Vinachem, the state-owned fertiliser and chemicals group, is seeking a buyer for its 11 per cent stake in the $4.5 Long Son Petrochemical Complex project in southern Vietnam.

Thailand’s SCG and Qatar Petroleum International - two foreign partners in the $4.5 Long Son Petrochemical Complex - would be potential replacers of Vinachem.

According to a Vinachem source, the state-owned PetroVietnam – another local partner of this joint venture has already declined to acquire Vinachem’s stake, foregoing its first-priority rights to buy out any partner seeking to withdraw from the project.

Vinachem, the source said, decided to divest its stakes in the Long Son complex because the company wanted to focus more on its core business fields of fertiliser and chemicals. Another motive, insiders say, is that Vinachem has had plans to set up another petrochemical complex that would churn out similar products to the Long Son’s, which would conflict with Long Son contractual agreements unless Vinachem divests.

The Long Son petrochemical complex, located on Long Son island in southern Ba Ria-Vung Tau province, will be Vietnam’s first petrochemical complex of its kind.

It was licenced in 2008 with Thailand’s SCG Vina taking a 53 per cent stake, Thailand’s Plastic and Chemical Corporation 18 per cent, PetroVietnam 18 per cent and Vinachem 11 per cent. In 2011, Qatar Petroleum International joined the project after acquiring 25 per cent from SCG Vina. The complex was broken ground also in 2008, but the construction was delayed due to land clearance and compensation issues on the 400 hectare site.

Recently Ba Ria-Vung Tau authorities said that it had a temporary calculation of land rental for 400ha of the project at around VND1.4 trillion ($66.6 million). The rental issue is now under discussion with the complex investors. Long Son Petrochemical complex will have a capacity of 1.4 million tonnes olefins from a flexible cracker utilising feedstock as ethane, propane and naphtha, with supporting infrastructure, such as storage facilities, port, jetty, power plant and other utilities. 

The complex offers excellent synergy with a wide array of Vietnamese industries such as consumer goods packaging, PVC pipe and profiles, electrical appliances and auto industry. Meanwhile, PetroVietnam is also seeking partners to set up the country’s third oil refinery, also in Long Son with the estimated investment capital of $7 billion and an annual capacity of 10 million tonnes of crude oil or about 200,000 barrels per day.

Vietnam Investment Review - November 26, 2012