Gazprom Neft had been in talks to secure a 49% stake in Vietnam's sole refinery after Hanoi wasn't willing to guarantee low import tariffs
Russian oil producer Gazprom Neft is pulling out of talks with Vietnam Oil and Gas Group (Petrovietnam) on acquisition of a 49% stake in the country’s only operating oil refinery Dung Quat, a representative of the company said on Monday.
According to the source, the Russian side has informed Petrovietnam on its intention to drop out of talks on Gazprom Neft’s participation in modernization of the refinery in a written form.
In November 2013, Gazprom Neft and Petrovietnam signed a framework agreement setting out the terms of Gazprom Neft’s proposed acquisition of a stake in the Dung Quat oil refinery, which came on stream in 2009, and its planned modernization program.
Gazprom Neft intended to invest up to $1.5 bln in the project. Gazprom Neft planned to acquire a 49% share in Binh Son Refining and Petrochemical, which controls and manages the refinery. As part of the modernization program, the capacity at Dung Quat is planned to be increased from the current 6.5 million tonnes to 10-12 million tonnes per year.
The trigger for Gazprom Neft’s refusal to participate in the project was the position of the Vietnamese Ministry of Industry and Trade, which said it was impossible to keep preferential import tariffs for the refinery after a 10-year beneficial operating run in 2018 that the Russian side asked for. Meanwhile, Gazprom Neft does not rule out acquisition of part of the Vietnamese refinery’s shares this year.
Source: TASS - Russian news agency