(EnergyAsia, June 30 2011, Thursday) — Vietnam is planning to expand the capacity of its first oil refinery at Dung Quat by more than 50% to around 200,000 b/d by 2017, according to operator Binh Son Refining and Petrochemical Co.

The company said it will the government will need to invest up to US$2 billion to carry out the expansion.

Started up in early 2009, the 130,500 b/d refinery has been processing high-quality low-sulphur crude produced in Vietnam and neighbouring countries.

As the supply of these grades is dwindling, Vietnam will have to turn to processing cheaper heavy sour crude from the Middle East and even Venezuela, forcing it to upgrade its refinery.

To finance the costly upgrade, the government said it is ready to sell off 49% of Dung Quat to international investors. It has begun talks with potential Investors from Japan, South Korea, Russia and Venezuela for a possible partnership.

The government is also moving to build a second refinery, a 200,000 b/d in Nghi Son, located about 200 km south of Hanoi city.