October 2, 2018 / 10:48 AM / 5 months ago

Vietnam's Petrolimex proposes halt to JXTG-backed project

Cars queue at a Petrolimex petrol station in Hanoi, Vietnam, January 7, 2016. REUTERS/Kham

HANOI (Reuters) - Vietnam’s top fuel importer and distributor Petrolimex proposes to halt a nearly $5 billion petrochemical project, jointly developed by Japan’s JXTG Holdings, to “focus resources on executing other projects”, a document reviewed by Reuters showed on Tuesday.

Work at the proposed 200,000-barrels-per-day Nam Van Phong Refinery and Petrochemical Complex costing $4.4 billion-$4.8 billion should stop, Petrolimex suggested at a meeting with senior government officials last week, the document showed.

Officials from the finance and investment ministries found it logical to halt the project given its lack of competitiveness, concerns about oversupply and uncertainty over tax support from the government, local media reported.

Any halt to the project needs approval from the prime minister or the government.

A Petrolimex spokesman said he had forwarded Reuters’ questions to top officials and will respond once he has answers. The Ministry of Industry and Trade, which holds a majority stake in the company, did not immediately respond to request for comment.

A spokesman for JXTG, which bought an 8 percent stake in Petrolimex in 2016 and signed a memorandum of understanding to work on the Nam Van Phong Refinery in 2014, said the company was aware of media reports but had not heard of any such decision from Petrolimex.

As far as JXTG is concerned, the project is still ongoing, said the spokesman, who declined to be named.

Two of Vietnam’s existing oil refineries, in full capacity, can meet up to 70-80 percent of domestic demand, while imported products enjoy tax cuts from Vietnam’s several trade agreements in the region.

Petrolimex announced plans to build the complex in 2011.

Additional reporting by Osamu Tsukimori in Tokyo; Editing by James Pearson and Subhranshu Sahu

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