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KPC And PetroVietnam Reaffirm Commitment To Vietnam Refinery Project Despite Delays

State firms Kuwait Petroleum Corporation (KPC) and PetroVietnam have reaffirmed their commitment to building a $6.2bn joint venture refinery and petrochemicals complex in Vietnam, despite delays in financing. Speaking to Kuwait’s state news agency KUNA on 6 January, KPC CEO Faruk al-Zanki revealed that he had met with his PetroVietnam counterpart Do Van Hau to confirm their respective commitments to the project. “Mr Do pledged his full support to secure the Vietnamese government’s guarantee for foreign exchange for lenders of the project,” Mr Zanki said. “The Kuwaiti government is committed to this project, which is also in line with KPC’s strategy to expand downstream business.” he added. He also confirmed that KPC would be supplying 100% of the crude oil for the refinery at the complex.

Construction work for the 200,000 b/d capacity refinery, which will be owned by KPC’s international subsidiary Kuwait Petroleum International (KPI), PetroVietnam and Japan’s Idemitsu Kosan and Mitsui Chemicals, has suffered several delays since its scheduled start date in 1Q11. These were due for the most part to a range of preparation and land clearance procedures, local media has reported. It is still expected however to go online by 2015. “The contract for engineering, procurement and construction (EPC) will be awarded once outstanding issues, including finance, are resolved,” Mr Zanki said.

In September last year the International Finance Corporation (IFC) approved a plan to provide funding to the project – located in the northern province of Thanh Hoa, 180km south of Hanoi – without releasing details on how the funding would be carried out. The IFC is said to be considering a long term investment of up to $300mn as an ‘A Loan’ and another $300mn ‘B Loan’, which would then be sold down to other investors. KPI and Idemitsu each hold a 35.1% stake in the joint project, while PetroVietnam and Mitsui hold 25.1% and 4.7% stakes respectively.

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