Vietnam feasibility study - EITI

Vietnam (Kitovani et al, 1961). On September 3 rd 1975, right after the reunification of the North and the
South, the Vietnam General Department of Petroleum and Natural Gas was founded by merging the
Geological Federation No. 36 and a division of the General Department of Chemicals, marking a new
stage of development for the petroleum industry. A year after its founding, the petroleum industry
for the first time discovered natural gas at drill No. 61 in Dong Co communes - Tien Hai district - Thai
Binh province. On 19 th June 1981, the Vietnamese-Soviet Petroleum Joint Venture (Vietsopetro) was
established.
Studies and surveys done in May of 1984 showed the possibility of commercial exploitation of oil in
the White Tiger and Dragon sedimentary basins (Vietsopetro, 2008). On November 6 th , 1984, the first
base oil rig in Vietnam (MSP-1) was launched at the White Tiger rig. The date June 26 th , 1986, went
down in Vietnamese history when the Vietnam-Russia Oil and Gas Joint Enterprise exploited the first
ton of oil from White Tiger MSP-1 rig. As a result, Vietnam was listed amongst the crude oil producers
of the world.
exploitation activities
To date, most of the economic components have participated in mineral extraction with over 2000
companies in which 90% are at a small scale. Based on the licenses that are issued by the Central
authorities, there are 150 extractive companies operating in 37 provinces. Of these, the sate owned
enterprises accounts for 54.41%, FDI enterprises for 8.82%, and the rest belong to the privately owned
Vietnamese enterprises. Due to limitations in capital and human resources, some mines are operating
at a small scale. There are few big scale mines in Vietnam, accounting for over 10% of all operating
mines. However, they have a bigger production compared to the rest of the mining sector and create
an enormous amount of jobs. The coal extraction sector alone accounts for 60% of the value of the
mining sector and creates over 100,000 jobs.
mineral processing and use activities
Regarding the mining sector, some factories were constructed before 1996, like Thai Nguyen cast iron
and steel and Tinh Tuc tin. In general, export of raw minerals is quite popular, though some refinery
factories have started operating in recent times, such as Song Cong Steel company (in Thai Nguyen) and
Bong Mieu Gold Refinery (in Quang Nam). Due to the low level of technologies applied in the mining
sector, most of the extractive companies operate at a small scale. Therefore, minerals are wastefully
exploited and processed. According to the report of Vinacomin, the loss ratio in coal extraction
in Quang Ninh is around 7.3-7.7% and 28-31% with opencast and pit extraction, respectively. The
recovery ratio of gold ore in processing is currently just 30-40%, resulting not only in a considerable
loss but also causing serious pollution to the environment (CODE, 2010).
Concerning the oil and gas industry, to assure the energy security and economic development,
Vietnam started building its first oil refinery factory in 2005, Dung Quat oil refinery factory in Quang
Ngai province with a capital investment of over 2.5 billion USD and capacity of 6.5 million tons of
crude oil per year. The factory started operating in February 2009, mainly producing propylene,
liquefied petroleum gas (LPG) and diesel. In addition, Vietnam started building the second oil refinery,
the Nghi Son oil refinery complex in Thanh Hoa province. The Nghi Son oil refinery complex started
in May 2008 with the investment capital of 7 billion USD invested by PVN incorporation with the
Kuwait Petroleum International (KPI), Idemitsu Kosan company and Mitsui Chemical company (MCI).
The project is divided into two phases. Phase 1 has a capacity of 10 million tons of crude oil/year and
it will use crude oil source from the Middle East with a capital investment of over 7 billion USD. The
ratio contribution is KPI (35.1%), PVN (25.1%), MCI (4.7%). In the second phase, the capacity will be
increased to 20 million tons of crude oil per year. The complex is planned to commercially operate
by 2014 with the main products including 2.3 million tons of gas/year, 3.7 million tons of diesel/year,
The Extractive Industries Transparency Initiative and the Implementation Perspective of Vietnam
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