A consortium comprising JGC Corporation (Japan), Technip of France, Technip Geoproduction of Malaysia and Tecnicas Reunidas of Spain has been awarded the engineering, procurement and construction (EPC) contract by Vietnam Oil and Gas Corporation (Petro Vietnam) for the Dung Quat oil refinery to be constructed in Quang Ngai Province, Vietnam. The contract value is approximately US$1.5 billion, and completion is scheduled for the first quarter of 2009.

The project includes the refinery and the crude oil import facilities. This refinery is designed to have a processing capacity of 145,000 bpsd (barrels per stream day—the maximum number of barrels of input that a distillation facility can process within a 24-hour period when running at full capacity under optimal conditions with no allowance for downtime).

Vietnam’s crude production averaged 403,000 barrels per day in 2004, making the country the third-largest oil producing country in Asia. Vietnam remains reliant, however, on imported petroleum products because no refining facility exists inside the country.

According to the EIA, a second refinery project is under consideration at Nghi Son, north of Hanoi in the Thanh Hoa province. The Vietnamese government has estimated the 150,000 bpsd plant will cost $3 billion. In August 2004, Mitsubishi Corporation agreed to participate in building Nghi Son for completion in 2010. In December 2004, Vietnam contracted the International Business Company (IBC) of the British Virgin Islands to conduct a feasibility study for a third oil refinery, to be located at Vung Ro in the southern Phu Yen province. The Vietnamese government hopes to complete the refinery within 12 years.

The concept of the Dung Quat refinery was initiated in 1997. During the period leading up to the contract award, Petro Vietnam modified the original plant configuration to meet the current updated product specifications in light of the accelerating motorization of the country. Once fully operational, the refinery is expected to meet 30%–40 per cent of the domestic market demand and alter the import/export trade balance of the country.

Petro Vietnam estimates that demand for petroleum products in the country will almost double from 2005 to 2015.