Dr Tran Ngoc Canh, director general of the Vietnam National Petroleum Group (PVN) talked about major developments of the refinery and its future plan in a recent interview granted to Tin Tuc (News Bulletin). Excepts from the interview.

Reporter: Would you brief us on the developments of this major project?
Mr Canh: It has been a long way to implement the project since it was designed by the Government and approved by the National Assembly. Looking back on it more than 10 years ago, we did find it very challenging to carry out the project when facing financial difficulties, the soaring prices of material and the final dissolution of investor Viettross – a joint venture between Vietnam and Russia. Other challenges included the installation of state-of-the-art production lines to meet tough requirements for product quality and environmental protection. However, what we have achieved so far testifies to the will and firm resolve of the investor (Vietnam) and contractors. The first oil products bearing the Made-in-Vietnam brand have come out of the refinery after 44 months of construction.

The key factor behind the successful implementation of the project was the special care of the Party and State, and the close and timely instructions of the Prime Minister and the steering board for key State-funded projects, as well as support from National Assembly committees, ministries, sectors and local administrations. It was also attributed to great efforts made by PVN executives and thousands of officials, engineers and workers on the construction site.

Reporter: What benefits will the refinery reap when it goes into full operation?
Mr Canh: The fact is that oil and oil-based products play a very important role, especially when the global economy relies on energy sources. For Vietnam which completely imports oil and petrol, the refinery will help reduce the trade deficit and ensure national energy security.

When the refinery operates at full capacity, it will produce nearly 150,000 tonnes of petrol, 240,000 tonnes of diesel, 23,000 tonnes of LPG, 30,000 tonnes of aeroplane fuel and 25,000 tonnes of FO a month, meeting 30 percent of the country’s demand.

With competitive prices, its products will be used by the State to stabilise the market, especially when global fuel prices fluctuate widely. It will also make a significant contribution to the provincial and State budgets as it expected to generate VND55,000 billion in revenue a year.

The inaugural of the refinery will help Quang Ngai province develop infrastructure and services, generate jobs for thousands of people and facilitate the development of the Dung Quat Economic Zone. It will create a prerequisite for Vietnam to develop the refined-petrochemical industry and other support industries.

The Dung Quat Oil Refinery will be a practical and effective model for PVN to carry out other similar projects inside and outside the country.

Reporter: The refinery was initially designed to use crude oil from Bach Ho (White Tiger) oilfield, but PVN is importing crude oil to feed it. Has the group put forward any solutions to ensure the economic efficiency of the project?
Mr Canh: According to the design, the refinery will use either 100 percent of its material (crude oil) pumped up from Bach Ho oilfield in the first phase or 85 percent of the volume from the oilfield and 15 percent transported from Dubai in the future. Although the volume exploited at Bach Ho oilfield is declining, it can manage to feed the refinery in the first one or two years. Judging from this fact, PVN had to adjust the design and select appropriate technology to ensure the refinery can use crude oil from different sources. PVN is negotiating and signing contracts with its partners to provide an adequate supply of material to the refinery in the long run. Therefore, the use of imported materials does not affect the economic efficiency of the project.

Reporter: Does PVN have any future plans to replace foreign specialists who are currently holding key posts and enjoying high salaries?
Mr Canh: I think that it is a must to hire experienced foreign specialists to operate the refinery in the first one or two years. Realising the importance of human resource development, PVN had adopted a personnel recruitment and training plan which was recently completed by the project management unit. All personnel for key posts were sent to training courses in Vietnam and other countries such as Russia, Romania, Indonesia and Malaysia. Currently, these people are working under the close supervision of contractor Technip and other foreign specialists from Petroconsult, Aramis, Idenmitsu and Petronas.

When the refinery is handed over to Vietnam in October 2009, PVN can manage to take over 90 percent of positions in operating units. The reduction and replacement of senior foreign personnel will be carried out between 6 months and 3 years according to international norms.