State-owned PetroVietnam and Thailand's Siam Cement Group expect to kick off construction at the proposed $5.4-billion Long Son petrochemicals project in southern Vietnam in the fourth quarter this year, PetroVietnam said in a statement Friday.
Under an agreement signed during the ongoing visit to Thailand by Vietnamese premier Nguyen Xuan Phuc, PetroVietnam and SCG said they would work as hard as they can to begin implementing the engineering, procurement and construction contract in Q4.
PetroVietnam said Long Son Petrochemicals Company Limited, the investor of the project, has already issued letters of award to key contractors for EPC and will soon approve the remaining sub-contractors.
Although no contractor name was provided, PetroVietnam said the two sides will give priority to services to be provided by the Vietnamese company's subsidiaries on the condition that they obey Vietnamese laws and benefits Long Son Petrochemicals.
SCG had said in another statement on July 14 that the project is expected to be constructed in four-and-a-half years and will be managed under the consolidated turnkey lumpsum project format, with commercial operation expected by the first half of 2022.
PetroVietnam also said in the Friday statement that SCG has pledged to provide guarantee for the $3.2-billion package that Long Son Petrochemicals plans to borrow, including PetroVietnam's portion of 29%. The Vietnamese company is now committed to providing a backup loan guarantee for Long Son Petrochemicals with regards to its 29% portion.
PetroVietnam had last month asked the central government to allow it to issue such a guarantee to help address the financing issue which has delayed the project so far. Current Vietnamese regulations prohibit a state-owned company from providing loan guarantee for a subsidiary that it holds below 51% stake in.
PetroVietnam owns 29% stake in the project in the Ba Ria Vung Tau province with the remaining 71% held by SCG.
Separately, Long Son Petrochemicals is in talks with Qatar Petroleum for the Sale of Petroleum Products Limited, or QPSPP, to review the feedstock supply agreement signed with former state-owned petroleum and petrochemicals marketing company Qatar International Petroleum Marketing Co., or Tasweeq.
In 2012, Tasweeq signed a long-term feedstock agreement to supply propane and naphtha to the steam cracker, while PV Gas, a subsidiary of PetroVietnam, signed a memorandum of understanding to supply ethane.
Since January 2017, Tasweeq has been integrated into state-owned Qatar Petroleum and new entity QPSPP has taken over sales and marketing previously handled by Tasweeq.
The Long Son petrochemicals complex will revolve around a 1 million mt/year steam cracker with flexible gas and naphtha feed to yield a total olefins capacity of up to 1.6 million mt/year depending on the feedstock mix.
The steam cracker will have the flexibility to utilize gas up to 80% of total feedstock, and will be fully integrated to the downstream polyolefins capacities of similar scale.
