Hanoi - Vietnam's National Oil and Gas Group has signed an agreement establishing a 6-billion-dollar joint venture with Kuwaiti and Japanese firms to develop the country's second oil refinery, an official said Tuesday. The state-owned conglomerate, known as PetroVietnam, signed the agreement Monday night in Ho Chi Minh City with Kuwait Petroleum International and Japan's Idemitsu Kosan and Mitsui Chemical after two years of negotiations, PetroVietnam senior official Dinh Van Son said.
Nghi Son Oil Refinery in Thanh Hoa province, 200 kilometers south of Hanoi, was scheduled to become operational by 2013. The plant is to be capable of processing 10 million tons of crude oil per year.
"The plant will definitely help Vietnam to reduce its reliance on imported petroleum products and, hence, ensure its energy security," said Truong Van Tuyen, vice chairman of PetroVietnam.
Kuwait's government has pledged to export 10 million tons of crude oil annually for the project in its initial years, according to the Vietnamese newspaper Tien Phong.
Because Vietnam's first refinery has yet to go on line, it exports all of its crude oil output and has to import all refined petroleum products for domestic consumption. Imports of gasoline and other refined petroleum products cost 2.81 billion dollars for the first three months of this year.
The country's reliance on imported petroleum products was expected to ease when its first refinery becomes operational in 2009. Dung Quat Oil Refinery, 860 kilometers south of Hanoi, is to be capable of refining more than 6 million tons of crude oil a year.
PetroVietnam exported 15.72 million tons of crude oil, earning 8.8 billion dollars, in 2007.
