Recently released market study: Vietnam Petrochemicals Report 2010

PRLog (Press Release) - Jan 17, 2010 -
Vietnam's bid to build two world-scale petrochemicals complexes by 2013 have been thrown into doubt due to the global financial crisis and its impact on the ability to secure multi-billion dollar funding, according to  BMI's latest  Vietnam Petrochemicals Report. At present, Vietnam's petrochemical industry is small and insufficient to serve local demand, let alone provide export revenue. This is despite the country's reputation as an emerging Asian manufacturing hub. The situation is set to change from 2009. In 2008, Vietnam had no oil refining capacity and was a net exporter of crude oil while refined products imports were in excess of 270,000 barrels per day (b/d). Vietnam's first refinery, the US$2.5bn Dung Quat complex, is scheduled to commence operations in Q209, refining 130,000b/d to produce diesel, gasoline, jet fuel, liquefied petroleum gas (LPG) and propylene. The  Vietnam Oil and Gas Group (PetroVietnam) is constructing a petrochemical complex in the Dung Quat economic zone, which will have the capacity to produce 260,000tpa propylene feedstock for a 150,000tpa PP plant. The entire complex is due to be operational by 2010. Another two projects are in the pipeline. The first is the Nghi Son Refinery and Petrochemical complex in Nghi Son with capacities of 150,000tpa of propylene, 150,000tpa of benzene, 480,000tpa of paraxylene and 150,000tpa of PP, which is scheduled to come onstream in 2013. The second, also scheduled for 2013, is the Long Son Petrochemical complex with capacities of 1.1mn tpa of ethylene, 550,000tpa of propylene, 400,000tpa of VCM, 330,000tpa of PVC and 1.45mn tpa of polyolefins. The chief problem is financing these projects at a time of tightening global liquidity conditions. While  BMI expects PetroVietnam's complex to come online in 2009, doubts surround the viability of the Nghi Son and Long Son projects. The failure of either or both the projects would deal a major blow to Vietnam's industrialisation efforts. The complexes would supply key industries in the country, notably the automotive and consumer goods packaging sectors, as well as exporting products to other southeast Asian markets. The country's per capita plastic consumption is also set to grow fast as a result of strong economic growth. The other concern is the impact of increased Asian petrochemicals capacities over 2009 and 2010 on product prices, particularly in a climate of slackening demand growth. With little domestic petrochemicals activity, Vietnam is at the bottom of  BMI's Asia Petrochemicals Business Environment Rankings with 36.5 points, 6.1 points behind Philippines. There is no likelihood of a significant increase in the country's score and it is likely to remain at the bottom of the league until world-scale complexes come online. Risk factors also need to improve, particularly in relation to most areas of the economy and the government's regulation of downstream industries.

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