Russian oil giants Rosneft and Gazprom Neft have signed a series of agreements with Vietnam's state-run Petrovietnam that will give them a 49% stake in Vietnam's only operating refinery and will cover landmark joint exploration and fuel supplies.
The agreements were signed during a visit to Vietnam by Russian President Vladimir Putin on 12 November, and will also pave the way for Vietnam's state-run oil company to jointly explore in Russia's Arctic Pechora Sea.
The deal could also see Rosneft's eventual purchase of a stake in an exploration block off Vietnam's continental shelf. The block in question is operated by PetroVietnam with a 40% stake, with France's Total and South Korean SK Energy holding 35% and 25%, respectively.
As part of the deal, Gazprom Neft-Gazprom's oil subsidiary--will acquire a 49% interest in the Dung Quat refinery, which will be modernized to increase capacity from 6.5 million tons to 10-12 million tons within a year.
Alexander Dyukov, Chairman of the Management Board of Gazprom Neft, said the deal was in line with the company's long-term strategy of pursuing a significant increase in refining volumes outside Russia. Access to the capacity at Vietnam's refinery will allow Gazprom Neft to enter the fast-growing Asian market for refined products.
"For this refinery upgrade project in Vietnam Gazprom Neft will draw extensively on the Company's experience in modernising our refining capacities in Russia and Europe, where all plants now produce fuel meeting the Euro-5 standard. By working with PetroVietnam we will ensure that the Vietnamese market enjoys a stable supply of refined products that meet world standards," Dyukov said.
Also included in the raft of deals signed, Russia's state-owned gas monopoly, Gazprom, will supply fuel to Vietnam, including liquefied petroleum gas (LPG).
Vietnam is a key ally in Asia for Russia, and bilateral trade has grown considerably over the past several years. In 2012, trade between the two countries grew 20% to $3.6 billion.
By. James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also… More