Petrolimex & Indian Oil join race for strategic stake in BSR

The Vietnam National Petroleum Group (Petrolimex) and the Indian Oil Corp. have filed applications to acquire strategic stakes in Binh Son Refining and Petrochemical (BSR), the owner and operator of Vietnam’s first oil refinery, Dung Quat, according to an announcement on BSR’s website on February 27.

After last month’s successful initial public offering (IPO), in which the government raised VND5.6 trillion ($245.2 million) from selling a 7.79 per cent stake, BSR is now selling 49 per cent to a strategic investor as part of a plan to reduce State ownership to 43 per cent.

Only Petrolimex and India Oil have submitted applications to date, while other possible investors, including Indonesia’s Pertamina and Thailand’s Bangchak Corporation Public Company Ltd, are still considering whether to apply, according to the statement.

At a January 5 roadshow held in Hanoi to introduce investment opportunities in BSR, Switzerland’s Vitol Asian Pte. and the US’s SNT Group both expressed interest in becoming a strategic investor in BSR. Russia’s leading energy firms Rosneft and Gazprom Neft, Thailand’s PTT, and the Kuwait Petroleum Corp. have also signaled an intention to join the race.

The company recently received approval from the Hanoi Stock Exchange to float 241.55 million shares on the Unlisted Public Company Market (UPCoM) from March 1 at a reference price of VND22,400 ($0.98) a share.

BSR, the operator of the Dung Quat Oil Refinery in central Quang Ngai province, reported net profit of VND8.66 trillion ($381.5 million) in 2017, an increase of an impressive 92.8 per cent against 2016. It produced 6.1 million tons of petroleum products during the year and posted revenue of VND82.03 trillion ($3.6 billion), up 11.4 per cent from a year earlier.

Other financial indicators also improved considerably. Return-on-equity (ROE) reached 25.57 per cent compared to 14.06 per cent in 2016, while return-on-assets (ROA) rose to 14.08 per cent from 7.49 per cent.

BSR is working on a plan to expand its processing capacity to 8.5 million tons of crude oil per year from the current 6.5 million tons.

Vietnam needs more refineries, as Dung Quat is capable of meeting just 30 per cent of domestic demand. The Nghi Son Oil Refinery in northern Thanh Hoa province, which was ready for official operations on February 28, will bring total supply to 80 per cent of demand.