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Petrovietnam’s Dung Quat Oil Refinery Project

By Danny Lee

04 April 2007 —

THIS IS THE FIRST NEXI OULI TRANSACTION FOR THE GOVERNMENT OF VIETNAM

BNP Paribas is pleased to announce that it has closed, acting as Mandated Lead Arranger and Agent, the USD 300 million term loan facility to finance part of Petrovietnam’s Dung Quat Oil Refinery Project.The Nippon Export and Investment Insurance (“NEXI”), Japan’s export credit agency has for the first time decided to provide the Overseas Untied Loan Insurance (the “OULI”) to cover the political and commercial risks for the loans extended by Japanese financial institutions to the Vietnamese Ministry of Finance.

The loan is used to build port facilities in Dung Quat to ship oil refinery production as part of Vietnam’s first refinery project implemented by a state oil company Petrovietnam. Part of the engineering contracts are awarded to a group of local Vietnamese contractors and the terms of BNP Paribas’ NEXI untied facility apply to their financing packages.

NEXI recognizes that this project is a priority for the economic development of Vietnam and its involvement underscores Japan’s commitment to further strengthen economic cooperation as stated in the Japan-Vietnam October 2006 Joint Statement.

The Petrovietnam refinery project will cost USD 2.272 billion, and the main engineering, technology, equipment and building contracts have been awarded to a consortium formed by Technip of France, Tecnicas Reunidas of Spain, Japan’s JGC and Malaysia’s Technip. Petrovietnam is giving priority to domestic loans to finance these packages.

While Vietnam has the third largest crude oil production in Asia, the country lacks the refining capacity to exploit these resources. This project has been ten years in the making and upon completion Vietnam will be able to meet about 40% of its domestic requirements.

This landmark transaction has opened access for Vietnam to more competitive financing sources in the international capital market and is expected to promote further investments from Japan to Vietnam.

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Third Oil Refinery in Southern Ba Ria Vung Tau

By Danny Lee

Vietnamese authorities have announced the development of a third oil refinery in southern Ba Ria Vung Tau.

According to reports, the Vietnamese government has permitted the use of a number of management structures during the construction of the site, including a joint-venture between domestic and foreign investors, reports Xinhua News Agency.

Government officials have conceded that the project may be wholly owned by either a domestic or foreign investor; under the terms of the contract, the investor may change the location to either Ninh Thuan or Phu Yen province.

Comprehensive details about the project have not yet been released, although the Ministry of Planning has been instructed to consider the project in full before formally granting planning permission.

Although planning for Vietnam’s first oil refinery in Quang Ngai began in 1998, construction only started in November 2005; the project is expected to be completed by early 2009.

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Idemitsu Will Build Vietnam Second Oil Refinery

By Danny Lee

Vietnam will allow Japan’s Idemitsu Kosan Co. to work with state-owned PetroVietnam in planning the construction of the country’s second oil refinery, the government said Thursday.

Idemitsu Kosan’s involvement would mark the first foreign investment in Vietnam’s oil refinery projects.

The two companies should submit their construction plans for the Nghi Son oil refinery to the government in July, Deputy Prime Minister Nguyen Sinh Hung said in a statement.

The refinery, to be located in Thanh Hoa province, some 180 kilometers (110 miles) south of Hanoi, is expected to have a processing capacity of 7 million metric tons a year, and will be built at a cost of US$2.5 billion, the statement said.

A PetroVietnam official said Vietnam is expected to start building the refinery in 2009 for operation from 2013.

Hung has also asked PetroVietnam to continue seeking investors for the project, including domestic companies, it said.

Vietnam is currently building its first oil refinery in Dung Quat district in central Quang Ngai province at a cost of US$2.5 billion. It will have a processing capacity of 6 million tons a year when it comes on-stream in 2009.

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HONEYWELL TO SUPPLY PROCESS AUTOMATION SYSTEM FOR VIETNAM’S FIRST OIL REFINERY

By Danny Lee

PHOENIX, Aug. 1, 2006 – Honeywell (NYSE:HON) has been awarded a $17.5 million contract to supply process controls for Vietnam’s first oil refinery. The Technip Consortium – which will build the refinery in Dung Quat for state-owned company PetroVietnam – selected Honeywell to supply its award-winning process automation system, the Experion® Process Knowledge System (PKS). The refinery will begin production in central Vietnam in early 2009.

“We wanted to make sure this refinery enters the market with leading-edge technology, and Honeywell’s reputation made the decision an easy one,” said P.K. Singh, Technip Consortium director. “Automating and integrating process controls is a very effective strategy for refining large amounts of oil in a timely manner. Experion will help us achieve that goal and shape the future of the Vietnamese process industries.”

Located in Quang Ngai Province near the South China Sea, the Dung Quat refinery symbolizes Vietnam’s technological advancement since trade embargoes were lifted in the 1990s. Trade agreements have since paved the way for technology companies like Honeywell to help Vietnamese businesses expand.

The Dung Quat refinery will produce 148,000 barrels of oil per day and other products such as propylene, liquid petroleum gas (LPG), motor gasoline, jet A1 kerosene, auto diesel and fuel oil. Experion will integrate the refinery’s subsystems to give operators a clear view of how the refinery’s processes are functioning. Honeywell will design, test, install and commission Dung Quat’s system. In addition to Experion, Honeywell will supply Safety Manager for Emergency Shutdown along with fire and gas protection systems.

“This refinery will help Vietnam become a player in Asia’s oil market,” said Jack Bolick, president, Honeywell Process Solutions. “To compete in this market, the Dung Quat refinery will need state-of-the-art equipment. Experion will ensure a smooth operation from offloading the crude oil to shipping the finished product.”

The Technip Consortium includes engineering and construction service providers Technip GeoProduction and Spain-based Tecnica Reunidas, as well as Japan Gas Company. PetroVietnam, also known as the Vietnam Oil and Gas Corp has developed rapidly since it was established in 1975, and its activities, through various companies and wholly owned subsidiaries, now cover all the operations from oil and gas exploration and production to storage, processing, transportation, distribution and services not only within the boundaries of Vietnam but also in the global arena.

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