Nearly 1.5 billion USD for upgrading and expanding

The Feasibility Study Report on the adjusted construction investment of the Dung Quat Oil Refinery Upgrading and Expansion Project was assessed by the Ministry of Industry and Trade as basically meeting the requirements under current regulations, qualifying the investor to implement the next steps.

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

Total investment increased by more than 200 million USD

The Ministry of Industry and Trade has just announced the results of the appraisal of the adjusted Investment Feasibility Study Report on the Dung Quat Oil Refinery Upgrade and Expansion Project submitted by Binh Son Refining and Petrochemical Joint Stock Company (BSR).

As a Group A, Level I project, belonging to a project that greatly affects safety and community benefits using other capital, the appraisal of the adjusted 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 construction investment project preparation, basic design; construction capacity conditions of organizations and individuals practicing construction, the Appraisal Report stated that organizations, individuals or contractors involved in this stage all have sufficient capacity conditions according to legal regulations.

The basic design of the Project is also consistent with the approved plans of competent authorities such as the Detailed Plan for the Construction of the Eastern Dung Quat Industrial Park, the General Plan for the Construction of the Dung Quat Economic Zone to 2045. The investment in the construction of the project is consistent with the orientation/direction 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 objectives and scale of the Project are considered by the Ministry of Industry and Trade 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 said that the total investment of the Project is 36,397 billion VND (equivalent to 1.489 billion USD), an increase of 18.55% compared to the total investment in Decision No. 482/QD-TTg dated May 5, 2023 (31,240 billion VND, equivalent to 1.257 billion USD).

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

The Ministry of Industry and Trade also concluded that the investor is responsible for the accuracy and honesty of the reported data, and is fully responsible for the investment efficiency of the Project; the Design Consultants and Appraisal Consultants are responsible for the data in the adjusted Construction 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 optimal technology for the project; research solutions to optimize investment costs, improve the economic efficiency of the Project; have solutions to strictly control and manage investment costs, ensuring optimization and economic efficiency.

Investment opportunity has arrived

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

Accordingly, Dung Quat Oil Refinery will be invested to increase its processing capacity from 148,000 barrels/day to 171,000 barrels/day; products will meet Euro V standards; meet environmental standards according to the Government's mandatory roadmap, while increasing flexibility in selecting crude oil, ensuring a long-term and effective supply of crude oil for the factory.

To meet these objectives, a series of new technology workshops will be invested in or adjusted and converted. The time to implement this investment in upgrading and expanding is 37 months from the date of signing the EPC contract and the goal is to put the Project into operation in 2028.

To arrange capital, BSR said the equity/loan structure is 40/60, but will also be considered and adjusted to suit the actual ability to balance resources.

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

Previously, when reporting to request adjustment of investment policy, BSR said that the project uses equity capital arranged from the Company's internal sources, from annual retained after-tax profits (2020-2025), after deducting funds and distributing dividends, depreciation sources after paying long-term loans and issuing shares to existing shareholders and new shareholders in case the above sources are not sufficient.

About 660 million USD in capital arrangement plan was proposed by BSR before approving the Investment Policy Adjustment in Decision 428/QD-TTg, along with information about credit institutions expressing interest. They are KooKmin Bank (100 million USD), BIDV (200-300 million USD), Bangkok Bank (200 million USD), OCBC Bank (75 million USD).

According to the Ministry of Finance, if the banks' requirements are met and the banks fulfill their commitments, BSR can borrow 575 - 675 million USD, not to mention a number of other banks that have expressed interest and will be considered at a later stage.

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

Source