Petroleum bonded warehouse in Van Phong Economic Zone

Quynh My

02:01 PM @ Friday - 18 June, 2010

After the planning for the development of the Van Phong Economic Zone in the central coastal province of Khanh Hoa until 2020 was approved by the Prime Minister on March 11, 2005, many local and foreign investors immediately registered for a place in the zone.

Major investors include the Simitomo Group from Japan, the JPO WEP Company, the Nghi Son Cement Company, the TSX Shipbuilding Group from the Republic of Korea, the Shin Sojoe-Energy Co. Ltd, the T&M Trans Group and the Van Phong Development and Investment Joint Stock Company (Van Phong Terminal). Van Phong Terminal has invested more than 122 million USD in building a petroleum bonded warehouse, which is expected to become “the Goose that laid the golden eggs” in Khanh Hoa province. Quynh My spoke with the Van Phong Terminal Director, Dao Minh Chau, on the investment.

Mr. Dao Minh Chau

Q: Would you talk about Van Phong Terminal’s investment as well as its operations and goals in the Van Phong Economic Zone?

At present, our country still imports a great quantity of refined petroleum products for domestic consumption but still cannot meet domestic demands even when our two oil refineries with a combined output of 15 million tonnes a year come into operation. Therefore, there is an urgent need for us to have a petroleum bonded warehouse, especially when our country possesses a long coast which is ideal for ship travelling from West to East and from the South to the North of Asia. After finding the site on My Giang Island in the Van Phong Gulf off Khanh Hoa province, Van Phong terminal poured investment in the construction of the petroleum warehouse. The 122 million facility sits on a site of 56ha and has a wharf capable of handling ships up to150,000 tonnes and storage tanks with a total capacity of 1 million cubic meters.

Van Phong Terminal intends to develop the warehouse into a centre where petroleum products are transited and distributed to the Vietnamese market and other regional countries. It has also provided equipment to produce more value added quality petroleum products and carried out other business activities and technical assistance services under Vietnamese law.

Q: Have any obstacles hindered the construction of the warehouse so far? Have the local authorities provided preferential treatment that has met the investor’s needs?

Currently we are building major and fundamental facilities for the warehouse, including storage tanks, wharfs, a system of pipelines and pumps, a transport network, a rain water and waste water drainage system, a system to collect discarded oil, power and water supply networks, a firefighting system, and other supporting amenities. However, the construction is slower than we planned and to date we have only completed just over 43 percent of the work, 23 percent less than our target. At present, we are working with the contractors on technical problems in order to speed up the construction so that the warehouse can go into operation by September 2011. In particular, we are ensuring security, safety at work and are addressing environmental issues at the construction site.

We are also pressing the contractors to accelerate the construction of the second and fourth phases while supporting the contractor in the third phase. We have submitted the design for an office building and a plan to raise the warehouse’s import capacity to the Board of Directors for approval. We have also sped up the disbursement of capital and completed the construction and investment management procedures as required by the investment monitoring team from the Ministry of Industry and Trade. We are continuing with the second phase of the project and discussed with the contractors the schedules for handing over the completed job to enable the contractor of the fourth phase to begin installing the pipelines, the electricity network and other systems. In addition to that, we have continued with clearing bombs and mines left over from the war on the depots site.

I can confirm that the local authorities have been very interested and created the best conditions they could to facilitate the construction to enable the warehouse to become operational as soon as possible.

Q: What are the practical benefits that the Van Phong petroleum warehouse will bring to the area?

I can confirm that the warehouse will bring a great deal of economic benefit to the public. The project will have modern facilities equipped with advanced technologies that will facilitate the services offered by both local and foreign petroleum businesses and will ensure competition. Apart from using cutting-edge technologies, the warehouse will be managed by leading experts from Southeast Asia and will serve as training centre for Vietnamese workers and technicians. The warehouse is expected to generate stable jobs for many local people.

Once in use, the warehouse will handle 6 million tonnes of petroleum products in the first phase when its storage capacity will be 500,000 cubic metres. And the Van Phong Terminal will earn its revenue mainly from leasing storage tanks and attached services, such as mixing, charging and pumping. Once in operation the terminal will contribute extensively to the local budget. In addition to that, the company will also promote the development of maritime services in the area, including towing and navigation services and the supply of freshwater, fuel and foodstuffs for the ships docked there.

When the petroleum bonded warehouse becomes operational, the Van Phong Economic Zone in Khanh Hoa province will become the hub of the country’s maritime industry and contribute to trade and tourism. The zone is also expected to become an attractive investment destination for investors from all over the world.

Q: What safety measures can the terminal use to prevent an environmental disaster or fires or explosions?

Before the project was launched, an environmental assessment report was produced and sent to the Ministry of Natural Resources and the Environment for consideration and examination. The report is one of the conditions that the company had to fulfill before building the project and putting it into service. During the construction we have also regularly inspected safety issues and firefighting procedures at the site.We have already outlined safety plans to fight fires and prevent explosions when designing and constructing the warehouse. Our firefighting system will extinguish any fires quickly and promptly to ensure the safety of the operators and the products in the warehouse.Our firefighting and explosion control system is based on the safety standards used by the American Fire Fighters Association. The system was also installed at the office building and supporting facilities, production facilities, the oil pumping station, the wharf and storage tanks.

We have equipped the warehouse with all the necessary and modern equipment for fighting fires as well as prepared plans to cope with the worst scenario if anything happens during the construction and when the warehouse becomes operational.

Thanks you very much

Quynh My

Vietnam National Petroleum Group - Petrolimex (PLX)

Committed to constantly making an effort to go further on the path of development and bring the lives of Vietnamese people and all Petrolimex employees to new heights in the future