(Bloomberg) -- Vietnam is seeking about $1.2 billion in overseas loans for its only oil refinery before a share sale in 2017, to increase output and meet demand in one of Southeast Asia's fastest growing economies.
“The expansion will help our refinery operate more efficiently since it will boost the overall output by 30 percent and help cut production costs,” Nguyen Hoai Giang, chairman of Binh Son Refining & PetroChemical Co., the refinery's operator, said in a telephone interview Thursday. The company is in the process of selecting an adviser for the loans, he said.
When completed in 2021, the expanded Dung Quat Refinery will be able to meet half of Vietnam's fuel needs, rising from about one-third now with its current capacity of 148,000 barrels a day, Giang said. Vietnam's demand for petroleum products is increasing and imports of such goods rose 18.7 percent in 2015, according to the General Customs.
The operator expects to sign an engineering-procurement-construction contract with foreign companies for the expansion in 2018, Giang said, without identifying potential suppliers.
The plan comes as oil is headed for its biggest weekly gain since August 2015 after OPEC approved its first supply cut in eight years.
The refinery is pushing ahead with its target to hold an initial public offering as soon as the third quarter of next year and is in the process of getting a valuation, Giang said.
Binh Son is in talks with international companies, including one from the Middle East and a few from Southeast Asia, to sell a 35 percent stake ahead of the IPO, the executive said, declining to identify potential strategic investors.
Vietnam's VN Index has risen 15 percent this year, the best-performing benchmark stock index in Southeast Asia after Thailand, according to data compiled by Bloomberg.
“We are trying very hard to get ready for the IPO,” Giang said. “The exact timing and share sale volume will depend on the market situation next year.”
To contact the reporter on this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net. To contact the editors responsible for this story: Linus Chua at lchua@bloomberg.net, Lena Lee
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