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Tony Milton MRICS

BSc (Hons) Est Man
MRICS
APREA (CREIF)

Oil Refineries, etc
Monday, 16 March 2009

 NATIONAL & REGIONAL OIL NEWS

 

Near the end of 2008, PetroVietnam announced that the country exports from 16 million to 17 million tonnes of crude oil and imports 12 million tonnes of fuel for domestic consumption per annum.

 

 

Comparisons to other oil refinery developments in South Asia

                  

Despite having been a net exporter of oil for over a decade, Vietnam (still) has no refining capacity, which coupled with the perceived need for energy self-sufficiency, and the increasingly unstable global socio-political situation (with crude oil prices upto USD$77 a barrel), by 2006 proved sufficient to finally compel central government to self-finance the construction of the Dung Quat Oil Refinery. This long promised project (two previous foreign developers from France and Russia pulled out), has now started construction but has come at a time when many other countries have had similar ideas for similar reasons, and it is estimated that there are now at least 6 refineries under construction in the USA, 8 in China, several and India.

 

 

 

The rise in oil prices has focused attention on the security and longevity of global oil supplies. According to a 2004 report prepared by the US office of petroleum reserves, “World oil reserves are being depleted 3 times as fast as they are being discovered.” For governments and financial markets though, perhaps the more pressing issue is not when oil will run out, but when ‘peak production’ will be reached - the point when half the total oil known to have existed has been consumed, beyond which extraction goes into irreversible decline. Estimates on the likely peak production date range from 2007 to the mid-2030s, but once peak production has been passed, global oil production is expected to decline at about 2–3% a year. For a world ‘addicted to oil’, the withdrawal symptoms could be exceedingly uncomfortable.

 

 

Top oil consumers (2004)

Rank  Country                 Total oil consumption (barrels per day)

1        USA                      20,700,000

2        China                    6,500,000

3        Japan                    5,400,000

4        Germany               2,600,000

5        Russia                   2,600,000

                                      37,800,000

 

Top oil producers (2004)

Rank  Country                       Total oil consumption        

(*OPEC member)   (barrels per day)    tons         

1        Saudi Arabia*        10,370,000            74,145,500

2        Russia                   9,270,000              66,280,500

3        USA                      8,690,000              62,133,500

4        Iran*                      4,090,000              29,243,500

5        Mexico                   3,830,000              27,384,500

                                      36,250,000            259,187,500

 

 

Oil is and will remain Vietnam’s major export earners for the short to medium to term and since the first tonne of oil was pumped in 1986, the country’s oil and gas sector has exploited more than 200 million tones (1.44 billion barrels) of crude oil from wells off the country’s coast and earned total export sales of USD$43 billion. Daily production is estimated at 48,000 tonnes of crude oil (345,000 barrels) and 20 million cubic meters of natural gas. The country’s oil and gas sector targets 18 million tones (130 million barrels) of crude oil and 7 billion cubic meters of gas in 2006.

 

 

Since the state owned monopoly PetroVietnam, reports that Vietnam has proven oil and gas reserves of 1.25 billion ton of oil equivalent (about 24,500,000 barrels per day), out of a total potential reserve of 4.5 billion ton (about 88,000,000 barrels per day). They estimate that investment needs will average US$3 billion per year for continuing oil and gas exploration with the aim of adding new oil and gas reserves of between 25 million and 30 million tonnes per year of oil equivalent (about 490,000-588,000 barrels per day). Foreign investors have so far participated in 57 exploration contracts worth a total of USD$7 billion, twenty six of which are still effective. Vietnam is Southeast Asia's third largest crude oil producer.

 

 

PetroVietnam plans to develop 3 oil refineries by 2010 (in the north, centre and south) to process the more than 17 million tons of crude oil that it produces annually (about 333,000 barrels per day). According to the national strategy for developing the oil sector of Vietnam, the total domestic production capacity will increase to 20 million tonnes (about 390,000 barrels per day) in 2020, by which time consumption is expected to reach 32 million tonnes (about 627,000 barrels per day).

 

 

There are 5 refineries that are planned to be developed in Vietnam : -

 

Name              Region             Capacity                      Investment      Due     Comments     

Dung Quat     South Central  6.5m tons/148,000bpd    $2.58bn    2010     Vietnamese

Nghi Son         North               7m tons/140,000bpd      $3bn         2010     Japanese JV

Long Son         South               -                                      -          -           Near Oil Fields

Can Tho          Mekong            2m tons/40,000bpd       $0.4bn      2010     Chinese JV

Nhon Hoi         South Central  5m tons/100,000bpd       $1.5bn      2010    100% Hong Kong

                                                                                                             (export only)

By way of regional comparision : -

 

Thailand - barrels per day / bpd

 

Thai Oil Co                                                  220,000 (270,000 in 2007)

Rayong                                                       145,000 (210,000 in 2008)

Star Petroleum                                            130,000

Bangchak Refinery (Bangchak Petroleum)     120,000

Thai Petrochemical                                       65,000

Rayong Purifier                                             17,000

Songkhla                                                    100,000

Sriracha Refinery (ExxonMobil)                     170,000

 

Malaysia - barrels per day / bpd

 

Melaka I Refinery (Petronas)                       126,000

Melaka II Refinery (Petronas/ConocoPhillips)  93,000

Kertih Refinery (Petronas)                             40,000

Port Dickson Refinery (Royal Dutch Shell)    155,000

Esso Port Dickson Refinery (ExxonMobil)       86,000

 

Indonesia - barrels per day / bpd

 

Musi Refinery (Pertamina)                            135,200

Balongan Refinery (Pertamina)                      125,000

Dumai Refinery (Pertamina)                          120,000

Cilacap Refinery (Pertamina)                         348,000

Balikpapan Refinery (Pertamina)                    260,000

Sungai Pakning Refinery (Pertamina)               50,000

Pangkalan Brandan Refinery (Pertamina)           5,000

Cepu Refinery (Pertamina)                                3,800

Kasim Refinery (Pertamina)                             10,000

 

Philippines - barrels per day / bpd

 

Limay Refinery (Petron)                                180,000

Tabangao Refinery (Royal Dutch Shell)          120,000

 

Singapore - barrels per day / bpd

 

ExxonMobil Jurong Island (ExxonMobil)           605,000

SRC Jurong Island (Singapore Refining Corp)   285,000

Pulau Bukom Refinery (Royal Dutch Shell)      458,000

 

Demand for eneray in Asia is growing at 5.7% per annum and is "fast becoming the world's leading regional energy market," according to the Cambridge Energy Research Associates (CERA), who add that, "within 2 years, Asian oil demand will exceed that of North America - providing the success of Asia's formidable economies continues. Companies are scrambling to redesign their strategies to lock in opportunities in markets in which the competition is getting tougher."

 

 

East Asian oil demand

 

Average regional annual increase to 2010       4%

East Asian oil demand in 2010                       10m bpd

China’s oil demand in 2010                            7m bpd

China’s oil imports in 2010                             2m bpd

Source: International Energy Agency

 

 

Current & Future Demand & Supply for Oil

 

Nationally : -

 

1.     Nghi Son (Thanh Hoa) – in mid 2006, the state oil and gas giant PetroVietnam announced plans to establish a joint venture (JV) in 2007 to develop a USD$3 billion petro-chemical complex in the country's north, including the long-planned Nghi Son oil refinery. Japan's Idemitsu Kosan Co Ltd is emerging as a major potential foreign partner although other foreign consortiums from the Middle East, United States and Russia were also being considered. Idemitsu Kosan and PetroVietnam are reviewing the feasibility study for the complex in Nghi Son Industrial Zone in Thanh Hoa Province, about 200 km south of Hanoi. The Nghi Son refinery will have an annual output capacity of 7 million tons, with most of the crude oil input imported from the Middle East and the remainder from Su Tu Den (Black Lion) oilfield off the country's southern coast. Su Tu Den, which is turning out around 70,000 barrels per day, is the third largest oil producing field in Vietnam. The field is in Block 15-1, about 1,200 kilometers from the Nghi Son complex, and the block has total proven oil reserves of 420 million barrels or 60 million tons. The petrochemical plant is designed to churn out 300,000 tons of polyester and polypropylene a year. The Nghi Son and Dung Quat refineries will contribute 70% of the country's demand for oil products by 2010 after they are in place. The Nghi Son petrochemical plant and the 150,000 ton-capacity Dung Quat polypropylene plant will satisfy around 40% of the national demand.

 

 

2.     Dung Quat (Quang Ngai) - The Nghi Son and Dung Quat refineries will contribute 70% of the country's demand for oil products by 2010 after they are in place. The Nghi Son petro-chemical plant and the 150,000 ton-capacity Dung Quat polypropylene plant will satisfy around 40% of the national demand.

 

 

3.     Long Son Island (Ba Ria-Vung Tau) - PetroVietnam is working on a plan to develop a refinery in the country's south and in 2004 conducted a geological survey of Long Son Island off the coast of Ba Ria-Vung Tau Province. The location was previously suggested by foreign investors for the first refinery but the Government decided to choose Dung Quat to create an impetus to develop the central region. The Nghi Son petro-chemical complex, if it materialises, will become the country's biggest downstream project in the oil and gas industry.

 

 

4.     Nhon Hoi (Binh Dinh) – In mid 2006, the govern­ment gave the in-principle go-­ahead signal for a petrochemi­cal and oil refining complex in Nhon Hoi Economic Zone. The Hong Kong General Association of International Investment is the project owner and wants to develop the project as a wholly for­eign-owned firm, and has pledged to invest US$1.5 bil­lion in the oil refinery with a capacity of 5 million tons. However, the Government in its document stresses that there will be no guarantees on crude oil supply, neither assistance to develop infra­structure for the project. The investor has said it highly valued conditions in Nhon Hoi due to its solid ground for building the refin­ery as well as the availability of Nhon Hoi Port capable of handling vessels of up to 100,000dwt. The investor has planned to import crude oil from the Middle East for processing if the project gets formal licencing approval. Binh Dinh authorities said that finished products from the planned oil refinery would not compete with products from Dung Quat Refinery, since the investor had pledged to ship all products to other markets. In an earlier informal meet­ing, the Prime Minister told provincial authorities that the Government would approve the project if the investor agreed not to sell products in the country and not to seek local crude oil supply. The refinery should be put into operation by 2009.

 

 

5.     Can Tho - Dong Trading Investment Joint Stock Co and China Overseas Engineering Co. (COVEC) have already selected a location for building an oil refinery in the Mekong Delta, and the planned Can Tho Oil Refinery will be built in Hung Phu I Industrial Park in the city's Cai Rang District. The refinery, with a designed annual capacity of 2 million tons of oil, is expected to require total investment capital of US$396 million.

 

 

6.     In late 2006 the Prime Minis­ter agreed to license a USD$500 million oil refinery project in the central province of Phu Yen. The joint venture be­tween Technor Star Man­agement Ltd from the UK and Russian oil and gas cor­poration Telloil, the Vung Ro refinery project, will have an annual capacity of 3 million tonnes of crude oil.

 

 

7.     In 2008 the Haiphong Paper Joint Stock Company (HAPACO) and its German partner Evagor (15:85%) started construction of a one million ton USD$150 million oil refinery in Dinh Vu Industrial Zone in Haiphong.

 

 

Internationally : -

 

World oil demand should soar from this year's almost 86 mil­lion barrels per day to 118 mil­lion bpd by 2030, even though higher fuel prices will cut back some petroleum usage, the US government's top energy forecasting agency predicted. Much of the growth in global oil consumption over the next quarter century will come from the non-industrialized nations in Asia, where the strong econo­mies of China and India will gobble up more barrels, accord­ing to the Energy Information Administration, the statistical arm of the Department of Energy. "Much of the world's incre­mental oil demand is projected for use in the transportation sector, where there are few competitive alternatives to petroleum," EIA said in its annual long-term international energy supply and demand forecast. The Organization of Petro­leum Exporting Countries will provide a large chunk of the ad­ditional oil supplies that will be needed to meet demand in 2030 the EIA said. However, the agency said OPEC's total share of global sup­ply will fall from 39.7% (34million bpd) of this year's world oil demand to 38.4% (45.3 million bpd) of global oil demand in 2030. While worldwide oil con­sumption rises, expected high crude prices will reduce demand by some 8 million bpd than previously forecast in 2025 to 111 mil­lion bpd, EIA said. This year's forecast has projections out to 2030 for the first time. Oil production from non ­OPEC countries in West Africa and the Caspian Sea region is forecast to increase sharply and grab a larger share of the global oil market over the next 25 years. Oil output is expected to decline in Norway, Europe's larg­est producer, from a peak of 3.6 million bpd this year to 2.5 mil­lion bpd in 2030. Despite President George W. Bush's call for the United States to end its addiction to oil, Ameri­cans will use more crude and retain the title of the world's biggest energy consumers. US oil demand is forecast to jump from 20.8 million bpd this year to 27.6 million bpd in 2030, still accounting for about one out of every four barrels of crude consumed each day in the world. The EIA's long-term forecast to 2030 also predicted that global natural gas consumption will jump from 95 trillion cubic feet in 2003 to 182 trillion cubic feet.

 

 

Last Updated ( Tuesday, 24 March 2009 )
 
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