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Vietnam's Prime Minister Nguyen Tan Dung yesterday officially inaugurated the country's first oil refinery in Quang Ngai Province, two years after it went on stream.

The US$2.5 billion Dung Quat refinery has been unofficially operating since February 2009. During this period the plant has received 7.6 million tonnes of crude oil from Bach Ho Oilfield in southern Ba Ria-Vung Tau Province, and imported 400,000 tonnes of crude oil.

By December 2010, the facility had successfully refined 6.75 million of products, and sold over 6.66 million tons of oil and gas.

Built at a cost of over US$3 billion by state-owned PetroVietnam (the trading name of The Vietnam National Oil and Gas Group (PVN)) the refinery has the capacity to process 6.0-6.5 million tonnes of crude oil per year, or 130,500 barrels per day (bpd). It produces fuel oil, jet fuel, liquefied petroleum gas, kerosene, diesel, A92 and A95 gasoline and polypropylene.

Petrovietnam and Binh Son Refining and Petrochemical Co. Ltd., the company which runs Dung Quat, have forecast they will produce 5.6 million tonnes of oil products this year and are said to be targeting profits of VND550 billion (US$23.5 million) on revenues of VND73-77 trillion (approx. US$3.85 billion) over the next 12 months. They are also planning an expansion that will raise the plant's product output to 9.2-10.0 million tonnes per year (around 200,000 bpd).

Nguyen Hoai Giang, chief executive of Binh Son was last month reported to have said that it was looking for foreign partners to buy a stake in the refinery, which has been criticised for being too small. Petrovietnam would sell a 49 percent minority stake in order to help provide funding for the expansion, which is likely to cost around US$1 billion.

Giang added that as part of the planned expansion the plant would also diversify its product output from the current seven, without giving specific details.

Petrovietnam has confirmed that its has chosen Japan's JGC Corporation as adviser for the plan to raise Dung Quat's production capacity to 200,000 bpd. The enlargement is scheduled to be completed in 2015-16.