of the world's rapid energy transition and Vietnam facing long-term energy security challenges, the construction of the National Oil Refinery and Energy Center in Dung Quat is considered a strategic step. However, lessons from previous oil refinery projects require that the implementation of this "super project" requires careful calculation and thorough preparation.

Or the Nghi Son Refinery and Petrochemical Plant project, a highly anticipated project, but also has many shortcomings in the implementation and operation process. Nghi Son Refinery and Petrochemical Plant is a joint venture between Petrovietnam, Idemitsu Kosan, Kuwait Petroleum and Mitsui.

Although it is expected to surpass Dung Quat in both scale and technology, this project has continuously faced internal crises: Disagreements in the joint venture, high operating costs, and sole dependence on Kuwaiti oil. Notably, in January 2022, the plant was almost shut down due to lack of cash flow, forcing the Government to intervene.

“The absurdity of signing the contract at Nghi Son Oil Refinery makes us lose money and have no gasoline to use and have to pay any price according to the world market,” he said.

The most recent lesson is the Long Son petrochemical complex project in Ba Ria - Vung Tau (now Ho Chi Minh City). Previously, the project was expected to be the most modern petrochemical center in the region, but after nearly 10 years of implementation, it has not been completed. The reasons are slow site clearance, legal problems, and poor infrastructure connections.

“These lessons are what the Dung Quat National Refinery and Energy Center needs to learn from if it is to be implemented. There cannot be a national energy center when there is still a local project mindset. Therefore, infrastructure, planning, and legal corridors for localities must be at the national and inter-regional level, and cannot be assigned to a locality or a unit to solve on its own,” the expert said.

Clarifying capital and technology mechanisms

An expert from the Vietnam Oil and Gas Association assessed that with the goal of meeting at least 30% of the country's petroleum demand, the Dung Quat National Refinery and Energy Center can be considered the energy "heart" of the entire economy. According to the expert, with a capital of up to more than 20 billion USD, it is necessary to clearly divide the investment, have a feasible and transparent financial plan.

The implementation of the construction of the National Oil Refinery and Energy Center needs to aim towards modern technology.

“It is not easy to implement a project with a scale 2-4 times larger than previous petrochemical projects. The National Center for Petrochemical and Energy needs to avoid repeating the mistakes of the Dung Quat or Nghi Son projects when only one type of oil can be refined.

It is necessary to focus on multi-source oil processing technology such as new generation fuel, sustainable aviation energy (SAF), hydrogen; it is necessary to prepare a team of qualified workers and engineers to ensure operational capacity," the expert said.

Mr. Tran Dinh Thien - Former Director of the Vietnam Economic Institute - said: "We are talking about a national petrochemical and energy center, but if we only follow the old industrial park mindset, each person does their own thing, local infrastructure takes care of itself, lacking national coordination, we will fall into the old loop."

According to Mr. Thien, the Dung Quat National Oil Refinery and Energy Center will only become a true “center” if it has technology that is ahead of the market, has a specific transparent mechanism, and is coordinated at the national level, and is accountable to the people. If it can be done, this will be a big boost for Vietnam in the global energy game…

To complete the project, Deputy Prime Minister Bui Thanh Son recently requested the Ministry of Industry and Trade to urgently review national strategies and master plans for development, refer to international experience, and ensure the feasibility and effectiveness of establishing a national petrochemical and energy center model in Dung Quat Economic Zone.

The Ministry of Industry and Trade needs to carefully review the content of the proposed policy to ensure "specific and distinct" requirements and breakthroughs to attract investment and promote development according to the Politburo's resolution and planning.