Vietnam National Oil and Gas Group (PVN) is planning to build an oil refinery complex worth up to US$19 billion in the southern province of Ba Ria – Vung Tau.

The Nghi Son Oil Refinery plant in Thanh Hoa Province, North Central Coast of Vietnam. File photo

In a proposal submitted to the Government, the PVN expected the investment would be conducted in phases, of which around 70% of the capital would be allocated for the first phase.

According to the PVN, Vietnam's domestic market is set to face a shortage of 19.5 million tons of petroleum products every year by 2030, and the figure could rise to 49 million tons by 2045.

At present, the domestic consumption of petrol products is estimated at 18 million tons per year. PVN forecasts the demand to continue rising to 25 million tons by 2025, and 33 million tons by 2030.

However, the combined production capacity of the two refinery plants Dung Quat and Nghi Son stands at 12.2 million tons per year, and 13.5 million by 2025 after the completion of the upgrade of the Dung Quat plant. 

“This would only meet 70% of domestic demand, and the rest would be imported,” noted the PVN.

Meanwhile, Vietnam consumed around 9.5 million tons of petrochemical products by 2020 and the figure would increase to 12 million tons per year in the next three years, eventually reaching 33 million tons by 2045.

For the next three to seven years, the country would be short of 7.2-12 million tons, and such a deficit may be expanded by an average of 3-6% for each subsequent year.

The PVN also pointed out the low level of oil and gas reserves, which can meet 5-7 days of consumption, and therefore the country is still largely dependent on import sources.

“Every year, Vietnam has to spend billions of dollars to import petrochemical and other products for domestic consumption. Given the unstable operation of the Nghi Son plant and the limited oil refinery capacity domestically, the construction of another oil refinery and storage complex in the southern region is an optimum solution,” noted the PVN.

According to  PVN, the southern region is in high demand for petrochemical products, accounting for 45% of the total market, but there has not been any oil refinery plant there.

“The supply of petrol products for the south depends on  Dung Quat and Nghi Son plants with high transportation costs, or on imports,” it noted.

In addition, the Long Son Integrated Petrochemical Complex in Ba Ria – Vung Tau has been earmarked as the location for the construction of the national underground storage of crude oil and petroleum products reserves.

“The construction of an oil refinery plant here would therefore save costs and resources while meeting the high demand for national energy reserves,” PVN said.

PVN is expected to submit the plan to the Government in January 2023, in which the preparation process would be conducted for the 2023-2024 period, and the construction would take place in a three-year time by 2027.