HANOI, VIETNAM: The Vietnam National Oil and Gas Group (PetroVietnam) planned to sell a 49% stake of Dung Quat Oil Refinery, its chairman Dinh La Thang said recently.

The refinery, Vietnam's first, is scheduled to begin working on 25 Feb, Vietnam News Agency (VNA) reported.

"PetroVietnam would appraise the refinery's value and negotiate with foreign partners before selling the stake," the chairman said on 2 Jan.

International partners that committed to supply crude oil to the refinery would be given preference.

PetroVietnam is expected to begin talks with British Petroleum (BP) about the planned sale and the supplying of crude oil next week.

The negotiations would focus on price and quality and it was possible that the BP would provide at least 50% of the total crude oil for the refinery, the chairman said.

PetroVietnam had decided to import crude oil for the refinery because Vietnam's oil and gas reserves were limited.

Further, the high quality of the oil from the major Bach Ho field off the southern coast would earn Vietnam more revenue as an export.

The Dung Quat plant, in central Quang Ngai province, did not need such high quality oil.

PetroVietnam has signed contracts with Venezuela, Malaysia, Iraq, Argentina and Russia to find oil for not only Dung Quat but also the planned Long Son and Nghi Son refineries.

The Government of President Hugo Chavez had given PetroVietnam permission to form a joint venture with Venezuelan partners to explore and exploit oil and gas in Venezuela, the chairman said.

PetroVietnam's total revenue jumped 31% last year against 2007 to 280 trillion VND (US$16.5 billion), or one fifth of the country's GDP (Gross Domestic Product).

About US$11.2 billion came from crude oil exports.

The corporation paid a tax of 121 trillion VND (US$6.9 billion), a year-on-year increase of 42%, and one third of the total State budget.

The Dung Quat Refinery was about 98% complete and its flare would be lit this weekend, said Binh Son Petrochemical Co. Deputy General Director Dinh Van Ngoc.

It was a landmark that signalled the plant was ready for business, he said.

Binh Son Petrochemical Co. manages the refinery and its deputy general director confirmed that many contracts had been completed.

These included construction of a breakwater - five months ahead of schedule - a port facility and a control centre.

Most departments of the refinery had been given a trial run and 40% of the plant's equipment was already operational.

"A great amount of good quality work has been completed. We are positive that we will have refined oil by 25 Feb 2009," he said.

The company imported gas, 52,000 tonnes of diesel and 600 barrels of crude oil to power the boiler of an electric station last month.

It would import 600,000 barrels of crude oil for testing by the end of this month.

The deputy general director said the refinery's oil producing capacity would gradually rise.

It would be working at 50% capacity in Feb but at 100% from Aug to Dec.

The refinery was expected to gain an average capacity of 60%-65% for all of this year, equivalent to processing 4 million tonnes of crude oil.

It would process a yearly 6.5 million tonnes of crude oil at full capacity.

The oil would be used to create 6.3 million tonnes of petrol products.

Improvements would be made so that the facility could refine mixed crude oil from the Middle East.

The management planned to further boost the refinery's capacity when it was completed and the Government had already approved the proposal.

The fastest option was to increase the refinery's capacity to 130%-140%, equivalent to 8.5 million tonnes of crude oil a year.

Or a new facility could be built alongside the refinery.

This would allow maximum use of existing infrastructure and workers.

"When the refinery project received a Government decision for its investment in 1995, its investment capital was US$2.5 billion," the deputy general director said, adding "Today, as it becomes the most modern oil refinery in Southeast Asia and one of the best refineries in Asia , we assume the cost is much higher."

He did not disclose the final cost.

PetroVietnam has designed a programme to help the Government implement measures to ward off recession, maintain economic growth and assure social welfare.

It will buy oil and gas sources in foreign countries in a bid to raise oil reserves to 35-40 million tonnes this year.

PetroVietnam will also accelerate production to ensure it exceeds its 15.8 million-tonne target for this year.

It has pledged to operate gas pipelines safely, ensure supply for buyers, and produce 10 billion kWh in 2009.

Petro Vietnam has set a growth target of 15% for this year. Its key projects, the Dung Quat, Nghi Son and Long Son oil refineries, the Southern Petrochemical Complex and the Ca Mau Fertiliser Project will soon be put into operation.

It has also earmarked 165 billion VND (US$9.7 million) for charity this year. (Bernama)