Nation’s First Oil Refinery Online for 2018

Nation’s First Oil Refinery Online for 2018

After years of uncertainty and controversy in the local petrochemical sector, Cambodia’s first oil refinery plant is expected to go online in 2018 thanks to a USD3 billion joint venture between Cambodian and Chinese firms.

The Cambodia Petrochemical Company (CPC) signed an MoU worth USD620 million in May with the Chinese National Petroleum Company (CNPC) Northeast Refining and Chemical Engineering with phase one engineering works expected to begin in October. 

Located on Cambodia\'s coastal zone, the refinery will be built on a 365 hectare landmass between Kampot and Preah Sihanouk province with a capacity of 5 million tons per year or about 90,000 barrels per day (bpd). But it will only produce 2 million tons per year or about 40,000 bpd during its initial operation stage before expanding to a full operation of 100,000.

Since Cambodia is not yet extracting its own oil, the plant is expected to refine imported crude oil from the Middle East until local extraction starts. The plant will be capable of refining both so-called sweet and sour crude – oil with low or high levels of sulphur respectively.

Waste from the refinery will be used to produce fertiliser, tires and other products. 85 percent of the refined oil will serve the local market with the remainder being exported overseas.

Speaking at the contract signing ceremony in Phnom Penh in May 2016, Oknha Hann Khieng, the managing director of the Cambodian Petrochemical Company (CPC) said it is time for Cambodia to have an oil refinery to supply the domestic market as well as for export to other countries, especially in ASEAN.

“Since we are the youngest country to have an oil refinery, the new facility will have the latest modern technology with a high standard to get a market share as an oil producer in the region,” he told the Khmer Times.

According to Oknha Hann, a number of overseas corporations have investigated the possibility for oil refinery investment in Cambodia over the years, but none of them invested in a refinery plant. In 2010, Oknha Hann Khieng partnered with a Chinese firm to register the CPC in Cambodia to allow their official cooperation to study an oil investment project in the nation.

After spending years on the procedures and issues related to this refinery investment, the Cambodian Petroleum Authority granted the investment license to the CPC on 15 June 2011 to do a feasibility study for an oil refinery plant.

The CPC fulfilled all the necessary procedures and legal requirements and subsequently received a construction permit to build an oil refinery in Sihanoukville province on 28 December 2012.

CNPC Northeast Refining and Chemical Engineering will manage and implement the procurement and build Cambodia’s first oil refinery. It is an expert in the oil and chemical industry and is a subsidiary of the Chinese-state-owned conglomerate CNPC.

CNPC is one of China’s top three oil engineering and chemical corporations.  This multi-sector company was listed on the stock market in 2010 with a share value of over USD3 trillion and was ranked the 14th best financial institution among the world’s top 500 corporations.

Li Limin, chairman of CNPC Northeast Refining and Chemical Engineering, said, “This first refinery will help develop the country’s economy while the plant will be safe by following international standards and be environmentally friendly.”

Cambodian Minister of Mines and Energy H.E. Suy Sem, welcomed the refinery as it is in line with government policy to urge investment in the oil and gas sector so that the country can supply more electricity domestically at a reasonable price.

“I encourage all private sector companies to facilitate and invest in oil and gas more and more,” he said.

The refinery was first announced in Cambodia in 2011, but despite securing a USD1.67 billon loan to finance the project from the Chinese Ex-Im Bank in 2013, there has been little progress since. 

Deputy Prime Minister H.E. Sok An, who is also the Chairman of Cambodia Petroleum Authority, had said previously that Cambodia’s current petroleum demand is more than 1 million tons a year, largely met with imports from Vietnam, Singapore and Thailand.

 

 

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