Construction of Long Son petrochemical complex to resume

According to media reports, the start of the construction of Long Son petrochemical complex, which is a joint venture between PetroVietnam (29%) and Thailand’s Siam Cement Group (SCG) (71%), was delayed in July due to a financial issue. However, parties informed that the construction will resume before the end of this year and it is scheduled to take four and a half years.

Back in July, SCG pledged to provide a guarantee for the $3.2 billion package but it asked PetroVietnam to issue a commitment to Long Son Petrochemicals, guaranteeing the 29% portion of the $3.2 billion the Thai partner will borrow on its behalf. However, PetroVietnam could not provide a loan guarantee for the project since there is a legal prohibition in the country that does not allow a state-owned enterprise to make a loan guarantee for a subsidiary holding less than 51% share in order to prevent a rise in public debt.

Now, SCG has pledged to provide a guarantee not only for his shares but also for PetroVietnam’s portion of 29% so that Long Son Petrochemicals project can borrow the full package of$ 3.2 billion. The Vietnamese company will now provide a backup loan guarantee for Long Son Petrochemicals with regards to its 29% portion.

The project has a total investment capital of $5.4 billion, about 30% of which will be used for the development of a deepsea port and other facilities.

Korean Hyundai Engineering and Construction Company (HEC) has recently signed a turnkey contract that cost $320 million to build a water supply and treatment plant at the Long Son petrochemical complex, which means the company will be responsible for the entire construction from design to test operations. The company has not awarded a contract yet for EPC (engineering, procurement and construction) although they are in search of contractors.

Once the project in the southern province of Ba Ria-Vung Tau is completed, it will be one of the largest of its kind in Vietnam, with a production capacity of 1.6 million tons/year of olefins. The olefins cracker will be fully integrated to the downstream polyolefins (PE / PP) capacities of similar scale. The facility is expected to start commercial operations by 2022.