Experts Skeptical That Planned Vietnam Refinery Will Ever Be Built

Vietnamese flag — Vietnam is struggling with a host of economic woes, including sluggish domestic demand and a banking sector weighed down with high levels of toxic debt and record numbers of bankruptcies. Flickr/ Creative Common

A proposed $27 billion Thai-Vietnam refinery and petrochemical plant that would produce about 660,000 barrels of oil per day in Vietnam’s Binh Dinh province, is unlikely to be built, Platt's reported Thursday.

The project faces many hurdles, not least of which is money. The state-owned Thai oil and gas firm leading the project, PTT Public Company Limited (BKK:PTT), estimates the cost would equate to almost a third of the company's 2012 revenue.

PTT confirmed on July 24 that a feasibility study for the refinery project would be completed by next April and that joint ventures with other partners have not yet been approved.

Vietnam crude oil production averages less than 330,000 barrels of oil per day and its main oil field is on the decline. The PTT project plus additional refining projects would add about 1.3 million barrels of oil per day by 2020.

The proposed location, in the Binh Ding province of Vietnam about 700 miles south of Hanoi, offers benefits as the Nhon Hoi economic zone would give PTT and any future partners cheap rent, access to a deepwater port, and connections to the north and south of the country.

As a small crude producer with limited regional oil transport infrastructure, Vietnam is unlikely to become a key Asian products exporter, according to Platt's.