STUDY ON ECONOMIC PARTNERSHIP PROJECTS
IN DEVELOPING COUNTRIES IN FY2011
STUDY ON THE PROJECT FOR DEVELOPMENT OF
NATIONAL STRATEGIC
OIL STOCKPILING MEGA-FLOATING SYSTEM
IN VIET NAM
FINAL REPORT
February 2012
Prepared for:
The Ministry of Economy, Trade and Industry
Prepared by:
Mitsubishi Research Institute, Inc.
Mitsubishi Heavy Industries, Ltd.
JGC Plant Solutions Co., Ltd.
Japan Marine Science Inc.
Reproduction prohibited
Preface
In this report, the results of the Yen Loan Project Formation Study commissioned by the Ministry of
Economy, Trade and Industry and conducted in 2011 by Mitsubishi Research Institute, Mitsubishi
Heavy Industries, JGC Plant Solutions and Japan Marine Science are compiled and arranged.
The study, ‘National (Strategic) Oil Stockpiling Mega-Floating System Study’, examines the
feasibility of using a JPY 32.6 billion yen loan to finance the outfitting of a National Strategic Oil
Stockpiling Mega-Floating System in Van Phong Bay, Khanh Hoa Province, or Phu Quoc Island
southern ocean area, Kien Giang Province, Viet Nam.
It is hoped that this report will assist the realization of this project, and that its contents are considered
by all parties involved.
February 2012
Mitsubishi Research Institute, Inc.
Mitsubishi Heavy Industries, Ltd.
JGC Plant Solutions Co., Ltd.
Japan Marine Science Inc.
Location of site
Van Phong Bay
Phu Quoc
Source) Prepared from University of Texas Libraries Perry-Castañeda Library Map Collection
Abbreviations
ABS
American Bureau of Shipping
ASEAN
Association of South East Asian Nations
CAPEX
Capital expenditures
DNV
Det Norske Veritas
DWT
Dead Weight Ton
EBIT
Earnings Before Interest and Taxes
EIA
Environmental Impact Assessment
EIRR
Economic Internal Rate of Return
FIRR
Financial Internal Rate of Return
GDP
Gross Domestic Product
IEA
International Energy Agency
IMF
International Monetary Fund
IUCN
International Union for Conservation of Nature
JETRO
Japan External Trade Organization
JICA
Japan International Cooperation Agency
JOGMEC
Japan Oil, Gas and Metals National Corporation
LEP
Law on Environmental Protection
METI
Ministry of Economy, Trade and Industry
MONRE
Ministry Natural Resources and Environment
NOx
Nitrogen Oxide
ODA
Official Development Assistance
OECD
Organization for Economic Co-operation and Development
OPEX
Operating Expense
RDB
Red Data Book
SEA
Strategic Environmental Assessment
SOx
Sulphur Oxide
toe
Tonne of oil equivalent
USD
U.S. dollar
VLCC
Very Large Crude Oil Carrier
VND
Vietnamese dong
VPI
Vietnam Petroleum Institute
WACC
Weighted Average Cost of Capital
WTO
World Trade Organization
Table of Contents
Executive Summary ............................................................................................................................ i
Chapter 1 Overview of the Host Country and Sector ...........................................................................1
Section 1 : Economic and Fiscal Conditions of the Host Country....................................................3
( 1 ) Outline of Viet Nam ..............................................................................................................3
( 2 ) Economic / Financial Conditions ..........................................................................................4
( 3 ) National Budget and External Debt.......................................................................................5
( 4 ) Energy-Related Conditions ...................................................................................................7
Section 2 : Outline of Project Target Sector......................................................................................8
( 1 ) Present Conditions of the Petroleum Sector..........................................................................8
( 2 ) Future Aspects of the Petroleum Sector ..............................................................................10
Section 3 : Target Area Conditions .................................................................................................11
( 1 ) Conditions of Khanh Hoa province.....................................................................................11
( 2 ) Conditions of Kien Giang province.....................................................................................11
Chapter 2 Study Methodology ............................................................................................................13
Section 1 : Study Content ...............................................................................................................15
( 1 ) Study Content......................................................................................................................15
( 2 ) Study target area..................................................................................................................16
Section 2 : Study Methodology and Structure ................................................................................17
( 1 ) Study Methodology .............................................................................................................17
( 2 ) Study structure.....................................................................................................................17
Section 3 : Study schedule ..............................................................................................................19
Chapter 3 Justification, Objectives and Technical Feasibility of the Project ......................................23
Section 1 : Background and necessity of the project ......................................................................25
( 1 ) Background .........................................................................................................................25
( 2 ) Improving energy security...................................................................................................26
Section 2 : Various examinations required to define the contents of the Project. ...........................29
( 1 ) Demand forecast..................................................................................................................29
( 2 ) Issues to be considered ........................................................................................................31
( 3 ) Examining technical methods .............................................................................................32
Section 3 : Outline of Project Plan..................................................................................................35
( 1 ) Basic policy .........................................................................................................................35
( 2 ) Conceptual Design, and Specifications of Applicable Equipment ......................................35
( 3 ) Contents of Proposed Project ..............................................................................................38
( 4 ) Candidate site selection .......................................................................................................40
( 5 ) Issues and Solutions for Adoption of Proposed Technologies and Systems........................73
Chapter 4 Evaluation of Environmental and Social Impacts ..............................................................76
Section 1 : Analysis of current environmental and social conditions..............................................78
( 1 ) Analysis of the Present Conditions......................................................................................78
( 2 ) Analysis of the Present Condition .......................................................................................82
( 3 ) Future Prediction (in the absence of project implementation) ............................................82
Section 2 : Environmental and Social Advantages of Project Implementation...............................84
( 1 ) Comparison of Effects on Environment ..............................................................................84
( 2 ) Comparison of Effects on Society.......................................................................................84
Section 3 : Social and Environmental Effects of Project Implementation ......................................86
( 1 ) Social and Environmental Items to Consider ......................................................................86
( 2 ) Comparison of Proposed Project and Alternative Options..................................................90
( 3 ) Result of Consultation with Local Institution .....................................................................92
Section 4 : Outline of Laws of Host Country in Relation to Environmental and Social Conditions
........................................................................................................................................................93
( 1 ) Outline of Laws in Relation to Environmental and Social Issues of Project Implementation
....................................................................................................................................................93
( 2 ) Contents of Host Country’s EIA etc. Necessary for Project Implementation......................98
Section 5 : Items to be established by the host country (implementing organization and other related
organizations) for this project .......................................................................................................103
Chapter 5 Financial and Economic Evaluation.................................................................................104
Section 1 : Project cost quantity survey ........................................................................................106
( 1 ) Initial Investment...............................................................................................................106
( 2 ) Operating Expenses...........................................................................................................109
Section 2 : Financial and Economic Evaluation ...........................................................................110
( 1 ) Usage Charges...................................................................................................................110
( 2 ) Tax Systems.......................................................................................................................110
( 3 ) Project Cash flow ..............................................................................................................114
( 4 ) FIRR and Validity..............................................................................................................117
Chapter 6 Planned Project Schedule .................................................................................................123
Chapter 7 Implementing Organization..............................................................................................129
Section 1 : Implementing Organization Outline ...........................................................................131
( 1 ) Ministry of Finance of Viet Nam Outline..........................................................................131
( 2 ) Ministry of Industry and Trade of Viet Nam Outline ........................................................132
( 3 ) PetroVietnam Outline ........................................................................................................133
Section 2 : Organizational Structure of implementing Organization ............................................135
Section 3 : Ability of Implementing Organization ........................................................................136
( 1 ) Ministry of Industry and Trade of Viet Nam .....................................................................136
( 2 ) PetroVietnam.....................................................................................................................136
Chapter 8 Technical Advantages of Japanese Company ...................................................................139
List of Figures
Figure 1
Construction outline ........................................................................................................ viii
Figure 2
Location of site .................................................................................................................. xi
Figure 3 Vietnam complete map.........................................................................................................3
Figure 4 Changes in GDP of Viet Nam...............................................................................................5
Figure 5 Recent Changes in exchange rate .........................................................................................5
Figure 6 Oil distribution .....................................................................................................................8
Figure 7 Production, consumption and export volumes of crude oil ..................................................9
Figure 8 Overview and positioning of the research of this project...................................................15
Figure 9 Outline of implementation structure...................................................................................17
Figure 10 Implementation structure..................................................................................................18
Figure 11 Study schedule..................................................................................................................19
Figure 12 Main route of tankers transporting crude oil to Viet Nam................................................26
Figure 13 Damage from unidentified vessels (2011)........................................................................27
Figure 14 Daily volume of crude oil transported via major straits, channels and pipelines (2009)..28
Figure 15 Demand forecasts for oil and oil products in each case ...................................................29
Figure 16
Overall plan of mega-float stockpiling base....................................................................37
Figure 17
Approximate Outside Views of mega floating oil storage...............................................39
Figure 18 Mega floating oil storages, oil protection wall, mooring dolphins etc. ...........................39
Figure 19
Schematic drawing of mega-float stockpiling facility.....................................................40
Figure 20 Flow of Mega-Floating System candidate site selection ..................................................40
Figure 21 Nghi Son water area wind and wave data acquisition location ........................................41
Figure 22 Van Phong bay area wind and wave data acquisition location .........................................42
Figure 23
Phu Quoc island southern water area wind and wave data acquisition location..............42
Figure 24 Nghi Son water area wind data analysis result .................................................................45
Figure 25 Nghi Son water area wave data analysis result.................................................................45
Figure 26 Van Phong bay area wind data analysis result..................................................................46
Figure 27 Van Phong bay area wave data analysis result .................................................................46
Figure 28 Phu Quoc island southern water area wind data analysis result .......................................47
Figure 29 Phu Quoc island southern water area wave data analysis result.......................................47
Figure 30 Shirashima National Oil Stockpiling Base .......................................................................49
Figure 31 Dam Mon and South Phu Quoc water area locations.......................................................50
Figure 32 Van Phong (Dam Mon) area development plan (2020 and 2030 objectives) ...................51
Figure 33
Construction site of the pending Dam Mon international container terminal ................51
Figure 34 Navigation passage (Lach Cua Be) depth sounding results (example) ............................54
Figure 35 Dam Mon area survey route (first time) ...........................................................................55
Figure 36 Dam Mon area survey route (second time) ......................................................................55
Figure 37
Field survey implementation and site establishment......................................................56
Figure 38 Depth sounding survey.....................................................................................................56
Figure 39 Survey locations (Dam Mon area)....................................................................................57
Figure 40 Survey result of water depth (site ①)...............................................................................58
Figure 41 Survey result of water depth (site ③)...............................................................................58
Figure 42 Current flow (summary figure)........................................................................................60
Figure 43 South Phu Quoc area survey route (first time) .................................................................64
Figure 44 South Phu Quoc area survey route (second time).............................................................65
Figure 45 South Phu Quoc area survey route (third time) ................................................................65
Figure 46 Survey result of water depth.............................................................................................66
Figure 47 Survey location (Phu Quoc) .............................................................................................67
Figure 48 Final proposed site outline ...............................................................................................69
Figure 49 Arrival time of the tsunami of a magnitude 8 earthquake off the coast of Manila ...........72
Figure 50 Arial view of Van Phong ..................................................................................................78
Figure 51 Khanh Hoa province population change ..........................................................................81
Figure 52 Diagram of three types of protected areas ........................................................................96
Figure 53 Flow for preparation of EIA in Viet Nam.......................................................................100
Figure 54 USD/100VND (end of month rate) ................................................................................107
Figure 55 JPY/VND (end of month rate)........................................................................................108
Figure 56
JPY/USD (end of month rate) .......................................................................................108
Figure 57
Approximate Building/Construction Schedule..............................................................126
Figure 58 Schedule for Achievement of Master Plan in Viet Nam.................................................127
Figure 59 Host country implementing organization outline ...........................................................131
Figure 60 Ministry of Finance organizational chart........................................................................132
Figure 61 PetroVietnam Management Organizational Chart..........................................................134
Figure 62 Project implementation structure....................................................................................135
Figure 63 Changes in the Budget of the Ministry of Industry and Trade .......................................136
Figure 64 Changes in the revenue of PetroVietnam 2005 - 2010 ...................................................136
List of Tables
Table 1
Phase 1 (1 million m3) project cost breakdown.....................................................................v
Table 2 Usage charges by finance method........................................................................................ vi
Table 3
Comparison between Mega-Float, aboveground and underground tank methods ............. vii
Table 4
The concrete action plan is shown in the following table. ....................................................x
Table 5 Ministries of Viet Nam list.....................................................................................................4
Table 6 Current system of oil stockpiling and distribution in Viet Nam.............................................9
Table 7 Counterpart organization......................................................................................................18
Table 8 First field visit details...........................................................................................................20
Table 9 Second field visit details ......................................................................................................20
Table 10 Seminar details...................................................................................................................21
Table 11 Summary of demand forecast figures and plan figures......................................................30
Table 12 Planned stockpiling of oil and oil products based on Prime Minister Decision No. 1139 .30
Table 13
Comparison of crude oil storage system..........................................................................33
Table 14 Candidate site wind and wave data analysis result ............................................................43
Table 15 Candidate site wave data analysis result ............................................................................43
Table 16 Dam Mon area tidal data (1977 to 2004) ...........................................................................52
Table 17 Dam Mon ocean area average wind velocity, major direction and average wind velocity as
major direction (1979 to 2002) ...................................................................................................52
Table 18 Dam Mon ocean area highest wind speeds by direction (1979 to 2002) ...........................53
Table 19 Dam Mon ocean area wave height estimation ...................................................................53
Table 20 Phu Quoc island highest wind speeds by day ➀(January through June 2011) .................62
Table 21 Phu Quoc island highest wind speeds by day ➁(July through Dec. 2011) .......................63
Table 22
Phu Quoc island highest wave height by day (January through August 2011)................64
Table 23 Site evaluation results ........................................................................................................68
Table 24 Final candidate site evaluation results ...............................................................................70
Table 25 Nha Trang (neighboring Van Phong) weather data ............................................................79
Table 26 IUCN Red Data Book number of listed species by category.............................................79
Table 27 IUCN Red Data Book number of listed species by category.............................................80
Table 28 Khanh Hoa province economic conditions ........................................................................81
Table 29 The Formation and overview of he Economic Zone of Van Phong Bay............................82
Table 30 Perspective of resources and environment of Van Phong Economic Zone in 2020 ...........83
Table 31 Environmental checklist items to consider ........................................................................86
Table 32 Comparison of Mega-Floating system with aboveground tank and underground bedrock
reserve methods ..........................................................................................................................91
Table 33 Outline of information and opinions gained via local institution consultation ..................92
Table 34 Air quality standards ..........................................................................................................93
Table 35 Permitted emissions of harmful substances into the atmosphere .......................................94
Table 36 Quality of Coastal Ocean Water Environmental Standard (TCVN5943- 1995) ................95
Table 37 Nature conservation and related laws ................................................................................97
Table 38 Outline of main laws relating to the management of protected areas ................................98
Table 39 Laws relating to Environmental Impact Assessment in Viet Nam .....................................99
Table 40 Projects requiring the preparation of EIA and receipt of approval...................................101
Table 41 Project cost breakdown of Phase I (1 million m3)............................................................106
Table 42 Exchange rates used for this project ................................................................................106
Table 43 Annual management costs of national oil storage facilities in Japan...............................109
Table 44
Business Income Tax (BIT) outline................................................................................. 111
Table 45
PetroVietnam project taxation case .................................................................................112
Table 46
Depreciation of fixed assets (Decision 206/2003/QD-BTC)...........................................113
Table 47
VAT .................................................................................................................................114
Table 48 Project profit-and-loss / cash flow calculation sheet........................................................116
Table 49 FIRR and validity.............................................................................................................117
Table 50
The Price and Trading Volume of Government-Bond over 10 years
(2011.5.27 to
2011.11.15) ...............................................................................................................................117
Table 51
Interbank rates in Viet Nam (2011/11/22) .......................................................................118
Table 52
NYMEX Crude oil call option premium (close price at 2011.2.1) .................................119
Table 53 Economic impact of this project ......................................................................................119
Table 54 Economic IRR of this project...........................................................................................120
Table 55
Usage charges by financing method................................................................................120
Table 56 Ministry of Industry and Trade organizational chart........................................................133
Table 57 PetroVietnam financial conditions 2001 - 2010...............................................................137
Executive Summary
i
ii
Executive Summary
(1) Background and necessity of this project
At the first ASEAN plus three Energy Ministers’ Meeting held in June 2004, a plan of action toward
the joint interests of strengthening of energy security, and enhanced sustainability was agreed upon,
and the importance of oil reserves was underlined. ASEAN countries, although aware of their
importance, have practically no national stockpiles in place at present beyond the extent that private
companies are obligated to keep certain meager stockpiles.
Due to the unpredictable nature of oil reserves, it is the responsibility of each country to avert crises
stemming from serious disruptions to the long term supply of oil. In light of this, the governments of
each IEA signatory nations are obliged to put in place official national stockpiles in an amount
equivalent to 90 days of net oil imports.
Viet Nam is producer of crude oil, however until recently there has not been an oil refinery in the
country and 100% of petroleum was imported. In 2009 Dung Quat Oil Refinery, the first of its kind in
the country, was built in the central region of the country, however due to recent economic
development the increase in demand is not currently being met, and thus the second and third oil
refineries for the country are currently being planned. In this respect, a petroleum reserve is necessary
in the interest of preventing the risk of disruption to import supply, and an oil reserve in order to
prevent the risk of disruption of supply to oil refineries is also essential.
On behalf of the government of Viet Nam, a study into international oil supply and demand structure
(businesses connected with oil reserves in Viet Nam) was carried out by the Ministry of Economy,
Trade and Industry of the government of Japan.
Since then, the government of Viet Nam has approved the drawing up of an oil reserve master plan
(Prime Minister’s decision 1139/QD-TTg, 31 July 2009), which contains “commercial reserve for the
circulation of petroleum”, “manufacturing reserves for oil refineries and the production of petroleum”,
and “national reserves for crude oil and petroleum”.
As for “commercial reserves” and “manufacturing reserves”, the planning of a private project has been
under way, however with regards to the national reserve, as private organizations are unable to
implement, it is anticipated that a concrete plan will be laid out henceforth.
The purpose of this study is to propose the necessity of the development of the Mega-Floating System
as a National Oil Reserve Base and to analyze the implications involved.
iii
(2) Various examinations required to define the contents of the Project
This study adopts the Mega-Float method for the National Oil Stockpiling Base. In this case it is
assumed that the reserve is purely for imported crude oil, which will not be used at times other than
emergencies. With this in mind, it is possible to facilitate Prime Minister’s Decision No. 1139, of
achieving 2,200,000 t of storage by 2025. As for the objective, the first 700,000 t will be provided
from 2016, with the establishment of the remaining 1,500,000 t to follow from 2018.
With regards to site selection, as is vital to have an adequate anchorage location for the storage vessel
as well as the transportation tanker, an area of deep water is necessary. As the storage vessel floats on
the water, it is vital to have calm conditions with regards to wind and waves. As it is a sealed storage
container, it need not be located close to an oil refinery.
With the above in consideration, the following is proposed.
(1) Reserve method:
Mega-Float
(2) Reserve type: National oil reserve (Imported crude oil) sealed storage container
(3) Reserve capacity:
2,200,000 t (first period of 700,000 followed by the second of 1,500,000
(4) Site conditions
a) Adequate water depth for storage vessel and transportation taker
b) Calm area of ocean
c) Not necessarily located close to an oil refinery
(3) Project outline
The construction of the mega float is as follows. In this study, Van Phong Economic Zone shows
satisfactory conditions and is used as a candidate area.
＜Mega-Float＞
Oil reserve capacity:
700,000t
Oil reserve vessel capacity:
Approximately 350,000t X 2
Oil reserve vessel: Main measurements:
Length: 350m
Width: 74m
Depth: 20.8m
Draft: 17.8 meters (maximum)
Oil pump:
2,500m3／h X 2
Water pump:
2,300m3／h X 2
Storage vessel anchorage:
Cargo mooring dolphin X 2
Mooring dolphin X 3
Oil-proofing:
Primary floating oil-resistant dam
Floating
iv
oil-resistant
dam
and
floating
shock-resistant layer
Freighting equipment:
120,000 DWT grade sea berth
Loading arm
Oil transfer pipe
＜Terrestrial installations＞
Electrical equipment:
Captive power generator
Substation
Environmental protection facilities:
Drainage processor
Guard basin
Oil impregnation water tank
Oil and gas processor
Water supply facilities
Central observation area
Non-inflammatory gas supply facilities
Firefighting facilities
Building (office, pump room etc.)
Disaster prevention facilities (as necessary):
Fire engine, oil recovery equipment, oil fence
Oil recovery vessel
Economic and financial analysis
The total project cost, adopting the 1 million m3 Mega-Float, and including the storage vessel, ground
installations and construction work is USD 395 million (see following table).
Table 1 Phase 1 (1 million m3) project cost breakdown
Initial investment
in USD
\
100
million
Yen
Construction Cost
〔million USD〕
Classification
of which is
denominated in
JPY (100 million)
Remarks
of which is
denominated in VND
(billion VND)
326
394.8
247.8
Storage vessels and tanks
179
216.8
143.2
848.7 Shipbuilding
20% local currency, 80% foreign currency
Based on cost in Japan and considering location factor(LF)
Ancillary construction cost
141
170.8
101.5
936.0
28% local currency, 72% foreign currency
Offshore construction
17
20.6
Construction
Anchorage dolphin etc.
Construction cost estimates based on local construction companies.
Berth(including pipeline bridge)
15
18.2
Construction
For Aframax tanker
Construction cost estimates based on local construction companies
Reclamation/seasalls/dredging
10
12.1
Construction
5ha
Construction cost estimates based on local construction companies
Oil-resistant dam
65
78.7
Construction
1st and 2nd stage oil-resistant dam (West breakwater excluded)
Cost based on local production with a new cost saving design
Terrestrial buildings
4
4.8
Construction
10 buildings
Construction cost estimates based on local construction companies
Terrestrial construction
2
2.4
Construction
Paving, drainage, etc.
Construction cost estimates based on local construction companies
29
35.1
Engineering
Terrestrial facilities (see notes for scope)
Based on cost in Japan and considering location factor(LF)
6
7.3
Plant cost (ancillary; utility plant etc.)
Disaster prevention equipment
1,854.9
24% local currency, 76% foreign currency
Fire boat,
14.2 fire engine
etc.
5.4
10% local currency, 90% foreign currency
Construction unit
Unit cost per m3
JPY
32,578
USD
395
Source) Complied from various sources
v
In this project, the ratio of dept to equity is assumed to be 7:3. The interest rate of the amount borrowed
is 0.2% (10 year grace period), and on setting the equity expected rate of interest at 16%, the WACC
becomes 4.9%. Therefore, in this project, usage charges are set in order to achieve a Project IRR of
4.9%. As a result, the usage charge becomes USD 38 per m3. On comparing the financing of the Mega
Floating system with the yen loan to that of the Viet Nam government bond (assuming an interest rate
of 10%), the usage charge with the STEP yen loan is 38/m3, and that of the Viet Nam government bond
is more than double, at 101/m3, which is more than double of the STEP yen loan.
Table 2 Usage charges by finance method
STEP
Yen loan
IRR 7% case
(reference)
Loan interest
0.2%
NA
Loan term
40 years
NA
Grace period
10 years
NA
Viet Nam
government
bond
10%
(Between 9 and
12%)
15 years
maximum (40
years with
refinancing
anticipated)
0 years
WACC
4.9%
7.0%
11.8%
Usage charge
USD 38/m3
USD 50/m3
Remarks
Between 8 and 12% for Viet Nam
government bonds; between 13 and
16% for interbank rate
There is no alternative to the yen loan
in terms of the length of finance
There is usually no alternative to the
yen loan in terms of grace period
Assuming capitalization rate of 16%
on the equity side.
USD 101/m3
Environmental and social analysis
Environmental and social impact of this project has been compared with that of other oil reserve
methods. The results are outline below (the Van Phong candidate site is adopted in this case).
vi
Table 3
Comparison between Mega-Float, aboveground and underground tank methods
Aspect
Mega-Float method
Environmental
・ Able to mitigate vapor
・ Able to mitigate oil
spills
・ As the scale of onshore
land reclamation is
small, there is little
anxiety of excessive
noise,
waste
emissions, changes to
terrain
and
geographical features
or land subsidence
due to the pumping of
groundwater.
The required area of
land acquired is small; it
is possible to avoid
resettlement
of
residents.
Social
Aboveground
tank
method
・ Able to mitigate vapor
・ Able to mitigate oil
spills
・ The scale of onshore
land reclamation is
large, and there the
effects of noise, large
waste emissions and
changes to the terrain
and geological features
are anticipated.
Underground
bedrock
method
・ Able to mitigate vapor
・ Able to mitigate oil
spills。
・ The scale of onshore
land reclamation is
medium, however there
is a fear of land
subsidence from the
pumping
of
groundwater required
for the underground
tank.
The required area of land
acquisition is large; the
necessity
of
the
resettlement of residents
is highly probable.
The required area of land
acquired is small; it is
possible
to
avoid
resettlement of residents.
Van Phong was once a designated area for environmental protection, however it was then designated
as a tourist destination and the site of an international container terminal. It is therefore showing a
trend of shifting from an area of environmental protection, to and area of industrial development.
It is extremely difficult to devise an option whose environmental and social impact is lesser than that
of the Mega-Float, and these effects are also lower at the currently adopted Van Phong site when
compared with other locations. For these reasons, at this stage, the scenario adopted above is the
option with the least environmental and social impact, and the modification if this option is
problematic in this respect.
vii
(4) Implementation schedule
The following implementation schedule is proposed for the establishment of the oil reserve base.
Firstly, a survey of the climatic and oceanographic phenomena is to be followed by the refinement of
design requirements.
Following this, preliminary design is conducted. Based on this design, the construction of the reserve
base anchorage, onshore equipment, sea berth and the construction of the storage vessel is conducted
at the shipyard.
After the mooring of storage vessel unit 1, tests are conducted to confirm the anchorage conditions.
Following this is the overall coordination of the onshore facilities and the commencement of
operations.
Figure 1 Construction outline
Source) Mitsubishi Heavy Industries, Ltd
viii
(5) Yen loan application / implementation feasibility
As the national oil reserve is restricted to usage in emergency and is not otherwise a generator of
revenue, it should be provided by national expenditure. The Ministry of Industry and Trade and the
Department of State Reserves of the Ministry of Finance of the government of Viet Nam recognize this
fact and are of the opinion that it should be financed by the country. However, as the size of investment
of large, it is thought that utilizing an ODA from Japan would be appropriate, and the will for a yen
loan application is strong. However, at the time of the yen loan application, it is vital to have an
accurate idea of the costs involved and a comparison of possible methods. Concrete numbers of costs
and comparisons of methods are submitted to the government of Viet Nam in this study.
(6) Technical advantages of Japanese company
Japan has constructed and is operating two Mega-Floating Oil Reserve Bases at Kamigoto and
Shirashima, and therefore has expertise and capability on the construction and operation sides. These
facilities have also been used safely.
At the time of planning and construction, shipbuilding capability for the construction of large
structures, and proficiency in engineering with respect to the climatic and oceanographic conditions
are vital. Japan has the capability for all of these necessary requirements, and its expertise in the
operation of Mega-Floating reserve bases is a significant advantage.
Japan has large scale water tanks to conduct experiments on the oceanographic and climatic conditions
for Mega-Floating storage base in order to ensure the safety of construction.
Also Japan has design guidelines which focus on safety and is able to design and construct storage
vessel which satisfy safety guidelines in the long term.
As for marine construction capability, from the manufacture of cassions and mooring dolphins for
foundation works on the seabed and precision construction work on sea, Japanese companies have a
high level of capability.
At for the operation of the Mega-Floating reserve, Japan has the necessary experience with regards to
daily maintenance management, and the building of management organizations. It is possible to offer
this expertise to Viet Nam.
In addition, Japan also makes use of underwater equipment and developed an underwater robot for the
maintenance of anchorages: labor saving is possible via these techniques.
ix
(7) Concrete action plan, schedule and the risk of obstructions
Table 4 The concrete action plan is shown in the following table.
Action plan
① MPI longｌist
submission
② Policy dialogue
③ JICA
cooperation
preparation survey
MPI longlist submitted after this study, JICA cooperation
preparation study requested
⑤ DD coordination
Japan assists with Detailed Design (DD); conducted by
consultants in Japan
2014
2015
2016～
MPI longlist submission, cooperation preparation survey
application
In the interest of more accurate cost calculation,
geographic, oceanographic an climatic research carried
out in 2012
From the JICA cooperation preparation survey,
complete LA with precise cost estimation.
2013
Policy dialogue
Enter as a topic into policy dialogue in 2012
④ LA completion
⑥ Construction
commencement
2012
JICA cooperation preparation survey
LA completion in 2013
Coordination DD
implementation in 2014
Construction commences ahead
of Prime Minister’s Decision
With the above action plan, construction can begin one
yeart earlier than determined in the Prime Minister's
Decision.
In order to implement the cooperation preparation survey, it is vital to raise awareness and submit a
long list to the Ministry of Planning and Investment, and work closely with the main organizations
involved: The ministry of Industry and Trade Energy Department, the Ministry of Finance Department
of State Reserves, and PetroVietnam who would be responsible for construction and management.
It is vital to underline the importance of the project for both the Japanese and Vietnamese governments
through policy dialogue between the two countries in 2012.
As the preparatory phase of this study was short, in order to calculate the costs of construction ①EIA
②geological survey, ③ oceanographic survey and ④climatic survey are required, It is necessary to
conduct a JICA cooperation preparation survey in 2013, and obtain a clear and precise picture of the
costs and provide estimations necessary for the yen loan financing.
x
(8) Project Site
Figure 2 Location of site
Van Phong Bay
Phu Quoc
Source) Prepared from University of Texas Libraries Perry-Castañeda Library Map Collection
xi
xii
Chapter 1
Overview of the Host Country and
Sector
1
2
Section 1 : Economic and Fiscal Conditions of the Host Country
( 1 ) Outline of Viet Nam
The socialist Republic of Viet Nam (later referred to as Viet Nam) is a located in the Eastern area of the
Indochina Peninsula. It stretches from North to South and is bordered by the People’s Republic of
China to the north, and Laos and Cambodia to the West. To the south, it is surrounded by the South
China Sea and faces the Philippines. Below is a collection of basic data on the country.
z
z
z
z
z
z
Population: 86,930,000 (December 31, 2010)
Urban areas 26,010,000 (29.9%); Rural areas; 60,920,000 (70.1%)
Hanoi: 6,561,900
Ho Chi Minh: 7,396,500
Area: 331,689 km2
Language: Vietnamese
Ethnic makeup: Kinh: around 90%; 53 others (minorities)
Religion: Buddhism (80%), Catholicism , Caodaism (new religion), others
Administration: 58 provinces, 5 independently governed cities: Hanoi (capital), Ho Chi Minh
Hai Phong, Da Nang and Can Tho.
Source) JETRO General Overview of Veit Nam, 2011
Figure 3 Vietnam complete map
Source) The World Factbook, Central Intelligence Agency, US government
3
( 2 ) Economic / Financial Conditions
In Viet Nam, there is a one party socialist political system in place, and as of October 2011, the
General Secretary is Mr. Nguyen Phu Trong, and Mr. Truong Tan Sang is the current President and
head of state. The National Assembly operates a unicameral system (of 500 members) and terms of
office are 5 years (however form 2007 to 2011, the party congress lasted 4 years). As of October 2011
the Chairman of the National Assembly is Mr. Nguyen Sinh Hung and the Prime Minister is Mr.
Nguyen Tan Dung.
Table 5 Ministries of Viet Nam list
English name
Ministry of National Defense
Ministry of Public Security
Ministry of Foreign Affairs
Ministry of Justice
Ministry of Finance
Ministry of Transport
Ministry of Construction
Ministry of Education and Training
Ministry of Agriculture and Rural Development
Ministry of Industry and Trade
Ministry of Planning and Investment
Ministry of Health
Ministry of Science and Technology
Ministry Natural Resources and Environment
Ministry of Information and Communications
Ministry of Home Affairs
Government Inspectorate
State Bank of Việt Nam
Committee on Ethnic Minority Affairs
Government Office
Ministry of Labor, War Invalids and Social Affairs
Ministry of Culture, Sports and Tourism
Source) The website of the government of Viet Nam.
In terms of economic policy, the changes made in the Doi Moi (renovation) adopted in 1986 regarding
foreign investment and the strengthening of national competitiveness is continuing. Although its
growth rate slowed due to the Asian economic crisis, the current average economic growth rate of the
country has been recovered and was 7.3% in the decade between 2000 and 2010, and foreign direct
investment has been steadily increasing. However, the country has also seen rapid price inflation and
instability of its currency, and the opacity of its macroeconomic conditions is presenting a challenge.
Major economic indicators are shown below.
z
z
Currency: Dong
Exchange rate: 20,600 (per USD January through July 2011)
4
z
z
z
z
z
GDP: 1,981 Trillion Dong (2010 estimate)
GDP growth rate: Nominal GDP: 19.4%, Real GDP 6.8% (2010 estimate)
Price inflation rate (yearly rate): 16.0% (January through July 2011)
Exports: USD 62.7 billion
Imports: USD 80.7 billion
Source) JETRO General Overview of Viet Nam, 2011
Figure 4 Changes in GDP of Viet Nam
nominal GDP
real GDP (1994 equivalent)
Dong Amount [trillion]
2,000
1,500
1,000
500
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source) Prepared from General Statistics Office of Vietnam website
Figure 5 Recent Changes in exchange rate
1 dollar
20,000
Dong
15,000
10,000
5,000
0
1990
1995
2000
2005
2010
Source) Prepared from World Development Indicator Databank
( 3 ) National Budget and External Debt
1 ) National budget
In 2008 it was estimated that the fiscal balance of Viet Nam showed a deficit of VND 31 trillion 280
billion of national debt, which increased 62.8% compared with the last year. It is 2.1% decrease on the
budgetary basis. Domestic finance was VND 229 trillion 570 billion and 73.5% of the total, and
5
external borrowing is equated to VND 8 trillion 320 billion.
Annual revenue increased by 13.9% on the previous year at VND 399 trillion, and increased 23.5% on
a budgetary basis. The part occupied by tax revenue was 88.7% of the total at VND 353 trillion 960
billion; corporation tax equated to 38.4%, VAT occupied 25.5%; and export tax equaled 16.2%.
Income generated from crude oil was 24.6% of annual revenue at VND 98 trillion.
Annual expenditure increased by 32.1% on the previous year at VND 425 trillion 206 billion, and
increased by 16.8% on a budgetary basis. Ordinary expenditure increased by 39.5% at VND 307
trillion 460 billion and was 72.3% of annual expenditure, and increased 21.2% on a budgetary basis.
Expenditure on development increased by 13.1% at VND 117 trillion 800 billion and increased 18.2%
on a budgetary basis. The majority of this was spent on the development of construction (93.4%).
The fiscal balance in 2009 showed a deficit of 52 trillion 580 billion, which had increased 64.4% on a
budgetary basis from the following year and over 80% of this was the issuance of government bonds.
The revenue budget increased by 20.7% at VND 389 trillion 900 billion, target GDP increased by
21.5%, and including the VND 14 trillion 100 billion balance brought forward from the previous year
the annual revenue amount was VND 404 trillion, or which the revenue generated from crude oil
showed a slight decrease at 16.3% of the total.
Revenue from tax, which occupied 88.5% of annual total, increased by 20.1% on a budgetary basis at
VND 345 trillion 250 billion, and was composed on 32.3% corporation tax, 31.0% VAT, 16.4% export
tax and 4.2% personal income tax.
Annual expenditure rose 25.4% on a budgetary basis at VND 456 trillion 580 billion, and expenditure
similarly rose 30.2% at VND 330 trillion 90 billion and expenditure on development occupied 24.7%
or the total.
2 ) External debt
According to the IMF report, the balance of external debt in Viet Nam at the end of 2003 was USD
13.3 billion, USD 23.8 billion at the end of 2007, and USD 25.2 billion (estimated) at the end of 2008.
It shows a gradual increase, however, an influx of capital from international organizations, ODA as
well as private investment henceforth. It can therefore be said that there is no major anxiety regarding
the repayment of debts. In the IMF report, the external debt equated to 33.3% of GDP, and 29.8% is
anticipated for 2008. The debt service ratio (DSR) is improving and was 4.5% in 2005, 3.8% in 2007
and 3.4% was predicted for 2008
Foreign exchange reserves totaled 23.47 billion at the end of 2007, and 23.82 billion were estimated in
October 2008.
6
( 4 ) Energy-Related Conditions
The amount of energy consumption increased rapidly from 24.33 million toe in 1990, to 59.94 million
toe in 2008. However, as a result of advances in resource and energy development, Viet Nam also
began exporting energy from 1990, and exported 13.75 million tons of crude oil and 19.36 million tons
of coal in 2008. From this we can see that Viet Nam has seen a sudden increase in both the supply and
demand of energy.
The above-mentioned development of the energy sector has been contributed to by the acceleration of
Viet Nam’s industrialization and modernization. On the other hand, the level of development is still
low and it is thought that there are many problems. It is predicted that economic development and
energy demand are set to increase, however adversity may be caused by the limitation of the country’s
domestic reserves, and that the energy demand balance may shift towards imports.
7
Section 2 : Outline of Project Target Sector
( 1 ) Present Conditions of the Petroleum Sector
Major petroleum gas mining areas currently in production and developing stage are distributed in
offshore waters south and southeast of Ho Chi Minh City in southern Vietnam.
Figure 6 Oil distribution
: Oil / Gas Fields
Source) Prepared from various data (PESA News Resources Online, The South China Sea, Asian Studies WWW
Virtual Library, Middlebury College, The U.S. Energy Information Administration Website)
PetroVietnam (formerly Vietnam Oil and Gas Group) are at the heart of oil exploration and production
activities in Viet Nam. As a result of increased efforts to promote mining activities in the 1990’s,
petroleum production in the country has rapidly increased, however due to limitations of the country’s
reserves etc., exported volume reached its peak in 2004, and has shown a negative trend thereafter.
Until the opening of Dung Quat Oil Refinery in 2009, there had been no oil refinery in Veit Nam, and
thusly all domestically consumed petroleum products were imported. There are now plans for 5 oil
refineries, including the currently-in-operation facility at Dung Quat,and it is expected that the
domestic production of petroleum products will increase. The majority of the crude oil used at Dung
Quat Oil Refinery is produced domestically, however there is also a shortage which is being
compensated for by imports.
8
Figure 7 Production, consumption and export volumes of crude oil
Production
Consumption
Export
25
Amount [Mt]
20
15
10
5
0
1995
2000
2005
2010
Source) BP, Statistical Review of World Energy 2011, General Statistics Office of Vietnam website
Table 6 Current system of oil stockpiling and distribution in Viet Nam
Item
Import Volume of Oil
(Amount of Oil Consumption)
Market Share
Staging & Distribution Terminal
Quantity
15.57million-t (2010)
Petrolimex58.5%, PETEC14%, PDCPV8.5%, etc. （2004）
Number of
Nominal Capacity
Installation
3
87
2,016,000m
Oil Import
17
Downstream Infrastructure
70
Trans Ocean Tankers
port Coastal Tankers
Purge
Tanker Truck
Pipeline
3
1,448,000m
3
568,000m
15＋9 (LPG) (Approximately)
39 (Approximately)
137 (Approximately)
1,368 (Approximately)
300km (Total Extention)
Source) BP, Statistical Review of World Energy 2011, ‘International oil supply system, survey 2005 (businesses
promoting oil stockpiles in Viet Nam)
In 2006, a study funded by the Ministry of Economy, Trade and Industry of Japan on the establishment
of a national oil reserve was carried out, which was then the basis for the Oil Stockpiling Master Plan
drawn up by the Ministry of Industry and Trade of the government of Viet Nam. On 31 July 2009,
Decision No. 1139/QD-TTg determined the objective of establishing national oil reserves, and the
option of a national oil stockpiling base was solidified. Within the Master Plan, there is a program to
select 3 locations for reserve sites by 2013, establish a 700,000 ton national oil reserve facility by 2016,
and 700,000 ton and 800,000 ton facilities by 2018. However, concrete plans for the oil reserve and
locations for the facilities have not yet been established, and the details are currently being arranged.
9
( 2 ) Future Aspects of the Petroleum Sector
As stated previously, it is anticipated that petroleum products in Viet Nam will increase significantly,
while oil production might decline due to the limitation of reserves etc. In light of this, it is expected
that the revenue generated by crude oil exports will cease, and expenditure on imports of energy will
increase.
As mentioned above, Viet Nam will continue to import petroleum. In this regard, disruptions to the
long-term supply due to sudden fluctuations in the price of oil and confusion due to political disputes
and war etc. present a significant national problem. In response to the risk of the stoppage of supply,
the implementation of a strategic national oil reserve is an important political matter. With respect to
the necessity of the strategic national oil reserve, details are outlined in Chapter 3.
10
Section 3 : Target Area Conditions
The target areas of this study are Van Phong, in Khanh Hao province, and Phu Quoc island southern
ocean area in Kien Giang Province. Outlines of both of these provinces are given below.
( 1 ) Conditions of Khanh Hoa province
Khanh Hao is located on the South Central Coast, with the China Sea to its East. It has an area of 5,197
km² and a population of around 1.16 million (2009), and the provincial capital is Nha Trang. Its 385km
coast line has many coves, bays and river mouths and there are over 200 island and archipelagos in the
area, including the Spratly Islands, of which there are territorial claims by many countries.
It is an economically developed area, and its GDP per capita is around 16 million Dong (2007); the
second highest in central Viet Nam after Da-Nang. Compared with agriculture, the manufacturing and
service industries are developing quickly, and that of tourism is particularly important.
The main industrial area is Nha Trang, and the manufacturing of the area’s fish products comprises its
principle industry. In other areas, the target area of this study, Van Phong, also has an emerging
economy.
( 2 ) Conditions of Kien Giang province
Kien Giang is located in the Mekong Delta in south Viet Nam, and its provincial capital, Rach Gia, is
around 250km from Ho Chi Minh. It has an area of 6,299 km² and a population of around 1.68 million
(2009). Its main industries are that of fishing and rice crops.
The target area of this study, Phu Quoc island is part of Kien Giang province, and is the largest island
(574 km²) in Viet Nam. Its population is around 85,000, and in terms of its economy, aside from
fishing and agriculture, the tourism industry is developing rapidly.
11
12
Chapter 2
Study Methodology
13
14
Section 1 : Study Content
( 1 ) Study Content
1 ) Study outline
To facilitate the financing of the National Strategic Oil Stockpiling Mega-Floating System via an
International Yen Loan, through this study the most suitable sites for the Mega-Floating System are
selected, and construction costs and environmental impact of the method will be compared with that of
aboveground and underground tank facilities. The advantages of the Mega-Floating System have been
quantitatively illustrated. Hereafter the results of the study will reflect the national crude oil
stockpiling plan and the aim of establishment via Yen Loan will be introduced.
Figure 8 Overview and positioning of the research of this project
Scope of This Research
Main Research
1
Select the suitable installation location
for National Strategic Oil Stockpiling Mega-Floating
2
Comparison of the cost and environmental impact
between Mega-floating, aboveground and underground storage.
Reflect Outcomes
Implementation of Oil
Stockpiling Mega-Floating on Policy and plan
3
Illustrate the advantage of Mega-floating system in objective way
with quantitative results.
Reflect the Result of the Investigations on
Policy and Plan
4
Reflect the outcomes of the above-mentioned research on plan in
detail of Vietnam National Crude Oil Stockpiling Mega-floating.
Implementation of the Plan
by Yen Loan Scheme
5
Establishment of Floating Stockpiling via International Yen Loan, the
Special Term for Economic Partnership, a ODA scheme of Japan.
Source) Mitsubishi Research Institute
For national oil reserves, in terms of risk hedging, It is customary to establish tanks in several locations
across the country. With regards to such sites, the feasibility of land expropriation, tanker access,
clearance of environmental regulations have been considered and assessed. Based on this evaluation,
the advantages of the Mega-Floating system compared with that of the aboveground tank and
underground bedrock reserve methods have been specifically outlined.
As for the construction structure, it’s technical viability is proven by the examples at Shirashima and
Kamigotou. Therefore, the main question becomes the finding of a suitable location for the
15
Mega-Float. In this respect, locating an area with appropriate oceanographic conditions, technical
inspection of mooring methods, and affirming feasibility are essential matters to confirm.
This is cross-border project, which solves energy sector problems by using technology of the Japanese
shipbuilding sector.
2 ) Items of study
Items of study are as follows.
i ) Economic / financial analysis
z (Aboveground / underground tank) land expropriation costs
z Mega-Floating system recycle value
z Construction costs / management costs etc.
ii ) Environmental and social evaluation
z Candidate site environmental regulations
z Investigating incompatibility issues of newly-established Mega-Floating system / aboveground
/ underground bedrock tank
iii ) Technical feasibility
z Mega-Floating system site selection and oceanographic / climatic conditions
z (Aboveground / underground bedrock tank facility) base
z Technical feasibility of mooring
z Oil transfer facilities
( 2 ) Study target area
The target areas of study are Van Phong bay (Khanh Hoa province), and Phu Quoc Island southern
ocean area (Kien Giang province)
16
Section 2 : Study Methodology and Structure
( 1 ) Study Methodology
Together with the information gained via the field survey, data on the locations has been collected,
which has been analyzed/ assessed and evaluated in Japan. Field visits were conducted on two
occasions. The first (mid-November 2011), interviews with local officials, candidate site confirmation,
environmental and social evaluation, and economic/ financial analysis were carried out. Descriptions
and explanations of the findings were made during the second field visit.
Analysis of collected information and materials, project financial and economic evaluation,
environmental and social evaluation, and comprehensive project examination as well as report writing
were carried out in Japan.
( 2 ) Study structure
An outline of the investigation conducted by Mitsubishi Research Institute is given in Figure 9.
Figure 9 Outline of implementation structure
Mitsubishi Research Institute, Inc.
[project manager]
[economic and financial analysis]
[environment impact assessment]
Japan
Mitsubishi Heavy Industries, Ltd.
[floating structure & storage ship]
JGC Plant Solutions Co., Ltd.
[petroleum installation]
Vietnam
Japan Marine Science Inc.
[meteorological and marine condition]
Ministry of Industry
and Trade
PetroVietnam
Source) Mitsubishi Research Institute
17
Figure 10 Implementation structure
Mitsubishi Research
Institute, Inc.
-Environment and Energy
Research Division
-International Project
Research Center
◎Project Manager
Mitsubishi Research
Institute, Inc.
Assistant Project Manager
Mitsubishi Research
Institute, Inc.
Masaya NAKANO
Satoshi WASEDA
◎Finance and Economics
Tetsuya ENOMOTO
◎EIA
Hiroshi ISHIZATO
Takashi ENDO
Tomohiro MIZUKAMI
Mitsubishi Heavy Industries, Ltd.
Yoshitaka TAKAMATSU
◎Floating Structure
Masao KOMATSU
◎Petroleum Installation
JGC Plant Solutions Co., Ltd
Shu SUDO
Mahathir JAMALUDDIN
Shigeo MOTEGI
Kazuhiro NAKAMURA
Installation Position
Japan Marine Science Inc.
Shigeo SHIGETA
Noriyuki AOYAMA
Keisuke NISHIZAWA
Source) Mitsubishi Research Institute
Name
Ministry of Finance
Ministry of Industry and
Trade
PetroVietnam
Table 7 Counterpart organization
Department
Area of expertise / role
General Department of
Funding of national stockpile
State Reserves
General Department of
Primarily responsible for national stockpile
Energy
Various
points
of
Responsible for the construction and operation
contact to the Vice
of national stockpile
President
Source) Mitsubishi Research Institute
18
Section 3 : Study schedule
This investigation was carried out in line with the illustration given in Figure 11 from the 11th
November 2011, to the 24th February 2012.
Figure 11 Study schedule
2011
November
Tasks within
Japan
December
2012
January
February
①Preliminary Survey
(Literature Searching)
Bring a draft report to completion
②Analysis & Report
Writing
①First Field Survey
Tasks in
Vietnam
Holding seminars in
Vietnam
②Second Field Survey &
Seminar
Source) Mitsubishi Research Institute
19
Field survey will be
almost finished.
Holding seminars
principally.
Date
Location
14 November
(Mon)
Hanoi
15November
(Tue)
16 November
(Wed)
16 November
(Wed)
Hanoi
17 November
(Thu)
Dung
Quat
18 November
(Fri)
Nha
Trang
21 November
(Mon)
Date
Rach Gia
Location
7
February
(Tue)
8
February
(Wed)
Hanoi
Table 8 First field visit details
Organization visited
Organization representative
Ministry on Industry and ‚
Deputy Director General, Department
Trade
of Energy
‚
Deputy Director General, Department
Ministry of Finance
of State Reserves
Ministry of Planning and ‚
Deputy Director, Foreign Economic
Investment
Relations
‚
Various points of contact to the Vice
PetroVietnam
President
Ministry of Transport
‚
Deputy Director, International Relations
, Vietnam Environment
Administration
‚
Land and Water Environment Division
‚
‚
Vice President and others
Project formulation authority
‚
Councillor, Secretary
Dung Quat Shipyard
‚
President, Vice President and others
Khanh Hoa People’s
Committee
‚
Vice Chairman and others
‚
‚
People’s Committee Chairman
Others, Industry and Trade Department,
Planing and Investment Department,
Department of Transportation,
Department of Resources and
Environment, Department of Finance
officials
Vinalines
JICA Hanoi office
Japanese Embassy,
Hanoi
Kien Giang People’s
Committee
Table 9 Second field visit details
Organization visited
Organization representative
Ministry of Transport
‚
Deputy Director, International Relations
‚
Deputy Director, International
Vinamarine
Cooperation Department
‚
Deputy Director General, Department of
Ministry of Finance
State Reserves
JICA
‚
Director, Hanoi
Ministry of Industry and
Trade
20
‚
Director General, Department of Energy
Table 10 Seminar details
Date and time: February 9, 2012; 9:30 to 13:00
Venue: Hilton Hanoi Opera
Participants:
Government departments with the authority to determine the implementation of the project
z Ministry of Finance, Deputy Director General, Department of State Reserves; Ministry of Industry
and Trade, Director General, Department of State Reserves; PetroVietnam, International
Cooperation Department, Dung Quat Shipbuilding Industry Company, Vice President, others
Government departments with the authority to determine yen loan application
z Ministry of Finance, Deputy Director General, Department of State Reserves; Ministry of Industry
and Trade, Director General, Department of State Reserves
21
22
Chapter 3
Justification, Objectives and Technical
Feasibility of the Project
23
24
Section 1 : Background and necessity of the project
( 1 ) Background
At the 1st ASEAN+3 Energy Ministers’ Meeting held in June 2004, an agreement was reached on the
common objectives of strengthening energy security and attaining sustainability, and on an action
program for achieving those objectives. The importance of national stockpiling was also confirmed at
the Meeting. However, the only ASEAN+3 countries that have national stockpiles in place are Japan,
Korea, and China. ASEAN countries, although aware of their importance, have practically no national
stockpiles in place at present beyond the extent that private companies are obligated to keep certain
meager stockpiles.
Stockpiling is to be put in place as a contingency against serious national crises that result in long-term
oil supply cuts for unforeseeable reasons or contingencies including political turmoil in oil-producing
countries, transport suspension due to accidents or problems at transport choke points such as the
Hormuz Strait, and sharp declines in the production capacities of oil facilities due to natural disasters
such as hurricanes. The responsibility and burden of putting in place such stockpiles rests with the
State. It is for this reason that the IEA obligates Member Governments to put in place official national
stockpiles in an amount equivalent to 90 days of net oil imports.
Viet Nam is an oil-producing country. However, until recently, Viet Nam has had no oil refinery for
refining crude oil into oil products, and it relied 100% upon imported oil products. In 2009, Viet Nam’s
first domestic oil refinery (Dung Quat Refinery) was completed in Central Viet Nam. However, as this
refinery is unable to meet increasing domestic demand arising from Viet Nam’s recent economic
growth, construction of second and third oil refineries is planned. Therefore, for the time being, oil
product stockpiling is necessary to cope with risks of supply cuts of imported oil products, and at a
later stage crude oil stockpiling will become necessary to cope with risks of supply cuts of imported
crude oil needed for domestic refineries.
With such a background, in 2006, at the request of the Vietnamese Government, the Ministry of
Economy, Trade and Industry carried out The Master Plan Study on Oil Stockpiling and Distribution
& Storage Systems.
Later, the Vietnamese Government prepared the Stockpiling Master Plan, which was approved by
Prime Minister Decision No. 1139/QD-TTg (July 31, 2009). Its contents relate to the Commercial
Stockpiling of Oil Products in the Distribution System, Production Stockpiling of Crude Oil and Oil
Products in Refineries, and National Stockpiling of Crude Oil and Oil Products.
As regards Commercial Stockpiling and Production Stockpiling, the plan is now being implemented in
Viet Nam as a private sector project. As regards National Stockpiling, a specific plan is to be prepared
because it cannot be undertaken by the private sector.
This Study will investigate and make proposals on the advisability of developing, as a national
stockpiling base, a floating tank system stockpiling base based on performance records of such a
system already introduced for Japan’s national stockpile.
25
( 2 ) Improving energy security
It is predicted that imports of crude oil to Viet Nam from the Middle East are set to increase in the
future.
After departing from ports in the Persian Gulf, tankers carrying crude oil pass the Strait of Hormuz, the
Gulf of Oman and the Arabian Sea, before passing India, the south coast of Sri Lanka, and the Strait of
Malacca and Singapore channel before arriving in Viet Nam (Figure 12).
Figure 12 Main route of tankers transporting crude oil to Viet Nam
Source) Japan Marine Science
Regarding the route above, there have traditionally been reports of damage from unidentified vessels
in the Strait of Malacca and Singapore. However, in recent years, the Strait of Hormuz, in the mouth of
the Persian Gulf, has seen a rise in these incidences (Figure 13). In global terms, while the amount of
damage caused by the activities of these vessels in the Somalia Sea is gathering interest, the threat to
ships carrying large amounts of crude oil from the Persian Gulf through the Strait of Hormuz is an
issue that cannot be ignored.
In addition, disputes arising from political instability in Middle Eastern counties also present an
unpredictable situation. In the past, there has certainly been significant disruption to the safe
navigation of tankers in this area of ocean as a result of disputes in the Persian Gulf.
26
Figure 13 Damage from unidentified vessels (2011)
Source) IMB Live Piracy Map 2011 (Accessed 12/05/2011)
As the Strait of Hormuz connects the Persian Gulf with the Gulf of Oman, over 2 million tons of crude
oil are shipped across it each day (Figure 14).
Although stretching as far as 20 miles (37 km) at its narrowest path, there is often congestion involving
crude oil-laden ships bound for their destinations and empty vessels making their return. Therefore, in
an effort to reduce collisions, two lanes (inbound and outbound, width 3 km each) have been
established, and communication of ships’ navigation is being carried out.
27
Figure 14 Daily volume of crude oil transported via major straits, channels and pipelines (2009)
Source) EIA website
http://www.eia.gov/todayinenergy/detail.cfm?id=330 (Accessed 12/13/2011)
Note) Estimates based on Apex tanker data
In the Strait of Hormuz, as there are many VLCC (approximately 333m in length and 60m in width),
security in this area is of paramount importance.
As an example of damage from unidentified vessels, the result of an incident involving ‘M. Star’, a
VLCC operated by a Japanese shipping company. The ship was carrying 270,000 tons of crude oil
through the channel in the early hours of 28 July 2010, when it sustained significant damage to its hull
as well as the crew's quarters. As a result, an investigation led by the Ministry of Land, Infrastructure,
Transport and Tourism of Japan into the cause of the incident was carried out.1
With regards to this incident, damage from unidentified vessels was not concluded, however it is clear
that there was some external force involved. Therefore, there has been tension among companies
assigning vessels (or operating companies), as well as those navigating the channel thereafter.
As for the Strait of Hormuz and the Strait Malacca and Singapore, which are vital for the world’s
supply of energy, in the event of large scale damage as a result of unidentified vessels leading to
difficulty of navigation, it is possible for all shipping companies (or operating companies) to suspend
the activities of tankers in the area. In the event of such circumstances arising, it is foreseeable that the
supply of crude oil would be temporarily suspended until the ships were able to be reassigned,
potentially taking a considerable amount of time. In these circumstances, it becomes vital for each
country to keep national crude oil stockpiles, and in the interest of improving energy security, being
able to guarantee a certain volume of emergency stock within one’s own country is highly desirable.
1
Strait of Hormuz tanker accident investigation report, December 2010, Ministry of Land, Infrastructure, Tourism and
Transport, Maritime Bureau
28
Section 2 : Various examinations required to define the contents of
the Project.
This Study has been carried out based on Prime Minister Decision 1139 made in 2009.
( 1 ) Demand forecast
Viet Nam’s oil demand will continue to grow annually and will reach a level that is approximately two
and a half times the current level by 2025. The following three forecasts have been suggested for oil
demand in Viet Nam
z Ministry of Economy, Trade and Industry (METI) (2006)
The Master Plan Study on Oil Stockpiling and Distribution & Storage Systems in Viet Nam
z Viet Nam Petroleum Institute (VPI) (2008)
Summary Report of the Project, Plan for the Development of Vietnamese
System of Petroleum Reserves and Petroleum Products Up to 2015, The
Vision Up to 2025
z Prime Minister Decision No. 1139 (2009)
Master Plan Approval for Crude Oil and Oil Product Stockpiling System
Development of Viet Nam to 2015, prospect to 2025
These forecasts are shown in the following Figure 15.
Figure 15 Demand forecasts for oil and oil products in each case
29
All of these forecasts show similar sharp upward trends. Prime Minister Decision No.1139 (2009)
reflects the largest forecasts. However, differentials with the other two forecasts are small.
Accordingly, judged from an overall viewpoint, it is rational to adopt the figure adopted by Prime
Minister Decision No.1139 as the oil demand forecast to be used in this Study Project. The following
Table 11 shows the figures in the Plan to be used in this Study project, which have been prepared from
the demand forecast.
Table 11 Summary of demand forecast figures and plan figures
Item
Year 2025
Notes
Oil demand
49.8 million toe
Estimated based on Prime Minister
(Viet Nam as a whole)
Decision No. 1139
National stockpiling
Net import for 30 days As per Prime Minister Decision No.
(Crude oil and oil products)
1139
National oil stockpiling
2.2 million tons
As per Prime Minister Decision No.
(Crude oil)
1139
The Table 12 below shows a summary of estimates based on Prime Minister Decision No. 1139.
Table 12 Planned stockpiling of oil and oil products based on Prime Minister Decision No. 1139
Type of stockpiling
Commercial stockpiling
Crude oil
Production
stockpiling
Oil products
Total
Crude oil
National
stockpiling
Oil products
Total
Total countrywide
stockpiling
Calculation units
2010
2015
2020
2025
Million tons
Net-import days
Consumption days
Million tons
Net-import days
Consumption days
Million tons
Net-import days
Consumption days
Net-import days
Consumption days
Million tons
Net-import days
Consumption days
Million tons
Net-import days
Consumption days
Net-import days
Consumption days
Million tons
Net-import days
Consumption days
1.3
40.3
30
0.23
5.4
4.0
0.12
3.8
2.8
9.2
6.8
1.8
65.9
30
1.3
33.4
15.2
0.6
22.6
10.3
56.1
25.5
0.4
13.8
10.3
13.8
10.3
2.1
63
47
0.4
15.6
7.1
15.6
7.1
4.2
138
63
2.6
43.9
30
1.5
17.8
12.2
0.7
11.9
8.1
29.7
20.3
0.7
8.6
5.8
0.4
7.3
5.0
15.9
10.7
5.9
90
61
3.6
38.8
30
1.5
11.9
9.2
0.7
8.0
6.2
19.9
15.4
2.2
16.6
12.4
1.3
13.5
10.4
30
22.8
9.3
90
68
Source) Prime Minister Decision No. 1139 (2009)
30
( 2 ) Issues to be considered
At present there are no national stockpiling bases in Viet Nam. However, it is necessary for national
stockpiling bases to be put in place in terms of the State’s responsibilities as soon as possible in view of
global oil demand and supply conditions in recent years. However, national stockpiling requires a
large amount of capital and sophisticated technologies. The following are major issues, which must be
duly addressed in this Project:
① Determining Government policy on national stockpiling
② Enacting laws and regulations and developing institutional infrastructure for the
implementation of national stockpiling policy
③ Project funding
④ Determining tank systems
⑤ Site provision
⑥ Solving technical problems relating to stockpiling bases
⑦ Operating stockpiling bases and their maintenance and management
① Determining Government policy on national stockpiling
As a national stockpile requires a large amount of funds for related construction and storage, it is
essential for the Government to decide how to take care of such funding. It is necessary for the scale
and
schedule of system construction to be clearly envisaged.
As regards this Project, Prime Minister No. 1139/QD-TTg Decision “Master Plan for Crude Oil and
product stockpiling system development of Viet Nam to 2015, prospects to 2025” has been prepared.
However, details of the national stockpiling plan remain unclear.
② Enacting laws and regulations and developing institutional infrastructure for the implementation of
national stockpiling policy
To implement the Project, it is necessary to enact various related laws and to develop an institutional
infrastructure. For example, stockpiling legal systems must be enacted and organizations such as
public oil agency, etc. must be established.
③ Project funding
A scheme must be established to provide Project funds required for implementing the Project. Besides
stockpiling base construction costs, how to fund oil purchase costs and stockpiling operation and
maintenance and management costs, must be stipulated. More particularly, use of a Japanese Yen Loan
Package can be considered.
④ Determining tank systems
The following tank systems are widely adopted.
1) Aboveground tank system
2) Underground rock cavern tank system
3) Floating tank system
31
Each system has its own merits and demerits. Whether the choice of a specific system is appropriate or
not depends upon other prevailing conditions. ( 3 ) of this Study (Examination of technical methods)
provides a comparative analysis of each system.
⑤ Site provision
Once an appropriate district has been chosen, a site with the required location and with the required
area must be provided. Actions for land title adjustment as well as environmental impact assessments
covering surrounding areas etc. must be taken.
⑥ Solving technical problems relating to stockpiling bases
Collection of data that form the basis for technical examinations such as land and marine weather data,
bathymetric surveys, and soil surveys, etc. must be undertaken. Furthermore, technical examinations
must be carried out on matters constituting design basics. For example, research must be organized
and undertaken for Design Data Collection and Technical Examination of Facilities. Accordingly,
basic data collection and technical examination must be implemented.
⑦ Operating stockpiling bases and their maintenance and management
The operation of stockpiling bases and their maintenance and management require sophisticated
knowledge and long experience and expertise. These are not available in Viet Nam because the
country now stands at the starting point in this field. Therefore, it would be advisable for Viet Nam to
seek advice from countries such as Japan, which are advanced in this domain.
( 3 ) Examining technical methods
1 ) Method of examination
What follows is a comparative study of three stockpiling systems, namely: aboveground tank system,
underground rock cavern system, and floating tank system. The merits and demerits of each system are
compared in terms of site, construction cost, operation and maintenance and management costs, and
environmental impacts, etc. As a result, the stockpiling system that is suitable for this Project is
selected.
2 ) Examination of conditions
： Crude oil(imported crude oil)
Type of oil stockpiled
： Sealed storage principle
Type of stockpile
： The first phase 0.7 million tons (1million m3)
Capacity of facilities
(This Project)
(Subsequently, additional capacity of 1.5 million tons will be added and the total capacity will reach
2.2 million tons)
3 ) Comparison
Please refer to Table 13 “Comparison of crude oil storage system” on the following page.
32
Table 13
Item for comparison
Comparison of crude oil storage system
Mega-floating storage system
„
„
„
„
Aboveground tank storage system
Mega sizes storages are floated on sea, where the crude oil is to be
filling up.
Since oil is stockpiled inside these mega storages, only small area
of land is required.
Risk of oil leakage is low.
Facility is easy to relocate, expand, dismantle and divert for other
uses.
„
„
Mega sizes tanks are constructed on aboveground.
Constructed and operated world widely.
Underground rock cavern tank storage system
„
„
„
Crude oil is sealed storage inside underground rock cavern.
No impact to surrounding scenery as stockpiling is done
underground.
For location selection, a lot of technical conditions have to be
satisfied in order to find a suitable place.
Characteristics of storage system
Location conditions
Location such as island, with sufficient water depth and calm waves and
wind.
A wide area of flat land adjacent to sea, where oil tankers can moored.
Sufficient volume of underground water at bedrock and adjacent to sea,
where oil tankers can moored.
Required land area
◎ Small
(Offshore：18ha, Onshore: 6ha)
× Large
(Aboveground: 50ha)
△ Middle
(Underground：12ha, Aboveground: 5ha)
◎ Small impact
(as scale for land preparation is small)
× Big impact
(as scale for land preparation is big)
○ Medium impact
(as per underground water pumping etc.)
1) As there are a lot of experiences in aboveground tanks operation,
safety counter measure is established.
2) Tank is single wall, protected by another two oil protection wall.
This triple protection assures its safeties.
1) Since the storage is inside the bedrock, safety level is high.
2) The storage rock cavern is sealed by underground water which
assures its safeties, but to control the underground water is difficult.
△ 5-6 years
Construction to be start with land reclamation, land preparation,
ground improvement, tank foundation, and finally tank construction.
These factors could lead to longer construction schedule.
△ 7-10 years
Tunnel to be dig inside the bedrock, which leads to longer construction
schedule.
◎ USD 395/m
○ USD 397/m3
(Relatively, cheap unit cost could not be achieved as it will depends on
the land reclamation cost)
△ USD 466/m3
Almost none.
Required onshore land area is small.
None (assumed if land reclamation).
Flat land area would be more costly.
USD 60,000 /year(170,000m2 x USD1.08 x 0.33)
Land rental fee at hillside is assumed 1/3 of flat land.
2.1 % of construction cost
2.8 % of construction cost
2.9 % of construction cost
(as per capacity 1.0 million m3)
Environmental impact
1)
Safety
(against natural disaster (such as typhoon) and
man-made disaster)
Construction period
(in general conditions)
Proven experience in Japan for 20 years. Design is based on 100
years accumulated meteorology data etc. of the site in order to
assure safeties.
2) Mega storages are doubled-hull, moreover protected by secondary
and primary oil protection wall. This quadrupled protection
secures its high safeties.
◎ 3-4 years
Construction of mega storages, offshore work and onshore work can be
done in parallel. Construction period is shorter compared to other
storage systems.
Construction unit cost
(as per capacity 1.0 million m3 base, land acquisition
cost
not
included,
currency
exchange
3
rate:
JPY82.75/USD)
Annual land rental fee
(based to Danang Industrial Park rental fee:
USD1.08/m2/y)
Annual operation and maintenance
cost (Based on Japanese national stockpiling
depot cost)
Scrap value
Technology transfer
Viet Nam domestic production and
construction ratio
TOTAL EVALUATION
◎
66,000t x USD500/t =USD33,000,000
(33,000t x 2 storages)
○
◎ A lot
(mega-floating storages technology transfer)
Local shipyard is to be used, thus domestic production and construction
ratio is high.
◎
Compared to other storage type, mega-floating storage system is
considered suitable in Viet Nam
20,000t x USD500/t =USD10,000,000
(2,000t x 10 tanks)
△ Little
(since it is already an existing technology, not much new technology
could be transfer)
Construction materials are mainly to be imported, thus lead to low
local production. Local construction ratio is high, though.
○
This storage type would cost more on land reclamation if to be
constructed in Viet Nam
Source) Photos as per JOGMEC’s website
33
×
Almost none
△ Little
(cavern rock tank technology mostly owned by western countries, thus
technology transferring is difficult)
Construction materials are mainly to be imported, thus lead to low local
production. Local construction ratio is high, though.
△
Relatively high in cost and only a few sufficient bedrocks are available
for oil stockpiling in Viet Nam
4 ) Assessment
i ) Floating tank system
z In the case of floating tank systems, site acquisition is easier than in the case of other systems
because the required land area is smaller and such systems can be constructed on islands with a
sufficient water depth.
z It is most likely that mega float construction costs can be reduced, depending on costs at the
Vietnamese shipyard to which technologies are transferred
z Compared to other storage system, shorter construction schedule could be achieved as each
construction works for onshore portion, offshore portion and floating tanks could be executed
in parallel
ii ) Aboveground tank system
z The aboveground tank system is easier to establish in terms of maintenance and management.
However, in case mega aboveground tanks are constructed on soft Vietnamese ground, large
additional costs may be incurred for works related to foundation ground improvement and
piling, etc.
z It costs more and takes more time to select sites and acquire land because this system requires
a vast flat terrain located adjacent to ports where large tankers can be moored
iii ) Underground rock cavern tank system
z The underground rock cavern tank system has fewer and smaller negative impacts on the
surrounding natural scenery
z There is no need for back-up tanks for general maintenance because no such maintenance is
required
z The site selection process will be difficult because few locations are suitable for such an
installation.
z Power costs will be larger than in the case of other systems because of the need to maintain a
water pressure balance by constantly pumping up underground water.
z The entire period of construction works will be longer than in the case of other systems
because long periods are required for time-consuming underground water surveys,
geotechnical surveys, and rock bed boring works, etc.
In view of the above, the floating tank system is the most suitable choice for Viet Nam as the
stockpiling system for national stockpiling bases.
34
Section 3 : Outline of Project Plan
( 1 ) Basic policy
Based on the results of the examination in the above Section, in this Study the floating tank system is
adopted for the national stockpiling base. Only imported oil to be storage and sealed storage principle
to be applied, where no oil shall be delivered except in emergencies. The expected stockpiling capacity
will be 2.2 million tons by 2025 in accordance with the stipulations of Prime Minister Decision
No.1139. It is aimed that the first construction phase of the stockpiling base to start from 2016 with a
capacity of 0.7 million tons and the second phase to start from 2018 with the remaining capacity of 1.5
million tons will be constructed.
As regards site selection, locations are required where storage vessels and transport tankers can be
moored. The condition must be met that such locations should have sufficient water depths.
Locations with light winds and small tidal waves are required because storage vessels will float on the
sea. Such locations may not necessarily be close to oil refineries because the sealed storage system is
adopted.
The above is summarized as follows:
(1) Stockpiling system
: Floating tank system
(2) Stockpiling type
: National stockpile (imported oil), sealed storage
(3) Stockpile volume
: 2.2 million tons
(1st phase: 0.7 million tons, 2nd phase: 1.5 million tons)
(4) Required site conditions
1) Water depths that enable mega-floats and oil tankers to be moored
2) Calm sea area (small tidal waves, light wind)
3) Need not to be adjacent to refineries
( 2 ) Conceptual Design, and Specifications of Applicable Equipment
The basic idea of the mega floating oil storage system is as follows.
The mega floating oil storage system is adopted for the purpose of long-term storage by floating and
mooring crude oil tanks on the sea, and enables the construction of larger tanks with the buoyancy
force utilized. A sea area which is surrounded by natural minor islands and is isolated from outer ocean
waves is selected, where multiple mega floating oil storage are deployed. In order to realize an
economical tank construction with high reliability, the mega floating oil storage is basically built and
repaired in a factory in principle, and it is considered to pursue the economy of scale to the extent that
it can be built in one piece in a building dock. Also, it is possible to shorten the construction period,
because the field erection work such as construction of dolphin, tanker berth, onshore facility, etc. and
the building of mega floating oil storages in a shipyard can be executed in parallel. Furthermore, since
the facilities are floating on the sea surface, the influence of earthquake is slight. This system does not
require land purchase or large-scale land reclamation works, in comparison with the aboveground tank
system.
35
The oil storage equipment by the offshore tank system consists of the following facilities:
① Oil storage tanks floating on the sea surface,
② Mooring facility such as dolphin and fender, etc.,
③ Outlying facility such as breakwater and oil protection wall, etc.,
④ Goods receiving and delivering facilities such as sea berth, etc. (including piping facility, etc.),
⑤ Onshore facility such as power generating equipment and central monitoring and control
equipment, etc.
In order to prevent an oil spill accident from the mega floating oil storage, the anti-collision wall is
circumferentially installed, and simultaneously, the mega floating oil storage has a double hull
construction with the oil protection wall installed around the storage facility.
Considering the natural conditions at site and the service period, a mooring facility of the mega
floating oil storage, which can assure a sufficient safety, is provided. To constrain the movement with
a small displacement without generating an excessive mooring force, a mooring system which
combines the dolphin and the constant reaction force type fender is adopted. All the kinetic energy of
the mega floating oil storage caused by ocean waves, winds, etc. is absorbed by the displacement of
this constant reaction force type fender.
As corrosion protection specifications for submerged portion of the outer plate of the mega floating oil
storage, the epoxy system painting and the cathodic protection with aluminum anode are applied in
parallel, in order to assure the long-term service life.
As for fire and explosion countermeasures, the safety measures shall be taken in compliance with the
relevant laws and ordinances and the ship class regulations. Especially, a water seal tank system that
fills the tank with seawater at all times is adopted for the surrounding area of the oil stockpiling zone.
The crude oil to be stored shall be Middle Eastern crude oil, and the crude oil with high pour point
shall not be treated. Also, considering the economical efficiency of storage, the prerequisites are that
crude oil of one oil type shall be evenly loaded in one mega floating oil storage.
The basic specifications for the mega floating oil storage system of Phase 1 Construction Work are as
follows:
<Offshore facilities>
Total Oil storage capacity
: 700,000 tons
Capacity of mega floating oil storage: : approximately 350,000 tons x 2 units
Main dimensions
: Main dimension length
350 m
: Width
74 m
: Molded depth
20.8 m
: Draught
17.8 m (maximum)
Main equipment
: Cargo oil pump 2,500 m3/h x 2 pumps/ship
: Seawater pump 2,300 m3/h x 2 pumps/ship
Mooring equipment
: Cargo handling mooring dolphin
2 units
: Mooring dolphin
3 units
36
Oil protection wall
: Primary floating oil protection wall
: Secondary floating oil protection wall-cum-floating with
anti-collision wall
Goods receiving and delivering equipment
: 120,000 DWT class sea berth
: Loading arm
: Crude oil transfer pipe
<Onshore facilities>
Power facilities
Environmental protection facilities
: Generator
: Transformer
: Waste water treatment
: Guard basin
: Oily water tank
: Flare
Water supply facilities
Control Center Room (CCR)
Inert gas supply facility
Fire extinguishing facilities
Buildings (office, pump room etc.)
Disaster prevention facilities (on required basis)
: fire-engine, oil recovery equipment, oil fenceexpanding vessel, oil recovery vessel, oil fence
Figure 16 below shows the overall plan of the stockpiling base assuming Van Phong Bay as its site,
while Figure 19 shows the operating flow of the facility.
Figure 16 Overall plan of mega-float stockpiling base
Source) JGC Plant Solutions Co., Ltd.
37
( 3 ) Contents of Proposed Project
The offshore oil stockpiling bases consists of multiple mega floating oil storage. The mega floating oil
storage loads a large quantity of crude oil, floats on the sea surface, and is moored. Accordingly, it is
required that the sea area where the mega floating oil storage is installed has sufficient water depth so
that the bottom may not contact the sea-floor surface under the condition with crude oil fully loaded,
and that sufficient space is ensured for installation of multiple mega floating oil storage. Also, from the
viewpoint of mooring safety, sufficient calmness must be secured.
Considering the actual condition of the general onshore facilities, the service period of the mega
floating oil storage is set to 50 years. However, as a large quantity of crude oil should be safely stored
and kept, the external force encounter during the following recurrence interval is taken into
consideration as for recurrence interval, placing special emphasis on safety assurance:
Normal storage condition (normal specification conditions of semi-loaded condition ~ fully loaded
condition): recurrence interval of 100 years
Storage preparation condition (assuming the total service period of 10 years in empty-loaded condition
~ semi-loaded condition): recurrence interval of 20 years
Under these conditions, Van Phong Bay was selected as a sea area where the oceanographic
phenomena condition of significant wave height value of 1.0 m or less is satisfied as ocean waves
condition, and the water depth of 20 m or more can be ensured.
For building of the mega floating oil storage, we consider that those structures are to be built in a
shipyard in Viet Nam, because it is not preferable to tow large mega floating oil storage in an open sea
from the economical viewpoint. The size of the structurers which can be built in Viet Nam is
considered to be the size of the mega floating oil storage.
The storage capacity of the mega floating oil storage shall be 350,000 tons per unit, considering the
strategic petroleum reserves in Viet Nam. In Phase 1 Construction Work, the total storage capacity
shall be 700,000 tons, and two mega floating oil storages are built and installed. During Phase 2 and
subsequent Construction Works, six mega floating oil storages are installed in total for storage of 2.2
million tons, which is the target of the strategic petroleum reserves.
Monitoring of storage status of crude oil in mega floating oil storage is performed in the central
monitoring station provided on the onshore side. Also, the facilities shall be provided on the onshore
side for the treatment of vapor gas generated from crude oil, the generator of inert gas to be filled into
respective crude oil tanks, the pumps for fire fighting, the foam extinguishing systems, etc.
Figure 17 and Figure 6-1 below shows the approximate outside views of the mega floating oil storage.
38
Figure 17 Approximate Outside Views of mega floating oil storage
(Top view)
(Side view)
(Sectional view)
Source) Mitsubishi Heavy Industries Ltd.
Figure 18 Mega floating oil storages, oil protection wall, mooring dolphins etc.
Source) JGC Plant Solutions Co., Ltd.
39
Figure 19 Schematic drawing of mega-float stockpiling facility
Source) JGC Plant Solutions Co., Ltd.
( 4 ) Candidate site selection
On selecting the candidate sites for the Mega-Floating System, it is necessary to consider the
following two points.
Mega-Floating System installation requirements (depth of water, climate, oceanographic phenomena
etc.)
The navigational safety of supertankers arriving at, and departing the reserve base.
In this context, the candidate sites have been narrowed down and selected in line with the flow
illustrated in Figure 20. With the restrictions of study time in mind, (3) ‘field study implementations’
have been carried out after being condensed to two locations.
Figure 20 Flow of Mega-Floating System candidate site selection
(2) Consideration of water depth / terrain
(1) Analysis of wind and sea data
Field survey site selection
( 3 ) - 1 Field survey implementation
・ Ocean survey
・ Local official interview
・ Analysis of obtained information
( 3 )- 2 Field survey implementation
・ Ocean survey
・ Local official interview
・ Analysis of obtained information
Final site selection
Source) Japan Marine Science
40
1 ) Wind and wave data analysis
For the construction and operation of the Mega-Floating System, it is vital to have calm conditions
with respect to wind and sea.
With a large length and a large width, combined with a small depth, the Mega-Floating system is
susceptible to the influence of waves. For this reason, the height of waves in the area are assumed to be
‘less than one meter’ during the design phase.
Based on information acquired from nautical charts and sailing direction of the area, the wind and sea
data of the following areas of interest in the north, south and central regions of Viet Nam were
collected and analyzed.
North: Nghi Son water area (Thanh Hoa province)
Central: Van Phong bay area (Khanh Hoa province)
South: Phu Quoc island southern water area (Kien Giang province)
As for wind and sea data, figures from the global numerical weather prediction model “GPV (Global
Point Value)” of Japan Meteorological Agency were used. The data concerned is divided into the
wind-focused GSM (Global Spectral Model), and the sea-focused GWM (Global Wave Model) and is
displayed every six hours on a grid which divides the globe into 0.5 degree (thirty mile) sections.
In this investigation, data from the year between June 2010 and May 2011 were used, and the data for
this period has been compiled and aggregated on a database.
As the data is divided into 0.5 degree sections, the data of the three investigation areas outlined in
Figure 21, Figure 22 and Figure 23 were selected.
North: Nghi Son water area 19°30′N 106°00′E
Central: Van Phong bay area 12°30′N 109°30′E
South: Phu Quoc island southern water area 10°00′N 104°30′E
Figure 21 Nghi Son water area wind and wave data acquisition location
41
Source) Japan Marine Science
Figure 22 Van Phong bay area wind and wave data acquisition location
Source) Japan Marine Science
Figure 23 Phu Quoc island southern water area wind and wave data acquisition location
42
Source) Japan Marine Science
The results of the aggregation of this data are displayed in Table 14 and Table 15. The time series
variations in the wind and sea data are outlined in figures from Figure 24 to Figure 29.
According to the results, the conditions in Phu Quoc island southern water area appear the calmest,
followed by Van Phong bay area and Nghi Son water area.
However, it is necessary to consider that the data acquisition locations are entirely exposed to the
ocean without any shelter. For the construction area of the Mega-Floating system, it is possible to
minimize the effects of winds and rough seas by utilizing the natural features of the landscape.
Particularly for Van Phong bay, the proposed site is further towards land than the place of data
acquisition, and the location is surrounded by islands and peninsula, it is therefore predicted that the
level of tranquility will in fact be higher than the data displayed here would suggest. In this regard, it is
necessary to comprehensively assess the areas based on the results of the field survey.
Table 14 Candidate site wind and wave data analysis result
Average
Maximum
Site
Speed (m/sec)
Direction (deg.)
Speed (m/sec)
Direction (deg.)
Nghi Son
5.3
122.1
17.3
68.2
Van Phong
6.3
139.9
16.5
7.1
Phu Quoc
4.6
166.8
12.2
28.5
Source) GSM data of Japan Meteorological Agency
Note) Maximum direction indicates the direction when the wind speed is at its greatest
Table 15 Candidate site wave data analysis result
43
Site
Average
Height (m)
Direction (deg.)
Maximum
Height (m)
Direction (deg.)
Nghi Son
0.8
99.1
4.9
100.0
Van Phong
1.7
89.7
5.8
40.0
0.4
171.6
2.1
270.0
Phu Quoc
Source) GWM data of Japan Meteorological Agency
Note) Maximum direction indicates the direction when the wave height is at its greatest
44
Figure 24 Nghi Son water area wind data analysis result
Wind Speed (left)
(m/sec)
18
Wind Direction (right)
(deg.)
360
15
300
12
240
9
180
6
120
3
60
0
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Source) GSM data of Japan Meteorological Agency
Figure 25 Nghi Son water area wave data analysis result
Wave Height (left)
(m)
6
Wave Direction (right)
(deg.)
360
5
300
4
240
3
180
2
120
1
60
0
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Source) GWM data of Japan Meteorological Agency
45
Mar
Apr
May
Figure 26 Van Phong bay area wind data analysis result
Wind Speed (left)
(m/sec)
18
Wind Direction (right)
(deg.)
360
15
300
12
240
9
180
6
120
3
60
0
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Source) GSM data of Japan Meteorological Agency
Figure 27 Van Phong bay area wave data analysis result
Wave Height (left)
(m)
6
Wave Direction (right)
(deg.)
360
5
300
4
240
3
180
2
120
1
60
0
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Source) GWM data of Japan Meteorological Agency
46
Mar
Apr
May
Figure 28 Phu Quoc island southern water area wind data analysis result
Wind Speed (left)
(m/sec)
18
Wind Direction (right)
(deg.)
360
15
300
12
240
9
180
6
120
3
60
0
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Source) GSM data of Japan Meteorological Agency
Figure 29 Phu Quoc island southern water area wave data analysis result
Wave Height (left)
(m)
6
Wave Direction (right)
(deg.)
360
5
300
4
240
3
180
2
120
1
60
0
0
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Source) GWM data of Japan Meteorological Agency
2 ) Water depth and geographical considerations
At the time of candidate site selection, it is necessary to consider the depth of the water and the terrain
of the surrounding area. Although Viet Nam has a long coastline stretching from north to south, it is
widely known that the coastline is comprised of wide, shallow waters. As for the construction of the
Mega-Floating System, it is planned to be in an offshore area with a suitable depth of water. However,
for the Mega-Floating System as well as the large tanker berth to be situated far out to sea, the
construction of a breakwater, to ensure a suitable level of tranquility becomes necessary; and the costs
of all construction are increased. Therefore this investigation has been exclusively explored areas of
coastline with the potential for construction.
47
Firstly, with regards to the depth of water, it is generally required to consider the inclination of a ships
hull and charts depth accuracy, and guarantee a 10% keel clearance below the ship’s maximum draft at
low tide. For example, in the case that the maximum draft of the vessel is 15 meters, a minimum of an
additional 10% of keel clearance at low tide (1.5m), making 16.5m the minimum required level. In
addition, the ship’s maneuverability is significantly reduced as the ship’s keel clearance reduced
(shallow water effect). In particular, there is a decrease in speed on approaching piers, and resulted in
ship-handling used the ship’s main engine and rudder becomes difficult. When the vessel is assisted by
tugboats, it is desirable to have as much keel clearance as possible.
The information available at the time of investigation was extremely limited. The information on
water depth recorded in the BA nautical chart2 and sailing directions were used. Although it is
possible to use the lowest sea level, i.e. the sea level on the small scale nautical charts, but the
information of sea level in the small scale nautical charts is restrictive, it is difficult to get a clear idea
of the location’s features (terrain of the seabed, undulation etc.). Therefore, making the best use of
experience up until now, the available information on the location’s features has been used as a basis
for prediction.
As a prerequisite for this project is the absence of the building of external structures such as
breakwaters, this investigation will endeavor to select a site that makes the best possible use of natural
features such as peninsulas and islands to minimize the effects of external forces.
As mentioned previously, it is common to design the Mega-Floating System assuming that the
maximum wave height of the area is less than one meter. However, it is extremely difficult to
practically guarantee that an area of ocean’s maximum wave height will be below one meter. In the
case of Japan’s National Crude Oil Stockpiling Base, in order to satisfy these conditions, the site is
enclosed by a breakwater around the surrounding area(Figure 30).
The master plan for an oil reserve for Viet Nam proposed by Japan in 2006 (Master Plan Study on Oil
Stockpiling and Distribution & Storage System in Viet Nam, 2006), states that ‘it is desirable to place
the national oil stockpiling base next to an oil refinery.’ At the time of the study, this was envisaged as
an above ground, or underground tank, and the establishment was not assumed to be at sea. This study
will also take into account stockpiling at the Mega-Floating System, whose oil will be used only in
emergency, and therefore an appropriate site will be widely selected without particular regard to the
presence of an oil refinery.
2
BA: British Admiralty Nautical Chart
48
Figure 30 Shirashima National Oil Stockpiling Base
Source) JOGMEC website http://www.jogmec.go.jp/jogmec_activities/stockpiling_oil/base_oil/base_oil_06.html
As a result of the survey on the long, north to south stretching Viet Nam coastline, the following two
sites have been proposed for the establishment of the Mega-Floating System, and field surveys to these
locations have been implemented. As an additional result of investigation, the Van Phong bay region
has been narrowed down to the Dam Mon area to the north.
Dam Mon water area (Khanh Hoa province, Van Phong bay north area)
Phu Quoc island southern water area (Kien Giang province)
Although the Nghi Son area was a candidate site in the previous section, it was clear that for sufficient
water depth, the site would be required to be situated over 10km for from the shore. The Nghi Son area
was therefore removed as a potential location.
The building of an oil refinery and the construction of a Single Point Mooring system for the area have
been planned, however, the distance will be 33.5 km from the shore.
3 ) Field survey implementation
Based on the results of the investigation thus far, the Dam Mon water area, and the Phu Quoc island
southern water area were selected as candidate sites and the field surveys to these locations were
implemented. The locations of both of these sites are illustrated in Figure 31.
The field surveys were carried out with an emphasis on the three points outlined below. The concept of
the large tanker is based on so called Aframax3 model.
The ability to ensure sufficient depth for the safe mooring of the Mega-Floating System
The ability to ensure sufficiently calm conditions for the safe mooring of the Mega-Floating System
The ability to ensure navigation safety as well as loading and unloading cargo word and mooring of
a large tanker (Aframax tanker)
3
Aframax Tanker: approx 120,000 DWT; length over all approx 245m; width approx 42m; maximum draft approx
15m.
49
Figure 31 Dam Mon and South Phu Quoc water area locations
Source) Japan Marine Science
i ) Dam Mon water area
a. Obtained data analysis (Dam Mon water area)
The following information was obtained via the survey of the Dam Mon area. The details of each item
are outlined below.
Dam Mon area Economic Zone Development Program
Nha Trang Weather station data analysis (wind, tide, wave)
Navigation area depth sounding results
(Dam Mon area Economic Zone Development Program)
Van Phong bay is known as a good location for a harbor by its natural features and suitable depths of
water for large vessels. However, industrial development has not reached the Dam Mon area, and there
have been no harbor facilities developed in the area.
In the Dam Mon region, the advancement if the Van Phong Economic Zone Development Program is
being promoted. There are currently two development programs taking place: the first aimed for 2020,
which has already received government approval, and presently, the lager in scale plan for 2030 is
under consideration.(Figure 32 ).
The 2020 development program is focused on the VINALINES plan for an international container
terminal. The construction of the foundations for this terminal has already begun (Figure 33). However,
the maximum size of the container ship was expanded from 9,000 TEU to 15,000 TEU, therefore it has
become necessary to redesign the facility, and fundraising has fallen short. The construction of the
facility has therefore been interrupted and there are currently no plans for its resumption.
50
Figure 32 Van Phong (Dam Mon) area development plan (2020 and 2030 objectives)
2030 objective
2020 objective
Source) Van Phong Economic Zone Management Board
Figure 33
Construction site of the pending Dam Mon international container terminal
Source) Japan Marine Science
51
(Tidal data)
The tidal data (1977 to 2004) from the Tuy Hoa Weather Station (north side of Dam Mon) is outlined
in Table 16.
HHWL
+2.4m
Table 16 Dam Mon area tidal data (1977 to 2004)
HWL
MSL
LWL
+2.02m
+1.31m
+0.41m
LLWL
+0.02m
Source) Tuy Hoa Weather Station
(Wind and sea data)
In line with the data from the Nha Trang Weather Station, the Average monthly wind speed, major
wind direction, and the average wind speed as major direction for the Dam Mon ocean area are
outlined in Table 17. From October to March, we can see that the average wind speed reaches 3 meters
per second. Furthermore, limiting to the prevailing wind direction (northerly wind) the average wind
speed reaches 5meters per second.
Table 17 Dam Mon ocean area average wind velocity, major direction and average wind velocity as
major direction (1979 to 2002)
1
2
3
4
5
6
7
8
9
10
11
12
Average Wind Velocity
3.2 2.9 3.1 3.2 2.8 2.4 2.4 2.5 2.6 3.1 3.2 3.3
(m/sec)
Major Direction
N
NE NE SE
SE
SE
SE
SE
SE NW
N
N
Average Wind Velocity
5.1 5.1 4.8 4.1 3.9 3.6 3.7 3.8 3.8 1.8 5.3 5.4
as Major Direction (m/sec)
Source) Nha Trang Weather Station
The highest wind speeds per year by direction are outlined in Table 18. Over the period of twenty four
years, the average of the highest wind speeds is 18 meters per second, and during this period, the
highest recorded wind speed was 30 meters per second in 1988.
52
Table 18 Dam Mon ocean area highest wind speeds by direction (1979 to 2002)
Unit： m/sec
Year
North
1979
14
NE
20
East
11
SE
12
South
15
SW
14
West
14
NW
18
Max
20
1980
1981
15
23
16
20
12
13
10
10
15
17
8
9
9
8
12
10
16
23
7
14
17
17
9
7
20
1982
17
16
10
10
9
1983
15
14
20
13
13
1984
15
13
11
10
9
10
12
10
15
1985
10
12
12
14
9
8
3
12
14
1986
1987
16
14
12
14
12
10
10
10
8
10
2
2
8
8
9
8
16
14
1988
14
30
10
12
8
4
8
8
30
1989
14
12
10
10
9
2
6
6
14
1990
14
14
10
10
8
8
8
8
14
1991
12
14
10
10
8
4
3
5
14
1992
1993
18
28
18
18
10
10
10
14
8
10
2
N/A
6
10
7
6
18
28
1994
14
12
10
10
7
1
4
10
14
1995
14
14
12
11
10
6
2
4
14
1996
16
17
10
11
11
11
13
5
17
1997
15
19
10
12
10
11
15
16
19
1998
1999
13
21
17
18
22
11
15
14
14
13
12
10
14
14
13
16
22
21
2000
17
16
12
12
13
12
13
10
17
2001
18
17
13
14
14
15
16
19
19
2002
15
13
11
12
7
1
1
8
15
Max
28
30
22
15
17
15
16
19
30
N/A
Source) Nha Trang Weather Station
As for wave height in the Dam Mon area, there is currently no data on record. Therefore, the wind and
wave data of the east side of the Hon Gom peninsula were used to estimate the wave height. The result
is outlined in Table 19. According to the results, in the event that the wind speeds exceed 20 meters per
second, the maximum wave height reaches 2.0 meters, and it is reported that the significant wave
height can reach 1.1 meters.
Table 19 Dam Mon ocean area wave height estimation
Wind Velocity
Wave Height
10m/s
20m/s
30m/s
40m/s
Max. Wave Height (Hmax)( m)
0.9
2.0
3.2
4.1
Significant Wave Height (H1/3)(m)
0.5
1.1
1.8
2.3
Source) Estimated value based on the data in the east side of the Hon Gom peninsula
53
(Navigation area depth sounding results)
According to the results obtained from the depth sounding survey of the navigation passage en route to
the Dam Mon area (Lach Cua Be), it is confirmed that at its main part, the passage depth is 27.7 meters
at its shallowest (Figure 34). As the maximum draught of the Aframax tanker used in this investigation
is 15 meters, it can be said that the area can guarantee an adequate depth of water for the safe
navigation of this vessel.
Furthermore, in the case of the larger tanker so called VLCC, the maximum draft is 22 meters: it can
therefore also be said that the passage can provide sufficient water depth for the safe navigation of the
VLCC.
Figure 34 Navigation passage (Lach Cua Be) depth sounding results (example)
Source) Pilot of Nha Trang
b. Dam Mon area survey
The Dam Mon area field survey was conducted twice via boat. The route of the survey is shown in
Figure 35 and Figure 36.
Taking into account the terrain of the area, the survey focused mainly in the four locations outlined in
Figure 37 (details refer to Figure 39). No problem were found through sounding with sounding
machine at the point where seemed to be important to install the Mega-Floating system (Figure 38).
Sounding result of the points ① and ③ where had high promising results in this investigation is
shown Figure 40 and Figure 41.
54
Figure 35 Dam Mon area survey route (first time)
Source) Japan Marine Science based on image from Google earth
Figure 36 Dam Mon area survey route (second time)
Source) Japan Marine Science based on image from Google earth
55
Figure 37
Field survey implementation and site establishment
Source) Japan Marine Science
Figure 38 Depth sounding survey
Source) Japan Marine Science
56
Figure 39 Survey locations (Dam Mon area)
Site ①
Site ②
Site ③
Site ④
Source) Japan Marine Science
57
Figure 40 Survey result of water depth (site ①)
068
069
070
071
072
073
074
075
076
077
078
079
080
081
082
083
084
085
Water
Depth
12 m
8 m
8 m
18 m
20 m
14 m
--- m
7 m
12 m
20 m
23 m
20 m
12 m
19 m
10 m
17 m
19 m
21 m
Source) Japan Marine Science
Figure 41 Survey result of water depth (site ③)
088
089
090
091
092
093
094
095
096
097
098
099
Water
Depth
11 m
15 m
17 m
20 m
19 m
17 m
14 m
--- m
23 m
18 m
20 m
21 m
Source) Japan Marine Science
58
c. Dam Mon area official interview result
When investigating the Dam Mon ocean area, interviews with the following local officials and
knowledgeable persons were carried out.
Nha Trang Port Authority
Nha Trang pilot
Dam Mon ocean area customs office personnel
The boat captain at the time of field investigation
Hotel businesses in the Dam Mon area
The results of the interview are outlined below.
(Regarding Monsoon conditions)
In the dry season (February to August) the wind direction is SW, and in the rainy season (September
to January) the wind direction is NE. The wind speeds in the rainy season (NE) are higher than that
of the dry season (SW).
The average wind speed of NE in the rainy season is 6 to 7 meters per second; it is rare for wind
speeds to exceed 10 meters per second; and the highest wind speed is around 12 meters per second.
Wind speeds at the time of typhoons approach is 15 meters per second.
(Regarding Waves)
The wave height is usually less than half a meter and does not exceed 1 meter.
Wave height reaches1 meter at the time of typhoons.
(Regarding Tides)
The tide level difference of the area is 2 meters at maximum.
(Regarding Currents)
There is a north going current from the bay entrance; from the north side of Hon Lon island to Van
Phong bay (Figure 42).
Although there is a current, it is usually not strong enough to effect small vessels or the activities of
divers.
While it is a slow-moving current, it tends to be slower from April to August, and faster from
September to March.
(Regarding Typhoons)
Typhoons sweep from July to October, however they only occur once every few years (there was
one attack in 2003 and 2010; there were no attacks between 2004 and 2009; the typhoon in 2003
was large, however there was no significant damage in the Dam Mon area.
(Regarding Tsunami)
59
It is said that there was a tsunami in Viet Nam 120 years ago.
(Regarding Fishermen)
There are many aquaculture rafts in the area.
The aquaculture rafts are moved with the seasons to minimize the effect of the wind (in the case of
NE winds, they are moved to the east side of the bay; in the case of SW winds, they are moved to the
west side of the bay).
(Regarding Calling large vessels)
While the large scale development program is in place, there are currently no large vessels calling in
the area.
Currently the largest vessel calling in the area is a 10,000 DWT for loading silica sand which uses
the berth located the north side of the bay.
Figure 42 Current flow (summary figure)
Source) Japan Marine Science
60
ii ) Phu Quoc island southern water area
a. Obtained data analysis (Phu Quoc island southern water area)
At the time of the field survey to the Phu Quoc island southern water area, the data from Phu Quoc
Weather Station was obtained, the details of which are outlined below.
(Regarding wind and wave data)
In line with the data from Phu Quoc Weather Station, the maximum wind speeds at Phu Quoc island by
day for 2010 are outlined in Table 20 and Table 21. The wind speeds from January to April are
relatively low and lower than 10 meters per second. Whereas, from May to December the wind speeds
exceed 10 meters per second, and the highest recorded wind speed is in July at 18 meters per second.
From around October, the southerly winds turn northerly and this tendency continues until January.
In addition, as the wave height is proportional to the wind speed, as mentioned previously, in the calm
period between January and April the highest wave height is below 10 meters. From May, it can
exceed 1 meters and in July and August the maximum wave height reaches 2 meters (Table 22).
61
Month
Date
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Max
Dir.
Table 20 Phu Quoc island highest wind speeds by day (January through June 2011)
Jan
Feb
Mar
Apr
May
Jun
Dir. Vel. Dir. Vel. Dir. Vel.
Dir.
Vel.
Dir.
Vel.
Dir.
Vel.
E
4 ESE
4 SW
6
E
5 ENE
5
W
8
E
5 SSW
4 SW
5 SW
5
E
6 NW
11
E
5
E
5 SW
6
SE
6 SW
5 WSW
13
E
6
E
5 SW
7 SSW
5
W
7 NNW
11
E
5
E
5 SW
6 SSW
6 SW
4
W
12
E
5 ENE
5 WSW
6 SSW
5 SW
7 WSW
12
ESE
5 ESE
5 SW
7 SW
5 SW
6 SW
9
E
4
E
5 SW
7 SSW
4 WSW
5 WSW
7
ENE
5
E
5 SSW
6 SW
5 SW
6 WSW
14
ENE
5 ENE
5
E
7 SW
6 WSW
6 SW
10
S
4 ENE
5 NE
8 SW
6 SW
6 WSW
5
E
4 ENE
4 ENE
6 SW
6 ENE
10 SW
4
E
6
E
5
E
5 SW
6
S
5 SW
7
ENE
8 SE
7
E
6 SW
6
E
5 WSW
7
ENE
6
E
5 SW
6
E
5 ENE
4 WSW
11
ENE
8
E
5
E
6
E
6
E
4
W
8
NE
9
E
6 ENE
7 ENE
6 ENE
5 WSW
10
NE
7
E
5 NE
7
E
6 SW
5 WSW
13
NNE
8
E
5
E
6 ENE
6 SW
10
W
12
NW
7
E
5
S
5 ENE
5 SW
4 WSW
11
E
4
E
5
S
5 SW
5 SW
9
W
10
ENE
5
E
5
E
5 WSW
8
W
11 SW
13
E
6
E
5 SW
6 SSW
4 WSW
8 WSW
14
E
6 SW
6 WSW
6
E
6
W
11 WSW
13
SW
4 SW
6 SW
6
E
7 WSW
9 NW
10
ENE
5 SW
5 ENE
6
E
5 NW
16
W
10
E
5 SW
6 ENE
6 SW
5 SW
13 NW
13
E
6 SW
5 WSW
7
E
6
S
9 NW
13
E
7
SSW
5
S
5 SW
W
9
E
6
E
6
E
7 WSW
6 SW
7
SE
5
NW
5
WSW
8
9
7
8
8
16
14
NE
SE
NE
WSW
NW
WSW
Source) Phu Quoc Weather Station
62
Table 21 Phu Quoc island highest wind speeds by day
Month
Jul
Aug
Sep
Oct
Date
Dir.
Vel.
Dir.
1
2
NNW
WSW
11
8
W
SW
3
WSW
4
WSW
12
W
5
S
4
NW
8 WSW
Vel.
Dir.
14 WSW
14 WSW
13
W
8 WSW
13
NW
6
WSW
6
NW
9
SW
7
8
WSW
W
8
7
W
W
16
13
W
SW
9
W
9
SW
12
W
10
WSW
7 WSW
13 WSW
11
SW
7
SW
10
W
12
SW
7
W
9
W
13
14
SW
SW
7 WSW
11
W
4 WSW
7 SW
15
SW
10 WSW
5
W
16
SW
9 WSW
4
W
17
SW
5
W
5
W
12
W
18
WSW
13 WSW
19
20
WSW
W
8
NE
6 WSW
6 WSW
6
W
21
W
9 WSW
12 WSW
22
WSW
23
W
14 WSW
24
W
18
SW
9
SW
25
26
W
W
14
14
S
NNW
5
7
SW
NNW
27
WSW
12
W
7
NNW
28
SW
10 WSW
12 WSW
29
NW
10
NW
11
W
30
SW
7
NW
12
NNE
31
Max
NNW
12
18
W
11
16
Dir.
13
W
W
14 WSW
13 WSW
W
(July through Dec. 2011)
Nov
Dec
Vel.
Dir. Vel. Dir. Vel. Dir. Vel.
9
NE
5
NE
10
NE
8
7 ENE
4 ENE
9
NE
8
14
SW
11
NE
9
NE
8
13
W
11
NE
9
NE
10
15
S
8
NE
7 ENE
9
13
SW
4
NE
6
NE
6
9 WSW
14
NE
6
NE
8
9 WSW
4
NE
8 ENE
9
10 NW
11
NE
8 ENE
6
10
W
16
NE
11 ESE
4
7 NNW
13
E
5 WSW
5
4
W
16 SW
5 WSW
4
5
W
13
NE
6 SW
4
9 WNW
14 ENE
6 SW
4
7
SW
16
E
7 ENE
3
6 WSW
12
NE
7
E
5
6
SW
10 ENE
9 ENE
9
6 NNW
9 NNE
9
NE
8
8 NW
7
NE
5
NE
7
5
W
9 ENE
6 ENE
7
6 NNW
9
E
5
NE
6
5 WSW
10 WSW
7
NE
5
3 NW
7 ESE
5
E
4
8
W
6 SW
5
NE
5
4 NW
5
NE
5 SW
4
4
E
5
NE
10 ENE
10
5 NNW
6 ENE
7
NE
10
5
NE
8
NE
9
NE
9
5
NE
9
E
8
NE
8
9
NE
11 ESE
7
NE
7
NE
9
NE
8
15
16
11
10
NW
W
NE
NE
Source) Phu Quoc Weather Station
63
Table 22
Phu Quoc island highest wave height by day (January through August 2011)
Jun
Feb
Mar
Apr
May
Jun
Jul
Aug
Max. Wave
Height
0.50
0.50
0.75
0.50
1.25
1.50
2.00
2.00
(m)
Source) Phu Quoc Weather Station
Note) results of wave height observation using units of 25cm
b. South Phu Quoc area survey
In the Phu Quoc Island southern water area, ocean surveys were implemented on three occasions. The
routes of the surveys are outlined in Figure 43 to Figure 45. No problem were found through sounding
in installing the Mega-Floating system. Sounding result of the southern area where had high promising
results in this investigation is shown in Figure 46.
Figure 43 South Phu Quoc area survey route (first time)
Source) Japan Marine Science based on image from Google earth
64
Figure 44 South Phu Quoc area survey route (second time)
Source) Japan Marine Science based on image from Google earth
Figure 45 South Phu Quoc area survey route (third time)
Source) Japan Marine Science based on image from Google earth
.
65
Figure 46 Survey result of water depth
Source) Japan Marine Science based on image from Google earth
c. Phu Quoc official Interview results
When investigating the Phu Quoc island southern water area, interviews with the following local
officials and knowledgeable persons were carried out.
Phu Quoc Meteorological & Hydrographical Station personnel
Kien Giang Port Authority
The boat captain at the time of ocean survey
(Regarding Monsoon conditions)
The wind direction during the dry season (February to August) is SW, and in the rainy season
(September to January) the wind direction is NE. The wind is stronger in the rainy season (NE) than
in the dry season (SW).
In the rainy season, the maximum wind speed is around 18 to 24 meters per second and the
maximum wave height of around 2 to 3 meters can continue for 10 days.
The highest wind speed is level 7 (15 meters per second).
(Regarding Waves)
Wave height increases with the long stretching SW winds and can reach as high as 3 meters.
(Regarding Typhoons)
Typhoons generally do not attack.
66
(Regarding the southern archipelago)
January and February present the harshest conditions.
Due to the presence of a coral reef reserve, development in the area is generally difficult.
(Regarding Calling large vessels)
There are generally no large vessels (merchant vessels) calling in the area.
There are however plans for accepting merchant vessels at the southern area of Phu Quoc island in
the future (details not yet fixed).
Figure 47 Survey location (Phu Quoc)
Source) Japan Marine Science
67
4 ) Site evaluation
The results of the site evaluation of the Dam Mon ocean area and Phu Quoc island southern water area
are outlined in Table 23.
Item
Depth
Influence
of
external forces
Super
access
tanker
Table 23 Site evaluation results
Dam Mon ocean area
Phu Quoc southern ocean area
Compared with Dam Mon, the area
of the water depth with more than 20
No problems.
m is narrow, and far away from the
coastline.
Although surrounded by islands, the
site faces the ocean, and compared
Surrounded by peninsula and islands;
with Dam Mon, the level of
very tranquil location.
tranquility is low (it is thought that a
breakwater is required).
The navigation route is restricted,
however, there are no major
No problems.
problems.
Source) Japan Marine Science
From the table above, compared with the Phu Quoc island southern water area, the Dam Mon water
area appears the more favorable in terms of depth of water and the influence of external forces, for the
establishment of the Mega-Floating system as well as a berth for the large tanker.
5 ) Final site selection
In terms of the external forces of the climate and ocean phenomena, the safe navigation of the
supertanker, as well as in terms of cost (the necessity for a breakwater), the investigation and analysis
thus far have concluded that there are two optimum locations for the establishment of the
Mega-Floating system located in the Dam Mon ocean area of Van Phong bay (Figure 48).
68
Figure 48 Final proposed site outline
Source) Japan Marine Science
The water depth, level of tranquility as well as the safety of large tanker (Aframax) navigation for both
areas have been assessed and are displayed in Table 24.
As far as the comparisons in this table are concerned, it is thought that there is no vast difference of
merit between the final two candidate sites ① and ②. However, it is necessary to comprehensively
assess geological features, the degree of difficulty of onshore facility establishment, construction costs
and expandability at the time of final site selection.
Furthermore, both sites is able to adequate distance from the passage for vessels which will be
assigned to new berths planned and developed by Khanh Hoa Local Government and VINELINES in
the future. It is therefore considered that there are no influences to the safe navigation for any vessels
including large size container vessels.
69
Table 24 Final candidate site evaluation results
Guarantee of adequate water
Influence of external forces
Safety of super tanker
depth
(wind / rough seas)
navigation
①
Candidate site
Short distance to island;
possible to guarantee
adequate depth of water.
②
Candidate site
Short distance to island;
possible to guarantee
adequate depth of water.
Against prevailing and strong
NE wind; Hon Gom peninsula
and Hon Ong island act as
shelter; the influence of wind
and rough seas is small.
The site being located near
navigation passage (Lach cua
Be), there are therefore few
obstacles to navigation.
Against prevailing and strong
NE wind the island acts as
shelter; the influence of wind
and rough sea is small.
Although the site is somewhat
far from the mouth of the
passage (Lach Cua Be), a
large tanker can be operated
safely without any influences
from other vessels which will
call the port according to
future port development.
Source) Japan Marine Science
6 ) Earthquakes and Tsunami in Viet Nam
Since the Great East Japan Earthquake on the 11th of March, 2011, there has been an increase in
anxiety across the world with regards to earthquakes and tsunami.
With regards to earthquakes and tsunami in Viet Nam, the Natural Disaster / Emergency Coordination
Group of the UN have produced a report as of 29 March, 2011.
Although within the country it is said that the likelihood of earthquakes in Viet Nam is smaller than
that of neighboring countries, there is the potential for a relatively high (maximum of magnitude 7)
earthquake in the northern regions of the country. In practical terms, from 1900 to 1995, there were 2
magnitude 5.6 to 6.0 earthquakes with seismic intensity of level 7; 13 magnitude 5.1 to 5.5
earthquakes with seismic intensity of level 7; and over 100 occurrences of magnitude 4.6 to 5.0
earthquakes with seismic intensity of level 6 to 7. Among them, in November 1935 and June 1983, the
largest recorded earthquakes occurred in the northern Dien Bien area, at magnitude 6.7 to 6.8.
Although there is no record of significant damage due to tsunami in Viet Nam in the report, there is
concern of the potential damage from tsunami in the central coastal region of the country. Particularly,
on the opposite shore, in the western region of the Philippines, it is anticipated that there will be an
earthquake with a magnitude of beyond level 8 off the coast of Manila. In the event of such an
earthquake, it is a concern that within 2 to 3 hours the areas of Quang Tri and Ninh Thuan could sustain
heavy damage as the result of a large tsunami. According to the prediction in the report, it is estimated
that in the event of a magnitude 8 or above earthquake occurring off the coast of Manila, the resultant
tsunami would reach Viet Nam in around 2 hours (Figure 49). The height of tsunami is estimated to
reach about 1.0 meters in the event of a magnitude 8 and to reach 1.5 to 2.0 meters in the event of
magnitude 8.4.
70
However, as for the centrally located Dam Mon ocean area, the entrance to the approach (Lach Cua
Be) facing the open sea is narrow at 2,000 m in width, and the rear of the approach is widely spread. As
tsunami tend to get larger in line with narrow stretches of water with shallow depth4, at terrain such as
the entrance to approach, the volume of water influx would be restricted, and the water entering at the
rear would be widely spread out, it is therefore predicted that the damage would be lower than that of
other inside the bay.
For the two candidate locations in this investigation, as the rear of the approach is located within the
bay, it is believed that the damage as the result of tsunami would be limited (Figure 49).
However, it is necessary to investigate this matter in further detail.
4
The height of a tsunami is inversely proportional to the fourth root of the water depth and the square root of the water
area’s width
71
Figure 49 Arrival time of the tsunami of a magnitude 8 earthquake off the coast of Manila
Source) Programme Coordination Group on Natural Disasters and Emergencies (The United Nations in Viet Nam)
72
( 5 ) Issues and Solutions for Adoption of Proposed Technologies and Systems
The issues for building of the offshore oil storage system are as follows.
1 ) Determination of Installation Site of Oil Stockpiling Bases
As already mentioned, for installation of the mega floating oil storage system, it is required to satisfy
the oceanographic phenomena conditions with water depth of 20 m or more and calm climate
throughout the year, and the design conditions are that the wave height shall be 1 m or less even in
rainstorm of recurrence interval of 100 years. Accordingly, this report recommends Van Phong Bay as
installation candidate, however, to make decision, it is necessary to survey the maritime meteorology
data that have been actually measured for a long period, and confirm that this bay is suitable for
installation of the mega floating oil storage. Also, it is necessary to obtain the data such as wind
velocity, wind direction, etc. as design data, and arrange those data as design conditions of the mooring
equipment of the mega floating oil storage.
2 ) Survey of Soil Property, Bedrock, etc. of Installation Site
During design of the mega floating oil storage system, the survey is required for the sea bed soil
property that is basic conditions of the offshore civil engineering works and its deposition status, the
necessity of foundation improvement, the type of bedrock that becomes foundation, etc. Also, in order
to establish the construction work period and construction work method, the condition setting is
required for the frequency of occurrence of strong wind if strong wind blows in the installation sea
area, the tidal current and the wave height.
3 ) Building/Construction Technique, and Ensuring of Necessary Materials and Equipment
For planning of the construction work plan, it is necessary to study the building method of mega
floating oil storage, the construction technique of the offshore civil engineering works in the oil
storage system and the construction of the onshore base, including the procurement of the work
equipment and materials required for these works.
As for mega floating oil storage, the prerequisites are that those facilities are built in the shipyard in
Vietnam. Since those facilities are super-large construction products, it is required to review and
decide the work process and construction technique, taking into consideration the equipment and
capabilities of the shipyard.
For the offshore civil engineering works of the mega floating oil storage system, it is necessary that the
caissons required for bank protection work and oil protection wall can be produced in the vicinity of
the planned site. Also, for the construction works, it is necessary to procure the large floating dock and
crane barge, the salvage barge for filling the riprap, the work platform for piling the steel pipes, the
concrete mixer barge, etc. For this reason, the prior survey is required for the procurement sources of
these equipment and materials and the periods required for procurement.
4 ) Coordination of Work Schedules
For construction of the mega floating oil storage system, the building of the mega floating oil storage
and the offshore civil engineering works of the oil storage system are simultaneously executed in
parallel. Accordingly, it is necessary to coordinate the work schedules of the respective works to
eliminate the wasting period of work and effectively facilitate the construction. For coordination of the
73
work schedules, it is necessary to take into consideration the periods of purchase and procurement of
primary materials, the work period including the preparation works, the period of device adjustment to
be individually executed in the mega floating oil storage and the stockpiling bases, etc. Also, during
the construction, it is necessary to pay sufficient attention to the progress status of the respective works
and to the adjustment of the interfaces.
5 ) Study of Towing of Mega floating oil storage to Storage System
Towing from the shipyard to the installation site is towing of a large structure. Therefore, it is
necessary to perform careful prior study by utilizing the model test, and to calculate an appropriate
towing horsepower, confirm the path stability, and plan an exact sailing schedule by taking into
consideration the feasibility of the towing arrangement. After that, it is desirable to plan the towing
plan and receive the evaluation by the external committee consisting of towing experts and persons of
learning and experience. Also, it is important to establish the ocean wave conditions as standards for
towing which are allowable during towing based on the structural design conditions of the mega
floating oil storage.
The towing work should be executed after receiving the confirmation of the towing method by the
specialized institutions and coordination with the agency responsible for the safety of the marine
traffic. Furthermore, the status of meteorological phenomena and oceanographic phenomena in the
towing sea area must be confirmed and carefully considered including its future forecast.
6 ) Installation Work in Oil Stockpiling Bases
The mega floating oil storage arriving at the installation location needs to be brought in the specified
site rapidly and be moored. In order to install them with high accuracy in extremely narrow water areas,
it is necessary to prepare in advance the required materials and equipment, and to appropriately
allocate the hardware required for bringing-in.
As for the first mega floating oil storage installed at first, the demonstration observation of the
mooring system with no load shall be executed. After confirmation of the safety of the mooring system,
the piping and cable connection with various types of equipment of onshore facilities are carried out
and the total adjustment operation is executed. After confirmation of the qualities and functions of the
total system, the oil-in is carried out and the operation is started.
7 ) Operation and Maintenance Management
For operation management of the mega floating oil storage system, it is necessary to execute the
operation management and facility management by establishing an appropriate maintenance
management organization and using extreme care from the long-term viewpoint, in order to
sufficiently understand the characteristics and respective functions of the mega floating oil storage,
and to maintain the integrity of the facility, ensure the safety, and preserve the surrounding
environment.
As for persons in charge of actual operation, it is important to clarify their role and continuously give
education and training required to implement their job.
After commencement of the operation, it is necessary that the storage equipment is periodically
74
inspected at the interval stipulated by the relevant laws and ordinances and regulations and repaired
appropriately as needed, to ensure the quality maintenance management and safe operation for a long
period. In case the periodic inspection is carried out as offshore inspection in the anchorage, the
offshore inspection program needs to be established in advance. Also, it is necessary to carry out
temporary transshipment of the loaded crude oil in the periodical inspection, and for this purpose, the
procedure to handle the crude oil must be established.
75
Chapter 4
Evaluation of Environmental and Social
Impacts
76
77
Before the implementation of the field surveys, the two areas of Van Phong and Phu Quoc were
envisaged to be candidate sites. However, with regards to environmental and social concerns, the field
surveys have identified the Van Phong area as having the higher level of feasibility.
Section 1 : Analysis of current environmental and social
conditions
( 1 ) Analysis of the Present Conditions
1 ) Location
Van Phong is located between Van Ninh and Ninh Hoa in the easternmost Khanh Hoa province of Viet
Nam, and was historically called Port Dayot by the French. Located 14 kilometers from international
waters, Van Phong bay is relatively close to an area where several maritime routes converge. With a
total area of 41,000 hectares, and water depth of 20 to 30 meters, Van Phong bay is a natural harbor
with relatively low winds. Because of this, the government of Viet Nam are currently planning an
international cargo container port in this area of ocean, as well as a comprehensive economic
development plan for the wider area. Van Phong bay is also half-enclosed by Hon Gom island; and as
there are many small islands and peninsulas in the area which are home to an abundance of nature, the
area is also attractive as a sightseeing destination.
As stated in the previous Chapter 3, the candidate site of this project is assumed to be situated in Dam
Mon area, the eastern part of Van Phong Bay. According to the “Plan for the Economic Zone of Van
Phong Bay to the Year 2020”, the construction of an international container transit port is under
contemplation. However, due to the change of the original plan, re-design becomes necessary with
regard to the facilities and equipment of the envisioned port and the construction work is now under
suspension.
Figure 50 Arial view of Van Phong
Source) website:Vietnam-Beauty.com, article:”Van Phong Bay, impressive and Unforgettable”
http://www.vietnam-beauty.com/top-destinations/destination-in-the-south/24-destination-in-the-south/182-van-phongbay-impressive-and-unforgettable.html
78
2 ) Natural Environment
i ) Weather / Climate
As the weather data of Van Phong is not available to the public, the data of the neighboring Nha Trang
area was consulted and is outlined below. According to the data, the prevailing wind direction is to the
northeast, and the average wind speed is 8 knots. The average temperature is 28 degrees centigrade,
and in the summer, the temperature does not exceed 30 degrees. It is thought that it has a relatively
comfortable climate.
Table 25 Nha Trang (neighboring Van Phong) weather data
Jan
Feb
Mar Apr May
11
10
9
7
25
26
27
29
Jun
Jul
Aug
Sep
Oct
Nov
Dec
SUM
7
6
6
6
6
8
10
11
8
30
30
30
30
30
28
27
26
28
Prevailing wind
direction
Average wind
speed
(Knots)
Average
temperature(°C)
Source) http://www.windfinder.com/
ii ) Wildlife
a. IUCN Red List
In recent years, the growth of Viet Nam’s economy has also been accompanied by a decrease in the
habitats of precious wildlife, and in increase in the number of endangered species in the country. The
endangered plant and animal species of the world are published in the Red Data Book (RDB) of the
International Union for the Conservation of Nature and Natural Resources. In Viet Nam, there are a
total of 264 species described as ‘endangered’ as outlined below.
Table 26 IUCN Red Data Book number of listed species by category
Critically
Endangered
(CR)
Animal
・ Mammal
・ Bird
・ Reptile
・ Amphibian
・ Invertebrate
Plant
・ Flowering
・ Monocot
・ Conifer
Total
49
12
11
11
4
11
43
28
10
5
92
Endangered
(EN)
Category
Vulnerable
(VU)
Conservation
Dependent
(LR/cd)
114
190
29
31
18
26
21
20
29
50
17
63
195
220
111
154
69
34
15
32
309
310
Source) 2007 IUCN Red List
79
7
Lower Risk
Near
Threatened
(LR/nt)
Least
Concern
(LR/lc)
0
6
12
7
5
1
3
0
6
3
11
6
12
6
b. Viet Nam Edition Red List
The abovementioned red list is a collection of red data specific to Viet Nam. The Viet Nam edition
does not come with a set of legal measures, however it does contain the following points for the
preservation of woodland and biodiversity
z
z
z
z
z
z
z
z
Basic information for nature and biodiversity conservation policy making
Order of priority for conservation activities
Information on the management of trade and importation of endangered species
Basic information for the preparation of national protected areas
Training for the staff of protected areas
Funding from donors
Services related to PR of national protected areas
There is a total of 721 species (365 animal and 356 plant) in the Viet Nam Red Data Book
(RDB)
Table 27 IUCN Red Data Book number of listed species by category
Endangered
(E)
Vulnerable
(V)
Category
Threatened
(T)
Rare (R)
Insufficiently
known (K)
Animal
68
96
87
108
6
Vertebrate
・ Mammal
30
23
1
24
0
・ Bird
14
6
32
31
0
・ Reptile/amphibian
8
19
16
11
0
・ Fish (fresh water)
4
18
5
11
0
・ Fish (sea water)
2
6
24
2
3
Invertebrate
10
24
9
29
3
Plant
24
61
157
83
31
Non-vascular
0
7
7
2
3
Vascular
24
54
150
81
28
・ non-seed plants
0
0
1
2
2
・ Gymnosperms
4
6
13
2
2
・ Angiosperm
Monocot
2
4
51
15
2
Dicotyledonous
18
44
85
62
22
Source) Red Data Book of Viet Nam Volume 1. Plants (1992) & Volume 2. Animals (1994))
Total
365
78
83
54
38
37
75
356
19
337
5
27
74
231
iii ) Social Conditions
a. Population Composition
The population of Khanh Hoa Province was 519,000 people as of 2010, registering an increase of
about 100,000 people in the previous 5 years.
80
Figure 51 Khanh Hoa province population change
thousand people
600
500
400
300
200
100
0
Population
2005
2007
2008
2009
2010
427.9
444
452.5
461
519.6
Source) Viet Nam Statistical Yearbook (2010 edition)
Furthermore, according to the “Plan for the Economic Zone of Van Phong Bay to the Year 2020”, the
population of the economic zone is expected to reach around 400,000, out of which, 69%, or 275,000
people will be living in the urban area.
b. Economic Conditions
In recent years, the economic growth of the Khanh Hoa province has been significant, with a growth
rate of over 9% since 2006, which reached 11% in 2010. GDP per capita also increased from USD 857
in 2006 to USD 1,480 in 2010. In terms of industrial structure, the there was a marked decrease in the
percentage of primary industries from 18.4% to 13.6%, as the proportion of secondary and tertiary
industries steadily increased.
Table 28 Khanh Hoa province economic conditions
2006
2007
2008
Khanh Hoa Province GDP
8.149
9.046
10.071
(billion dong)
GDP growth rate on previous year
9.7
11.0
11.3
(%)
GDP per capita (million dong)
13.7
16.3
20.3
GDP per capita (USD)
857
1,015
1,150
GDP industrial structure (%)
Primary industries
18.4
17.5
16.7
Secondary industries
41.5
41.6
41.6
Tertiary industries
40.1
40.9
41.7
Source) Khanh Hoa Province People’s Committee
81
2009
2010
11.099
12.318
10.2
11.0
24.2
1,330
29.0
1,480
15.1
41.4
43.5
13.6
42.2
44.2
( 2 ) Analysis of the Present Condition
According to the Ministry of Natural Resources, The central government has frequently adjusted the
objectives of the Van Phong bay development program. Namely, the area was designated as a national
protected area, and then a sightseeing area with the development of an international container relay
terminal. On the whole, the area is gradually changing from one of environmental protection to that of
industrial development.
In addition to the container terminal, plans for sightseeing and fishery projects are also advancing.
Therefore, at the time of project implementation, it is necessary to consider its conformity with other
existing projects and plans. In this regard, it is considered essential to have close collaboration with the
Van Phong Economic Zone Management Board and the Kanh Hoa Province People's Committee.
( 3 ) Future Prediction (in the absence of project implementation)
The future perspective of Economic Zone of Van Phong Bay is envisioned as follows in the “Plan for
the Economic Zone of Van Phong Bay to the Year 2020”.
1 ) Formation of Six Functional Areas
In the future, the Economic Zone of Van Phong Bay will be composed of six functional areas, i.e. the
port area, tourist resort area, commercial-financial center area, habitation urban area, industrial area
and aqua-product cultivation area.
The location and schedule of construction of respective areas are reflected in the following table:
Table 29 The Formation and overview of he Economic Zone of Van Phong Bay
Functional Area
Overview
Port Area
Tourist and Resort
Ara
Commercial-financial
Center Area
Habitation Urban
Area
z
・
North of Van Phong Bay
International container transit port: Located at the eastern bank of Dam Mon Pool;
potential planning area to be 750ha and the area by 2020 to be 120ha.
・ Port tourism area: Functioning as a service area for international container transit port at
Hon Gom Peninsul, with an area of 150ha.
z
South of Van Phong Bay
・ Oil transit port: Located at My Giang Island, with an area o of 70-80ha, of which, the oil
port and shipbuilding factory is about 50ha.
・ Hon Khoi port: Located at the northwestern of Doc Let Beach (50km to the north of
Nha Trang) , with an area of 4-5ha including the general port of Khanh Hoa and the
tourist ship port.
z
Tourist resorts of North Van Phong Urban Area
・ Tuan Le-Hon Ngang Resort : about 350ha
・ Bai Tham Resort : about 210ha
・ Hon Gom Peninsula Resort: about 200ha
・ Dai LanhResort : about 40ha
z
Tourist resorts of South Van Phong Urban Area
・ Ca Ong mountain, Hon Doi Island, Khai Luong mountain
・ Khai Luong fishing village, Hon Cho, Hon Kho, Cot Buom, Genh Rong promontory
・ Ninh Dao fishing village of Hon Lon, etc.
A multi-functional center located at the center of Hon Gom Peninsula, specialized in
services-commerce-finance-banking-, with an area of about 400ha.
z
North Van Phong Urban Area (about 2,150ha)
・ Tu Bong, Dam Mon and Dai Lanh new urban : about 1,650ha。
・ Van Gia township: about 500ha。
z
South Van Phong Urban Area (about 1,600ha)
・ Ninh Hoatownship: about 500ha。
・ Ninh Thuy-Ninh Phuoc-Doc Let new urban: about 1,100ha。
82
Industrial Area
Aqua-product
Cultivation Area
z
・
Van Thang Industrial Area (about 200ha)
A multi-field industrial area, less polluted, exploiting advantages of sea-port services and
tourism
z
Ninh Thuy Industrial Area (about 500ha)
・ A multi-field industrial area
Cultivation of aqua-products such as lobsters, fish-cage, pearls, swallow-nests, corals at Ben
Goi Pool, the bank and water surface of the western bank of Van Phong Bay
Source)“Plan for the Economic Zone of Van Phong Bay to the Year 2020”
2 ) Perspective of Resources and Environment in 2020
The perspective of resources and environment of Van Phong Economic Zone in 2020 can be seen from
the five sectors including drainage, water supply, power supply, waste treatment, and hygiene
environment.
The perspective of respective sectors is summarized in the following table:
Table 30 Perspective of resources and environment of Van Phong Economic Zone in 2020
Sector
Perspective
Drainage
z
z
z
Waste water shall not be allowed to be released to the swimming beach.
Waste water shall have to be fully treated before released to the sea at defined places.
Rain water shall be concentrated to defined water inlet whereby to be released to the
rivers, streams, canals and ditches leading to the sea, and different drainage system will
be used to separate rain water and living waste water.
Water Supply
z
Demand for Water
・ Urban Area : about 32,000m3/d in 2010, and 100,000 m3/d in 2020.
・ Rural Area : about 9,000 m3/d in 2010, and 10,000 m3/d in 2020.
z
Water Resources
・ Hoa Son Lake and Dong Dien Nam Lake will be water resource for:
Van Gia Township, Van Thang Industrial Area, Tu Bong and Hon Gom New Urban.
・ Tien Du Lake and Da Ban Lake will be water resource for:
Ninh Thuy- Ninh Phuoc New Urban and Ninh HoaTownship.
Power Supply
z
Power Transmission
・ The first Step: Constructing a double-circuit line for available 110kV line from Nha
Trang to Tuy Hoa.
・ By 2020: Constructing a 220kV substation in Ninh Hoa District.
z
Power Distribution
・ For urban and tourist resorts: Underground cables to be applied.
・ For Suburb: Above-ground cables to be applied.
Waste Treatment
Solid wastes treatment facilities will be built at the Hoa Son mountainous area and Ninh Son
Village of Ninh HoaDistrict.
Hygiene
z
Constructing separating belt to protect the environment of Hoa Son Lake, Tien Du and
Environment
underground water exploitation area in Hon Gom Island.
z
Vessels, boat traveling in Van Phong Bay are required to be equipped with device for
waste collecting and treating, and untreated wastes will not be allowed to be released to
the bay.
z
The ports are required to be equipped with devices for the prevention of oil spilling and
be well prepared for rescue in accidents of this kind.
z
Special organization for wastes collecting on the sea and environmental watching
stations are to be set up.
Source) “Plan for the Economic Zone of Van Phong Bay to the Year 2020”
83
Section 2 : Environmental and Social Advantages of Project
Implementation
Environmental and social advantages of project implementation are based on comparison with other
oil reserve systems. The Mega-Floating oil reserve system of this project has less influence on the
surrounding environment when compared with an inland oil reserve, or above ground tanks and
underground bedrock reserves. Based on comparisons with these methods, the advantages of this
project will be identified.
( 1 ) Comparison of Effects on Environment
In the case of the above ground tank reserve, as it requires the creation of around 50 hectares of
large-scale construction work, it is assumed that the influence of the above ground tank method on the
surrounding environment would be large. In particular, the large amount of waste created, the high
level of noise, and effects on geographical features are expected to be significant.
In the case of the underground bedrock reserve, the aboveground usage area would be around 5
hectares, and the underground area 15 hectares. The aboveground construction area would not be as
large as the aboveground tank method, and therefore the above ground influence would not be as
significant. However, with the water abstraction accompanying underground construction, there will
be effects on the environment underground. In addition, with regards to the possibility of land
subsidence, it is difficult to predict in advance and site selection is also problematic.
Compared with the above two methods, the Mega-Floating reserve area would occupy 12 hectares of
ocean, and 3 hectares inland, where large scale construction work is not necessary and thusly the
influence on the surrounding area is small. Additionally, as water extraction is not necessary, there is
no concern with regards to land subsidence such as with the underground bedrock reserve method.
With regards to concerns of the effect of the Mega-Floating system on the ocean, with the use of an oil
separator, the drainage to the ocean is lower than 5ppm, and is able to satisfy Viet Nam’s oil drainage
limitation standards.
Therefore, for the establishment on an oil reserve base, it is thought that the Mega-Floating system is
the more advantageous with respect to the surrounding environment when compared with other two
methods.
( 2 ) Comparison of Effects on Society
As for the effects on society accompanying oil reserves, the involuntary resettlement of local
inhabitants is thought to be the largest issue. In the case of the above ground reserve tank, it is
necessary to acquire a large amount of flat, wide land connected to the tanker’s mooring. Generally,
the utility value of such land is high, and is being used by local inhabitants, resulting in the high
possibility of their involuntary resettlement becoming necessary.
In the case of the underground bedrock reserve, as the reserve is located underground, the extent of
land expropriation is comparatively small. However, it is vital to assess the potential effects of issues
such as land subsidence on the neighboring population.
As the area of onshore land required for the Mega-Floating system is small, the necessity of land
84
expropriation is comparatively low. Therefore, for the establishment of an oil reserve base, it is
thought that the Mega-Floating system is the more advantageous with respect to the surrounding
environment when compared with the other two methods.
85
Section 3 : Social and Environmental Effects of Project
Implementation
( 1 ) Social and Environmental Items to Consider
On selecting Van Phong as the project site, the JICA Environmental and Social Consideration
Checklist was used as a basis for confirming a wide range of items. The results are displayed below.
Table 31 Environmental checklist items to consider
Category
Licensing /
explanation
Item
EIA and
Environmental
license
Explanation to the
area’s residents
Main items to be checked
Confirmation
a. Has Environmental Impact
Assessment Report (EIA Report) etc.
been finished?
b. Has approval of EIA Report etc.
from host country government been
received?
c. Is the EIA Report approval
unconditional? In the case that there are
conditions, can they be satisfied?
d. In addition to the above, in the case
that it is necessary, has perdition been
given by the area’s local government
authority?
a. Are project contents and effects open
to the public? And are they
understandable?
Implemented at project materialization.
Implemented at project materialization.
b. Have local people’s comments been
reflected in project content?
Consideration of
alternative plans
Pollution
countermeasures
Air quality
Water quality
a. Have several alternative plans
(including those that effect social and
environmental concerns) been
considered?
Do emissions of soot, sulphur oxide
(SOx), nitrogen oxide (NOx) of ships,
vehicles and ancillary facilities
conform to the host country’s effluent /
environmental standards? Are their any
countermeasures available with regards
to air quality?
a. Does the drainage of related facilities
conform to the host country’s effluent /
environmental standard?
b. Does the drainage of ships and
ancillary equipment (docks etc.)
conform to the host county’s effluent /
environmental standard?
c. Are their countermeasures to avoid
the spill or discharge of oil or toxic
materials to the surrounding waters?
86
On identifying Van Phong as the most
desirable candidate site, using Phu
Quoc as an alternative candidate
The Mega-Floating system itself does
not cause any damage to the air quality.
However, it is possible that there could
be emissions from ships transporting
crude oil, and it is important that these
satisfy Viet Nam’s effluent standard.
It is necessary that the general drainage
of related facilities conform to Viet
Nam’s effluent / environmental
standards.
As the Mega-Float is equipped with a
drainage system, it meets
environmental standards. The drainage
of vessels carrying crude oil must
comply with Viet Nam effluent /
environmental standards.
The four tangible countermeasures are
outlined below
・ General drainage: sterilized from the
septic tank, flushed through the
guard basin and into the sea
・ Oil impregnation water drainage: Oil
and water is separated via Oil
separator, and the water is flushed
through the guard basin and into the
sea
Category
Item
Waste
Noise / vibrations
Land subsidence
Odor
Sea bed
Natural
Environment
Protected areas
Ecological areas
Main items to be checked
d. Are there changes to the waterline,
such as the creation of new water, and
decrease in water (where poor quality
water is circulated), or
temperature-induced changes in water
quality?
e. In the case of carrying out land
reclamation, are there any
countermeasures to prevent pollution
to streams, ocean or underground
waters?
a. Is the waste matter of ships and
related facilities being processed and
disposed of in line with the host
country’s regulations?
b. Are the effects of dredging on the
surrounding area being minimized in
line with the host country’s standards?
c. Are there countermeasure in place to
prevent the spillage to toxic substances
into the surrounding waters?
Do the levels of noise / vibrations
conform to the host country’s
standards?
Is there a fear of land subsidence from
the pumping of large amounts of
groundwater?
Is there a source of odor? Are there any
countermeasures against the odor?
Are there any countermeasures against
contaminating the sea bed with the
emissions of toxic substances?
Is the site of the project in a national/
international protected area? Will the
project affect a protected area?
a. Does the site include any virgin
forest or ecologically important
habitats (coral reef, mangrove,
wetland, tide land etc.)?
b. Does the site include any habitats of
species protected by national law or
international treaty?
c. In the case that there are concerns
over large influence on ecosystem? Are
there any countermeasures to limits
these effects?
87
Confirmation
・ Oil Spills: there is a basic three layer
structure (watertight tank, 1 oil proof
container, 2 oil proof container) and
the chances of oil spilling are low. In
the unlikely event that spillage
occurs, due to the oil recovery
vessels on standby and the
establishment of an oil fence,
recovery is possible.
・ Waste / emissions at the time of
construction are appropriately dealt
with
・ Gas etc: produced gas etc. is treated
safely and released into the
atmosphere.
It is thought that a certain degree of
effect will be incurred, however this
will be confirmed in the next phase of
the investigation.
There is a possibility that ground
reclamation will become necessary.
Concrete measures will be devised in
the next phase.
Waste matter of the Mega-Float as well
as vessels carrying crude oil is disposed
of in line with the host country’s
regulations.
In the case the dredging takes place,
pollution is dealt with in line with Viet
Nam’s standards.
The release of toxic substances into
surrounding area is strictly prohibited.
Steps are taken to ensure that the levels
of noise / vibrations are compliant with
Viet Nam’s standards.
It is not expected that these kinds of
activities will take place.
This will be confirmed in the next phase
of the investigation.
The release of toxic substance from the
Mega-Float as well as ships into
surrounding area is strictly controlled.
The site is not located in a protected
area of Viet Nam or International
treaties.
These kinds of areas are avoided as a
part of the site selection process.
Not included
In the case that these kinds of effects
are confirmed, countermeasures will be
considered.
Category
Item
Oceanographic
phenomena
Terrain /
geological
features
Resettlement
Social
conditions
Livelihoods
Main items to be checked
Confirmation
d. Is there concern about adverse
effects on aquatic life? In the case that
there are, are there countermeasures?
This will be confirmed in the next phase
of the investigation. In the case that
there are adverse effects,
countermeasures will be considered.
e. Are there concerns over the adverse
effects on coastal wildlife / vegetation?
In the case that there are, are there
countermeasures?
Will there be changes to the drainage
system due to the establishment of
harbor facilities? Will this have an
adverse effect on the currents/ waves/
tides?
Will there be any significant changes to
the terrain / geological features of the
area due to the establishment of harbor
facilities?
a. Will there be any involuntary
resettlement accompanying project
implementation? In the case that there
is, what can be done to minimize the
effects of resettlement?
b. What explanation is offered to
moving residents regarding
compensation / livelihood rebuilding?
c. Is there a plan in place for the
compensation of reacquisition costs,
and recovery of livelihoods after
resettlement?
d. Is compensation paid before
resettlement?
e. Is the compensation plan settled in
writing?
f. Does the plan consider the needs of
women, children, elderly,
impoverished, ethnic minorities/
indigenous peoples among the
resettling residents
g. Has an agreement been reached with
the residents before resettlement?
h. Have appropriate arrangements been
made for the resettlement of residents?
Is there sufficient implementation
capacity and budgetary provisions for
these measures?
i. Are there plans for the monitoring of
resettlement?
j. Is there a system in place for the
dealing with complaints?
a. Are there any adverse effects on
residents as a result of the project?
As above.
b. Will there be any adverse effects on
the livelihoods of residents as a result
of changes to the surrounding waters
(including fishing and recreation)?
c. Will the harbor facilities have any
adverse effect on local residents’
existing water transport routs or the
88
As above.
As above.
As this project is focused on the
Mega-Float at sea, and the required
amount of onshore land is small, there
is no need for the resettlement of
residents.
This will be confirmed in the next phase
of the investigation. In the case that
there are adverse effects,
countermeasures will be considered.
As above.
As above.
Category
Item
Main items to be checked
Confirmation
road traffic of the surrounding area?
Cultural heritage
Scenery
Ethnic minorities /
indigenes
Labor conditions
Others
d. Is there a danger of the spreading of
an illness (including infectious diseases
such as HIV) as a result of population
influx from other areas? Is there
sufficient sanitation?
Is there a risk of damage to any
archeological, historical, cultural or
religious heritage or historical
landmarks etc. as a result of the
project? Are measures determined by
law being considered?
Is there any particular scenery that
ought to be considered? And will there
be any adverse effect on it? If there is,
are countermeasures available?
a. Are measures to minimize the effect
on ethnic minorities / indigenes being
considered?
b. Are the rights of ethnic minorities /
indigenes with regards to land and
natural resources being respected?
a. Concerning this project, are the laws
of the host country on labor conditions
being observed?
There is no possibility of such
consequences of the implementation of
this project.
b. Are tangible safety considerations in
place for individuals involved in the
project, such as the installation of
safety equipment which prevents
industrial accidents, and management
of hazardous materials?
c. Are intangible measures being
planned and implemented for
individuals involved in the project,
such as the establishment of a safety
and health program, and safety training
(including traffic safety and public
health) for workers etc.?
d. Are appropriate measures taken to
ensure that security guards involved in
the project not to violate safety of other
individuals involved, or local
residents?
Measures to ensure the safety of those
involved with the project are taken.
Effects of
construction work
a. Is there a plan to mitigate the adverse
effects of construction (noise,
vibrations, muddy water, soot, exhaust
gas etc.)?
b. Will there be any adverse effects on
the natural environment (ecosystem)?
Is there a plan in place to mitigate these
effects?
c. Will there be any adverse effects on
the social environment? Is there a plan
in place to mitigate these effects?
Monitoring
a. Are the items deemed to have the
effects outlined above being
monitored?
89
No possibility.
This will be confirmed in the next phase
of the investigation. In the case that
there are adverse effects,
countermeasures will be considered.
As above.
Labor conditions must conform to Viet
Nam’s labor laws.
Measures such as safety training for
workers are taken.
As the measure for ensuring that
security guards do not violate the safety
of other individuals involved or
residents, this principle will be
stipulated in the document of
employment contracts.
It is possible that there will be some
pollution as a result of construction,
however countermeasures are to be
carried out in line with Viet Nam’s laws
and regulations.
Monitoring and countermeasures are
set in line with EIA regulations.
Category
Notes
Item
Main items to be checked
Cautions of using
environmental
checklist
b. Are the items, methods frequencies
etc. of the plan appropriate?
c. Has the monitoring of business
entities (structure, personnel,
equipment, budget and continuance)
been established?
d. Are the manner and frequency of
business entities’ reports to local
governments being regulated?
a. It is necessary to consider the effects
of land reclamation and harbor
excavation (reduced water levels,
chloride), and land subsidence due to
usage of groundwater, and consider the
necessary measures based on them.
b. Where necessary, the effects of
trans-boarder or global scale
environmental problems must be
confirmed
( when considered to be
waste boarder transgression, acid rain,
ozone layer destruction, contributors to
global warming etc.).
Confirmation
Items, methods, frequencies,
implementation structures, reports to
local governments etc. follow EIA
regulations.
The likelihoods of these are extremely
low, however, this will be confirmed in
the next phase of the investigation, and
appropriate measures will be devised.
It is predicted that there will be no
significant impact.
( 2 ) Comparison of Proposed Project and Alternative Options
In this section, comparisons between this project and alternative options with low environmental
impact will be addressed. The comparisons will be that of the social and environmental effects of the
Mega-Floating system with those of alternative oil reserve methods, in terms of the proposed location
of the Mega-Floating system.
With regards to crude oil reserves, as outlined above in Section 2, with respect to social and
environmental concerns and compared with the aboveground tank method, as well as that of the
underground bedrock reserve, the Mega-Floating system has the following characteristics.
90
Table 32 Comparison of Mega-Floating system with aboveground tank and underground bedrock
reserve methods
Aspect
Mega-float
Aboveground tank
Underground bedrock
Environmental
・ Able to take
・ Able to take countermeasures
・ Able to take
countermeasures against vapor
against vapor
countermeasures against
・ Able to take
・ Able to take countermeasures
vapor
countermeasures against oil
against oil spills
・ Able to take
spills
・ As the amount of required
countermeasures against oil
inland construction is large,
spills
inland construction is
there will be emissions of
・ Area of required inland
small, the emissions of
noise, waste and changes to
construction is medium in
noise and waste, changes
surrounding terrain and
size, however there is a
to surrounding terrain
geological features.
concern of land
・ As the scale of required
and geological features
subsidence from the
are minimal, and there is
pumping of groundwater.
no concern of land
subsidence from the
pumping of groundwater.
Social
・ Area of necessary land
・ Area of necessary land
・ Area of necessary land
acquisition is small; able
acquisition is large;
acquisition is small; able to
to avoid resettlement of
possibility of resettlement of
avoid resettlement of
residents.
residents is high.
residents.
Both Van Phong and Phu Quoc were envisaged as candidate sights, however, through the field surveys,
the Van Phong area has been identified as having the higher level of feasibility. The two candidate sites
characteristics with regards to environmental and social issues are outlined below.
Phu Quoc island is essentially a target of nature conservation, and as such the central government are
making efforts to restrict the area’s economic activity. Therefore, in the case of selecting Phu Quoc as
the place of construction for this project, it is predicted that approval from the Ministry of
Environment and Natural Resources would not be forthcoming.
On the other hand, Van Phong was also designated as an area for environment protection, however it
was then reclassified as a sightseeing area and was designated as the construction site of an
international container terminal. In other words, the gap between designated area of environmental
protection and that of industrial development is gradually becoming smaller. In this respect, the
feasibility of the Van Phone area is higher than that of Phu Quoc.
It is extremely difficult to establish an option whose effect on both the environment and society is
smaller than that of the Mega-Floating system, and the proposed Van Phong area will entail the least
influence on its surroundings when compared with other sites. For this reason, at this stage, the above
is that with the lowest impact on the surrounding environment and society, and it is difficult to adjust
this option. On the other hand, with regards to the construction methods of the Mega-Floating system,
it is thought that while other methods whose impact on the surrounding environment and society are
lower do exist, this is considered to be the more concrete.
91
( 3 ) Result of Consultation with Local Institution
At the time of the field survey, the following opinions and information from the central government
Ministry of Environment and Natural Resources, the Khanh Hoa Province People’s Committee and
the Kien Giang Province People’s Committee were collected.
Table 33 Outline of information and opinions gained via local institution consultation
Institution
Main information an opinion
Ministry of
・ It is necessary to outline exactly what environmental impact the project will have on the coast
Environment and
Natural Resources
(MONRE)
and waters of Viet Nam.
・ Van Phong was designated as an area of environmental protection, however since then it has
designated as a sightseeing area as well as that of an international container terminal.
・ Phu Quoc island is essentially a target of nature conservation, and as such the central
government are making efforts to restrict the area’s economic activity.
・ Cam Ranh, Dung Quat and Quang Nga in the central region of the country are also part of the
central government’s coastal development plan, and these areas are also recommended.
・ There are unpredictable risks associated with this project and in particular oil spills are
common in Viet Nam, so it is necessary to consider if there are problems.
・ To get a clear picture of the conditions in Viet Nam, it is recommended that collaborative
research be carried out on both the Japanese and Vietnamese sides. Nha Trang Marine
Institute is an institution that would be able to help.
Khanh Hoa People’s
Committee
・ There is a plan for the VINALINE international container terminal close to that of the
proposed Mega-Float. There also plans for sightseeing projects for the area. It is necessary
for guidelines from ministries and local government. In particular, the navigation courses of
the vessels involved with the international container terminal are important.
・ A plan for Van Phong to be carried out until 2030 in relation to sightseeing areas designated
by local government has been submitted, but is not yet being carried out.
・ It is possible that project implementation can go ahead if approval is received from the central
and local governments. However, in the case that a separate project is already under way at
the site, negotiations / compensation etc. will be necessary with the other organization.
Currently, there is a resort project being developed by MINEXCO.
・ There are fisheries in the area and it is therefore a particularly environmentally sensitive
location
・ Khanh Hoa province development office possess space planning documents.
Kien
Province
Committee
Giang
・ The current candidate site is home to a large amount of coral reef and is a protected area.
People’s
Construction is not possible, however there are suitable areas around Nam Du island in the
Kien Hai region of Kien Giang.
・ In the event that the central government approves the project and opts to modify the current
environmental protection plan, the regional government must abide.
・ The local government approves the project, and so that implementation can go ahead, it is
envisaged that many locations will be investigated in order that a suitable location can be
chosen.
92
Section 4 : Outline of Laws of Host Country in Relation to
Environmental and Social Conditions
( 1 ) Outline of Laws in Relation to Environmental and Social Issues of Project Implementation
1 ) Air Pollution
The environmental standards of Viet Nam with respect to air pollution are set out in 1995 TCVN
5937-1995. Additionally, TCVN 5938-1995 set out the maximum permitted emissions of harmful
substances into the atmosphere. The standards for air quality as well as the maximum permitted
emissions of harmful substances are outlined below.
Table 34 Air quality standards
averaging
time
Total Suspended particulate
matter(TSP)
Carbon monoxide (CO)
Nitrogen dioxide (NO2)
Sulfur dioxide (SO2)
Carbon hydride
24h
1h
24h
8h
1h
24h
1h
24h
1h
24h
1h
Vietnamese Standard
(TCVN 5937-1995)
mg/Nm3
ppm
0.2
0.3
5
4
10
8
40
32
0.1
0.049
0.4
0.195
0.3
0.105
0.5
0.176
1.5
5.5
-
Source) Global Environmental Forum (2007) "Environmental Regulations in OECD countries project study report Part
II, trade insurance and environmental issues" survey commissioned by the Ministry of Economy
93
Table 35 Permitted emissions of harmful substances into the atmosphere
(mg/Nm3)
No.
1
2
3
4
5
6
7
8
9
10
11
12
Substance
Acrylonitrile
Ammonia
Aniline
Vanadium (anhydride)
Arsenic (afunction)
Aydrogen arsenide (arsine)
Acetic acid
Hydrogen chloride
Nitric acid
Sulfuric acid
Benzene
Fine particles with silica
Dianas 85-90% silica
Firebrick 50% silica
Cement 10% silica
Dolomite 8% silica
13
Fine particles with asbestos
14
15
16
17
cadmium. (metal and oxide)
Carbon disulfide
Carbon tetrachloride
Chloroform
18
Tetraethyllead
19
Chlorine
20
Benzo-amine
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
Chrome and its compound
1,2-Dichloroethane
DDT
Hydrogen fluoride
Formaldehyde
Hydrogen sulfide
Hydrogen cyanide
manganese and its compound
nickel and its compound
Naphthalene
Phenol
Styrene
Toluene
Trichloroethylene
mercury and its compound
Vinyl chloride
Gasoline
Tetrachloroethylene
Chemical
formula
CH2=CHCN
NH3
C6H5NH2
V2O5
As
AsH3
CH3COOH
HCl
HNO3
H2SO4
C6H6
Cd
CS2
CCl4
CHCl3
Pb(C2H5)4
Cl2
NH2C6H4NH2
Cr
C2H4Cl2
C14H9Cl5
HF
HCHO
H2S
HCN
Mn/MnO2
Ni
C6H5OH
C6H5CH=CH2
C6H5CH3
CICH=CCl2
Hg
ClCH=CH2
C2Cl4
Average of 24
hours
0.2
0.2
0.03
0.002
0.003
0.002
0.06
0.06
0.15
0.1
0.1
0.05
0.1
0.1
0.15
Must not be
detected
0.001
0.005
2
0.02
Must not be
detected
0.03
Must not be
detected
0.0015
1
0.5
0.005
0.012
0.008
0.01
0.01
0.001
4
0.01
0.003
0.6
1
0.0003
1.5
0.1
Maximum value
0.2
0.05
0.05
0.2
0.4
0.3
1.5
0.15
0.3
0.3
0.5
Must not be
detected
0.003
0.03
4
0.1
Must not be
detected
0.0015
3
0.02
0.012
0.008
0.01
0.01
0.003
0.6
1
13
5
Source) Global Environmental Forum (2007) "Environmental Regulations in OECD countries project study report Part
II, trade insurance and environmental issues" survey commissioned by the Ministry of Economy
94
2 ) Water Pollution
With respect to water quality in Viet Nam, the Environmental Protection Law (LEP) and Government
Decree No.175/CP outline various TCVN standards. As for specific regulations of water quality, there
are four standards outlined in the abovementioned two laws. Among them, the Quality of Running
Water Environmental Standard (TCVN 5942-1995), Quality of Coastal Ocean Water Environmental
Standard (TCVN5943- 1995), and the Quality of Groundwater Environmental Standard (TCVN 59441995), are laid out. This is not a basis for the direct drainage of factories, but an indication of desirable
conditions, however with respect to the law regarding running water, the law divides water sources
into categories: after reasonable possessing and irrigation, target water quality for areas designated as
the source of waters for daily use: A (quality of water used for households after reasonable possessing
(class A)), and water from areas other than that of the source of water used by households target
quality: B (other than household water source (class B)). The upper limits of 31 substances are given
as a basis for categorization.
Among the above, Quality of Coastal Ocean Water Environmental Standard (TCVN5943- 1995) is
outlined below.
Table 36 Quality of Coastal Ocean Water Environmental Standard (TCVN5943- 1995)
No.
1
Item
Water temperature
Unit
Bathing beach
Farming area
Others
30
Must not be
2
Odor
offensive
3
Concentration of hydrogen ions (ph)
6.5-8.5
6.5-8.5
6.5-8.5
4
Dissolved oxygen (DO)
mg/L
4
5
4
5
BOD5(20 )
mg/L
<20
<10
<20
6
Suspended solids (SS)
mg/L
25
50
200
7
Arsenic
mg/L
0.05
0.01
0.05
8
Ammoniacal nitrogen
mg/L
0.1
0.1
0.1
9
Cadmium
mg/L
0.005
0.005
0.01
10 Lead
mg/L
0.1
0.05
0.1
11 Hexavalent chrome
mg/L
0.05
0.05
0.05
12 Trivalent chrome
mg/L
0.1
0.1
0.2
13 Chloride
mg/L
0.01
14 Copper
mg/L
0.02
0.01
0.02
15 Fluorine compound
mg/L
1.5
1.5
1.5
16 Zinc
mg/L
0.1
0.01
0.1
17 Manganese
mg/L
0.1
0.1
0.1
18 Iron
mg/L
0.1
0.1
0.3
19 Mercury
mg/L
0.005
0.005
0.01
20 Sulfide
mg/L
0.01
0.01
0.02
21 Cyanogen
mg/L
0.01
0.01
0.01
22 Phenolic compound
mg/L
0.001
0.001
0.002
23 Surfactant agent
mg/L
None
None
0.3
24 Oils and fats
mg/L
2
1
5
25 Total pesticides
mg/L
0.05
0.01
0.05
26 total coliforms;
MPN/100mL
1,000
1,000
1,000
Source) Global Environmental Forum (2007) "Environmental Regulations in OECD countries project study report Part
II, trade insurance and environmental issues" survey commissioned by the Ministry of Economy
3 ) Nature Conservation
i ) Definitions of Protected Area
Protected Areas (PA) in Vietnam are divided into categories of special use forest, protected wetland
areas and protected marine area with respect to their locations and characteristics. The special use
forest areas are mainly in mountainous regions and divided into the subcategories of national parks,
95
nature conservation areas, habitats and areas of protected scenery: nature preservation areas and
habitats are generally referred to as nature conservation areas. This is mainly intended for the
preservation of precious species etc. On the other hand, protected wetland areas are mainly in areas of
open field and coast, and are divided into nature conservation areas and biotype reserves. In Decree
23/2006/ND-CP paragraph 36, (regulations on the trade of rights of forest usage) invalidation clauses
are laid out in 83/2010/ND-CP. There is also the 2009 Decree 25/2009/ND-CP regarding ocean and
island areas.
Figure 52 Diagram of three types of protected areas
Marine Protected Area
Special use Forest
Wetland Reserves
National parks
Ramsar reserves
Marine Protected
Area
Nature Conservation Area
Related National Legislation
National MPA System Plan
Nature reserves
Nature reserves
Species habitat
conservation zones
Species, biotope
reserves
Landscape
protection areas
Revised law of forest protection and
development（No. 29/(2004/QH11)
Provision on implementation of law of
forest protection and development
Decree No. 23/2006/NDCP)
New environment protection law
Government provision on marsh conservation and
persistent development(No. 109/2003/ND-CP)
Notices on implementation of Government
provision on marsh conservation and persistent
development(No. 18/2004/TTBTNMT)
-
Source) JICA ""Profile of Environmental and Social Consideration in Vietnam"", September 2011
96
Table 37 Nature conservation and related laws
Nature reserve classification
Related laws etc.
Protected areas based on domestic laws
・ Special use forest (land reserve)
Forest protection and development law reform
(fourth paragraph) etc.
・ Wetland reserve
New Environmental Protection Law (fourth
chapter), government regulations of wetland
reserves and continuous development
・ Ocean reserve
New Environmental Protection Law (fourth
chapter), government regulations of wetland
reserves and continuous development.
Viet Nam ocean reserve system plan until 2020
(Decision 742/QĐ-TTg)
Coordination and management of environmental
protection and resources of ocean and island area
regulations (Decree 25/2009/ND-CP)
Protected areas based on international
laws and regulations
・ Designated wetlands
・ World heritage sites (natural heritage)
Ramsar Convention
World Heritage Convention
Source) JICA ""Profile of Environmental and Social Consideration in Vietnam"", September 2011
ii ) Basic Laws
The foundations and management provisions of protected areas (special use forest, wetland, and
marine reserves) are classified into those based on municipal law and those which are based on
international treaty. As for municipal law, there are: ①Law on Forest Protection and Development,
No. 29/2004/QH11, April 1 2005, No. 29/2004/QH11, ②Decree on the Implementation of the Law
on Forest Protection and Development, Decree No. 23/2006/ND-CP March 3 2006, Decree No.
23/2006 and ③Law on Environmental Protection, No. 52/2005/QH11, December 2005. With
regards to marine conservation, there is the national and internationally focused Decree
57/2008/ND-CP and the plan for marine conservation in Viet Nam until 2020, Decision 742/QĐ-TTg.
The following laws particularly focusing on protected areas have come into effect since 2007.
z
z
z
Decree 57/2008/ND-CP: Regulations for the management nationally and internationally
important marine protected areas in Viet Nam
Decision 1479/QD-TTg: Plan for a system of system of conservation of inland water areas
until 2020.
Decision 742/QD-TTg: Plan for a system of conservation of marine areas until 2020.
On the other hand, as examples of international treaties which have an influence on Viet Nam’s policy
on protected areas, there are the World Heritage Convention and the Ramsar Convention. Based on the
World Heritage Convention, there is the designation of special use forests (national parks), and based
on the Ramsar Convention, there is the designation of wetland reserves, both of which are recognized
under municipal law.
97
Table 38 Outline of main laws relating to the management of protected areas
Law
Date
Content
1.
2.
＜Sanctuaries / reserves＞
Decision No. 192/2003/QD-TTg
Decision No. 256/2003/QD-TTg
2003/09/17
2003/12/02
Systems management strategy for protected areas for 2010
Strategy of National Environmental Protection for 2010 as
well as 2020 objective
1.
＜Special use forest＞
Decision No. 1171/QD
1989/11/30
Production forests, protected forests and special use forest
management rules
Former Forest Protection and Development Act
2.
3.
4.
5.
6.
Law on Forest Protection and
Development
Decision No. 327/CT
Decree No. 14/CT
Decree 163/ND-CP
Decision No. 08/QD-TTg
1992/09/15
1992/12/05
1999/11/16
2001/01/11
7.
Decree No. 139/2004/ND-CP
2004/01/25
8.
9.
No. 29/2004/Q11
Decision No. 61/2005/QD-BNN
2004/12/14
2005/10/12
10.
11.
Decision No. 62/2005/QD-BNN
Decree No. 23/2006/ND-CP
＜Wetland reserves＞
Law on Environmental Protection
Decree No. 109/2003/ND-CP
2005/10/12
2006/03/03
1.
2.
3.
1991/08/19
1993/12/27
2003/09/23
Decision No.
646/QD/BNN-KHCN
Decision No.
04/2004/QD-BTNMT
2004/03/17
5.
Circular No. 18/2004/TT-BTNMT
2004/08/23
6.
No. 52/2005/QH11
＜Marine reserves＞
Decree 25/2009/ND-CP
2005/12/12
4.
2004/04/05
Land (bare land, forests, coastal areas).
Fines / penalties for forest protection and management
Use of forests for the purpose of long-term forest management
Production forests, protected forests and special use forest
management rules
Forest management and protection, penalties for violations of
the Protocols for production
Forest Protection and Development Law Revision
Decision on the promulgation of rules for classification of
forest protection standards
decision on the classification criteria of special use forests
Protocol of the Forest Protection and Development Act
Former Environmental Protection Act
Protocol for the protection and sustainable development of
wetlands
Decision on the basis of wetlands
Decisions pertaining to the approval of the action plan on
Wetland Conservation and Sustainable Development 2004 to
2010
Notice relating to the implementation of government
regulation of wetland conservation and sustainable
development (No. 109/2003/ND-CP)
New Environmental Protection Law
2009/03/09
Protocols for the comprehensive management of island and
marine resources and environmental protection
Source) Sourcebook of Existing and Proposed Protected Areas in Viet Nam, BirdLife (2001)
( 2 ) Contents of Host Country’s EIA etc. Necessary for Project Implementation
The application for, and acquisition of an Environmental Approval Certificate through the preparation
of environmental impact assessment is required for the construction of factories etc. in Viet Nam, and
is necessary for project implementation. The environmental impact assessment is essentially based on
Government Decree No. 175/ CP, however with regards to foreign investment, the simpler Circular No.
490/ 1998/ TT- BKHCNMT addresses the requirements of environmental impact assessments with
respect to investment projects.
98
Table 39 Laws relating to Environmental Impact Assessment in Viet Nam
Laws
Summary
For any business of construction and renovation of the
facilities in production area or populated area, or of the
facilities for economy, science, technology, health,
culture, society or security and defense, and any
business with foreign investment, it is mandatory to
submit EIA report to the responsible agency and attain
approval.
It describes the projects which need environmental
impact evaluation, the evaluation organization and the
items on the environmental impact evaluation report.
Guidance of EIA with regards to the equipments in the
facilities in operation. The facilities were categorized
into 4 and the procedure of EIA in each category and
contents of report are set down. The facility which was
approved most recently was even obligated to submit a
report till 30 June, 1995.
It was set down that MONRE established EIA
Review/Appraisal Councils, along with structure of the
Councils and TOR related to consultations by the
councils.
Law on Environmental Protection
1993.12
Providing Guidance for the Implementation of the Law on
Environmental Protection (Government Decree No. 175/CP)
1994.10
Instruction for Guiding Environmental Impact Assessment to
the Operating Units ( 1420-QDMTg)
1994.12
Regulation on Regulations and Organization of the Appraisal
Council on Environmental Impact Assessment (No.1807/
QD-MTg)
1994.12
EIA and Licensing, Decision on Regulations and Appraisal
Council (No. 1806/ QD-MTg)
1994.12
Permitted to implement Decision No/1807/QD-Mtg.
1998.4
Revision of Circular No.1,100. Investment projects
were divided into Category I and Category II. The
environmental impact evaluation report is needed for
the Category I and registration of the environmental
standard certification is needed for the Category II.
Guidance on Setting up & Reviewing EIA Report for
Investment Projects (Circular No. 490/ TT-BKHCNMT)
Source) Global Environmental Forum (2007) "Environmental Regulations in OECD countries project study report Part
II, trade insurance and environmental issues" survey commissioned by the Ministry of Economy
1 ) Environmental Assessment System
Environmental Impact Assessments in Viet Nam are essentially based on Environmental Law
paragraphs 17 and 18, and Government Decree No. 175/CP. LEP 1994 stipulates the conducting of
Environmental Impact Assessment; EIA, which obligates business entities carrying out projects in
Viet Nam to create EIA to be submitted to the government for inspection. Additionally, the October
1994 Government Decree No. 175/CP outlines regulations on EIA Examining Authority. In addition,
with respect to the Examining Authority of EIA and with regards to organization and environmental
licenses, there are rules including the Ministry of Science, Technology and Environment (MONRE)
Decision No. 1806/ QD-MTg, 1994. Contained within is the MONRE Circular for the review of the
Environmental Impact Assessment Report for Investment Projects Circular No. 490/ 1998/
TT-BKHCNMT, April 1998, which is the most important law related to EIA. Circular for the review of
the Environmental Impact Assessment Report for Investment Projects Circular No. 490/ 1998/ TTBKHCNMT divides activates into categories: those which are deemed to have a large impact on the
environment (1) and those which are deemed to have a small impact on the environment (2). The flow
for EIA in Viet Nam is illustrated below.
99
Figure 53 Flow for preparation of EIA in Viet Nam
Project proposal
Determine Category I and
Category II
Category I
II
Firms:
Firms:
Prepare document for investment
license(including rough descriptions
for environment impact and its
countermeasures)
1.Prepare document to apply for investment license
2. Prepare for registration of the environmental standard
certification
・ Application form
・ Registration of the environmental standard
certification (including English version)
・ Document for feasibility study or study on the impact
of economy and technology for proposed project
1 -> Submit to the
agency responsible for
investment permission
2 -> Submit to the
administrative
organization of
Environment
The agency responsible
for investment
permission: review
document
The administrative
organization of
Environment:
review document
Issue an investment
license
Register an
environmental
standard
1 -> Submit to the
agency responsible for
investment
permission
Request of
resubmitting
Agency responsible for
investment permission:
review document
Within 20 days
Issue an investment
license
Within 5 days
Application Process of
Investment License
Firms: Prepare document for EIA
- Application form for EIA’s review
- EIA report (including English version)
- Document for Feasibility study or study on
economy and technology for proposed project
Start design and construction
Request of
resubmitting
Submit to the administrative
organization of environment
The administrative organization
of Environment: review document
within
60 days
Within
The administrative organization
10 days
of Environment: Issue a
Process of Design
Start design and
and Construction
construction
Inspection on waste treatment
operation and security condition
Audit for compliance of
environmental conditions
Process of Design
and Construction
Consider and issue an environmental
certification
End of project
End of project
Source) Global Environmental Forum (2007) "Environmental Regulations in OECD countries project study report Part
II, trade insurance and environmental issues" survey commissioned by the Ministry of Economy
100
2 ) Target of EIA
In the MONRE Circular for the review of the Environmental Impact Assessment Report for
Investment Projects (Circular No.490/1998/TT-BKHCNMT), investment project which are deemed
to have a large impact on the surrounding environment are categorized into category 1, and
necessitates the approval of MONRE, or the Department of Natural Resources and Environment
(DONRE) of the EIA. Investment projects in category 1 are shown below. Additionally, in the
Circular No. 490/ 1998/ TT- BKHCNMT also stipulates that in the case that the project is put into
category 2, preparations of the EIA can be finalized by the submission of Registration for Securing
Environmental Standards to the relevant office The RSES lays out ①Description of planned project,
② Summery of production technology, ③ Summery of Pollution Sources, ④ Pollution
countermeasures, ⑤Environmental monitoring plan, and ⑥Satisfying of environmental standards.
Table 40 Projects requiring the preparation of EIA and receipt of approval
Investment projects implemented in areas where environment is easily influenced, reservations of nature and
1 resources, sightseeing areas, areas which hold historical or cultural heritage with international or domestic
point of view, or their neighboring areas.
2 Planning
2.1 Regional development
2.2 Field development
2.3 Urban development
2.4 Development of industrial park/export processing zone
3 Petroleum, gas
3.1 Development
3.2 Processing
3.3 Transportation
3.4 Storage facility for petroleum and gas(with the capacity over 20,000 m3)
Metallurgy plant including steel-making, cast iron, non-ferrous metals(with the capacity over 100,000 tons per
4
year)
5 Tanning plant(with the capacity over 10,000 tons per year at equivalent of production volume)
6 Fabric/dyeing plant(with the capacity over 20 million tons per year)
7 Paint plant(with the capacity over 1,000 tons per year)
8 Cane sugar plant(with the capacity of sugar cane processing over 100,000 tons per year)
9 Food processing plant(with the capacity over 1,000 tons per year at equivalent of production volume)
10 Freezing plant(with the capacity over 1,000 tons per year at equivalent of production volume)
11 Thermal power station(with the capacity over 200 MW)
12 Pulp and paper plant(with the capacity over 40,000 tons per year at the equivalent of pulp volume)
13 Cement plant(with the capacity over 1 M tons per year)
14 Sightseeing place, leisure spot(area size over 100ha.)
15 Airport
16 Sea port(with the capacity over 10,000 DWt at the equivalent of ship dead-weight capacity)
17 Railways, highways, main roads–1st, 2nd and 3rd grades set up on TCVN4054-85(with over 50km in length)
18 Hydraulic power plant(with the storage capacity over 100M m3)
Water resources management facility(e.g. irrigation, discharge, salt water management) (area size over 10,000
19
ha.)
Waste disposal facility(centralized treatment facility, with the capacity over 100,000 m3 per year/disposal site
20
for solid waste)
Mine, construction material plant(with the total volume of solid minerals, disposal soil, disposal stones
21
over100,000 m3 per year)
22 Grove for timber
23 Sea food farm(area size over 200 ha.)
24 Production, storage and usage facilities for hazardous chemical substance
25 Nuclear reactor
Source) Global Environmental Forum (2007) "Environmental Regulations in OECD countries project study report Part
II, trade insurance and environmental issues" survey commissioned by the Ministry of Economy
101
The law passed in 2006, based on the New environmental protection law, requires the creation of a
Strategic Environment Assessment (SEA) report, Environmental Impact Assessment (EIA), or
otherwise an Environmental Protection Commitment.
z Projects Requiring SEA
Article 14 of the New Environmental Protection Act outlines the activities (projects) that are required
to create a Strategic Environmental Assessment (SEA). Projects for which SEA is required are
outlined below
9
Strategies / plans for National Economic Development
9
City at the national level (branch) and territory (domain) relating to strategies / plans of
development
9
Strategic design plan for state and local community development
9
Land use, development, design, forest protection and the use of other natural resource for
development across regions / provinces
9
Plans for the development of key economic areas
9
General design of rivers across regions
z Projects Requiring EIA
Article 18 of the New Environmental Protection Act outlines the activities (projects) that are
required to create an Environmental Impact Assessment (EIA). Projects for which EIA is required
are outlined below
9 projects of national importance
9 The use of nature reserves, national parks, etc. or significant historical and cultural areas
9 Project with negative environmental impact on surrounding area
9 Projects that may negatively impact the ecological environment of river or coastal waters
9 Economic zones, industrial parks, projects in infrastructure and construction such as
high-tech apartment blocks
9 Urban and residential construction projects
9 Project on the large scale development of natural resources and groundwater
9 Project that are potentially hazardous to the environment and those which can have
negative environmental impacts
z Projects Requiring Environmental Protection Commitment
Article 24 of the law outlines the necessity of Environmental Protection Commitments for small scale
projects which do not correspond to that of articles 14 and 18. In addition, in the New Environmental
Protection Law implementation details Decree No. 80/ 2006/ ND-CP Appendix I, there are 102
projects requiring EIA, and in Appendix II there is a list of projects which have required the Ministry
of Environment and Natural Resources’ approval of EIA by region.
102
Section 5 : Items to be established by the host country
(implementing organization and other related
organizations) for this project
As a result of the examination of the environmental and social laws and regulations in (4), at the time
of implementation of this project, it is necessary that an Environmental Impact Assessment is to be
created, which will be assigned to category 1 or category 2 depending on the scale of environmental
impact. According to the preliminary examination within this study, it is predicted that this project will
apply to category 2 (project with small environmental impact), however, the authorities under whose
jurisdiction it falls, such as the Ministry of Natural Resources and Environment, will conduct a
preliminary consultation and clarification is required with regards to the procedure for the
Environmental Impact Assessment. As the strategic environmental assessment for projects are
outlined in the New Environmental Protection Act enacted in July 2006, at the time of project
implementation, it is vital to determine the type of assessment required for this project at an early
stage.
103
Chapter 5
Financial and Economic Evaluation
104
105
In this Section, the financial and economic aspects of the Oil Stockpiling Mega-Floating System will
be evaluated.
Section 1 : Project cost quantity survey
( 1 ) Initial Investment
1 ) Project cost details
In Phase I of this project, a scope of 1 million m3 is adopted for the mega-floating system. A
breakdown of project cost is outlined in Table 41. The total investment of storage vessels, on-land
equipment as well as construction is USD 395 million.
Table 41 Project cost breakdown of Phase I (1 million m3)
\
Initial investment in
USD
100
million
Yen
〔million USD〕
Classification
of which is
denominated in JPY
(100 million)
Remarks
of which is
denominated in VND
(billion VND)
326
394.8
247.8
Storage vessels and tanks
179
216.8
143.2
848.7 Shipbuilding
Ancillary construction cost
141
170.8
101.5
936.0
Offshore construction
17
20.6
Construction
Anchorage dolphin etc.
Berth(including pipeline bridge)
15
18.2
Construction
For Aframax tanker
Reclamation/seasalls/dredging
10
12.1
Construction
5ha
Oil-resistant dam
65
78.7
Construction
1st and 2nd stage oil-resistant dam (West
breakwater excluded)
Terrestrial buildings
4
4.8
Construction
10 buildings
Terrestrial construction
2
2.4
Construction
Paving, drainage, etc.
29
35.1
Engineering
Terrestrial facilities (see notes for scope)
6
7.3
5.4
JPY 32,578
USD 395
Construction Cost
Plant cost (ancillary; utility plant e
Disaster prevention equipment
1,854.9
24% local currency, 76% foreign currency
20% local currency, 80% foreign currency
28% local currency, 72% foreign currency
14.2 Fire boat, fire engine etc. 10% local currency, 90% foreign currency
Construction unit cost
Unit cost per m 3
Note) (1) Purchase price of stored petroleum is not included
(2) Storage vessel expenses include towing (from Dung Quat shipyard to site) and installations costs
(3) Building and export insurance costs are not included
(4) Exchange rates: JPY/USD = 82.57; JPY/Dong = 0.004218; outlined in 5.1.1 (2).
Source) Compiled from various sources
2 ) Exchange rate / price escalation
The exchange rates used for the calculations in Table 41 are outlined in Table 42.
Table 42 Exchange rates used for this project
Currency
Rate
USD/100VND
0.005107
JPY/VND
0.004218
JPY/USD
82.57
Source) MRI analysis using International Financial Statistics, IMF, Year Book 2010 and 2011
At the time of calculating the exchange rates in Table 42, the end of month average values of July 2010
through June 2011 from the IMF’s International Financial Statistics, Yearbook 2010 edition and the
2011 edition were adopted (as the most recent rates for the Viet Nam Dong published in the book are
from June 2011). Details of the rates are given below.
106
As Viet Nam is a socialist state, the currency is controlled by the government, and as such the
exchange rate of the Dong per US dollar is determined and announced by the State Bank of Vietnam
daily5.
Fluctuations of the exchange rate for 100 VND per US Dollar are outlined in Figure 54 . The average
of the end of month rates for this period is USD/100VND=0.005107.
Figure 54 USD/100VND (end of month rate)
USD/100VND:
end of period
USD/100VND:
end of period
0.005500
0.005400
0.005300
(Unit:USD)
0.005200
0.005100
0.005000
0.004900
0.004800
0.004700
0.004600
Jul
Aug
Sep
Oct
Nov Dec
2010
Note)
Jan
Feb
Mar
Apr
May Jun
2011
Calculation based on ‘Dong per US Dollar: End of Period’ of the market rate in the 2010 and 2011 Year Book
of America and Viet Nam. From July 2011, as data concerning the Vietnamese Dong is not recorded, the
Exchange Rate Quotation of the State Bank of Viet Nam’s homepage was consulted. However as of 9
December 2011, the data is not available.
Source) International Financial Statistics, IMF, Year Book 2010 and 2011
The fluctuations in the exchange rates for the Japanese Yen per Viet Nam Dong from July 2010 to June
2011 are outlined in Figure 55. The average of the end of month rates for this period is
JPY/VND=0.004218.
5
‘Fractal analysis of Vietnamese Dong and Yen exchange rates’ Yoshihiro Mizukami, Shiga University
107
Figure 55 JPY/VND (end of month rate)
JPY/VND: end of period
0.004800
0.004600
(Unit:VDN)
0.004400
0.004200
0.004000
0.003800
0.003600
Jul
Aug
Sep
Oct
Nov Dec
Jan
Feb
Mar
2010
Apr
May Jun
2011
Note) Calculation based on ‘Dong per US Dollar: End of Period’ of the market rate in the 2010 and 2011 Year
Book of America and Viet Nam. From July 2011, as data concerning the Vietnamese Dong is not recorded,
the Exchange Rate Quotation of the State Bank of Viet Nam’s homepage was consulted. However as of 9
December 2011, the data is not available.
Source) International Financial Statistics, IMF, Year Book 2010 and 2011
The fluctuations in the exchange rates for the Japanese Yen per US Dollar from July 2010 to June 2011
are outlined in Figure 56. The average of the end of month rates for this period is JPY/USD=82.57.
Figure 56 JPY/USD (end of month rate)
JPY/VND: end of period
0.004800
0.004600
(Unit:JPY)
0.004400
0.004200
0.004000
0.003800
0.003600
Jul
Aug
Sep
Oct
Nov Dec
2010
Note)
Jan
Feb
Mar
Apr
May Jun
2011
Calculation based on ‘Yen per US Dollar: End of Period’ of the market rate in the 2010 and 2011 Year Book
Source)International Financial Statistics, IMF, Year Book 2010 and 2011
108
( 2 ) Operating Expenses
For this project, annual operating cost is set at 1.6% of the initial investment.
Table 43 Annual management costs of national oil storage facilities in Japan
Name
Method
Shirashima Oil Storage
Mega-Float
Japan Underground Oil Storage Underground
Mutsu-Ogawa Oil Storage
On land
Tomatoh Oil Storage
On land
Shibushi Oil Storage
On land
Akita Oil Strage
On land
Fukui Oil Storage
On land
Kamigoto Oil Storage
Mega-Float
Total
Capacity
(10,000m3)
560
500
570
640
500
450
340
440
4,000
Construction
Costruction
cost
3
(100 mil Yen) costs/year/m
(10,000
Yen)
(A)
2,839
2,286
1,726
1,502
1,545
1,936
1,030
2,007
14,871
1,267
1,143
757
587
773
1,076
757
1,140
937
Annual
commission
(100 mil Yen)
(B)
Yen / m3
71.4
66.8
54.5
49.8
39.1
36.5
33.8
32.7
384.6
1,275
1,336
956
778
782
811
994
743
962
(B) / (A)
%
2.5%
2.9%
3.2%
3.3%
2.5%
1.9%
3.3%
1.6%
2.6%
Source) Administrative reform meeting "Business Review", November 2009
The annual maintenance management costs of the National Oil Reserve Facilities in Japan are outlined
in Table 43; they are set at between 1.6% and 3.3% of the initial investments. The lowest ratio of
maintenance management costs to that of initial investment is 1.6% of Kamigoto Mega Float facility.
As this project is carried out in Viet Nam, it is thought that in terms of labor costs, this project will be
less costly compared with that of Japan. Therefore, it is appropriate to adopt the maintenance
management costs of the most economical of Japan’s example facilities at Kamigoto in the interest of
conservative estimation.
109
Section 2 : Financial and Economic Evaluation
Based on the initial investment and operating costs outlined in 5.1, this section will address the
economic and financial analysis. In concrete terms, the storage charges of the facility, revenue and
cash flow calculation, assumed tax system as a basis of cash flow calculation, FIRR (Financial Internal
Rate of Return) / EIRR (Economic Internal Rate of Return) evaluation, and sensitivity analysis will be
carried out.
( 1 ) Usage Charges
For power transmission lines and port facility infrastructure businesses, usage charges are generally
established by calculating the CAPEX multiplied by a certain interest rate (or by WACC: Weighted
Average Cost of Capital) in addition to OPEX.
In this project, the ratio of payable loan to capital is 7:3. The interest rate of the payable loan is 0.2%
(10 year grace period). The expected investment yield is 16%, and the WACC becomes 4.9%.
Therefore, storage charges are established to achieve a project IRR of 4.9%. As a result, the storage
charge is USD 38 per m3. The details are outlined below; it becomes less expensive than using a loan
from a commercial bank to finance the construction of the aboveground tank method.
( 2 ) Tax Systems
The tax systems related to this project are outlined below. In Viet Nam, even in the case of state-owned
companies, the basic rate of 25% applies. However, as explained in the following section, there are
also favorable conditions for those regarded as special cases.
110
Table 44
Tax rate
In the case that
taxable profit is
not produced
Transfer of losses
Business Income Tax (BIT) outline6
Standard tax rate; that of whole period 25%.
(Tax is reduced in special circumstances)
In the case that taxable profit is not generated in the first three years after the commencement of
operations, tax exemption is granted from the fourth year. (In the case that the company is
founded after 1 January 2009, for a three year period after foundation, other deductable
expenses should be set at a maximum of 15%.)
It is possible to transfer the whole amount of losses for a maximum of five years.
• As tax relief by way of periods of tax exemption or reduction as well as the transfer of
losses is set at a maximum period of 5 years, in the event that the entity is eligible for tax
relief, it is necessary to consider a schedule which reflects the period of tax exemption.
• It is possible to offset losses and those of activities that are not eligible for tax relief with
activities which are applicable to these conditions.
• The recuperation of losses is not included.
• There are no regulations regarding consolidated taxation or the total losses of groups.
①p77
②p7
①p76
①p9
Source) ①Guidebook for Japanese businesses on laws and regulations in Viet Nam, JETRO, March 2010.
②Viet Nam Pocket Tax Book 2011, PwC
The Underground Petroleum Storage Terminal Project of PetroVietnam Oil Stockpile Company at
Dung Quat is recognized as a special case, it is therefore thought that this project will also be
recognized in the same respect.
It is possible to transfer the whole amount of losses for a maximum of five years. However, if no
taxable profit is generated in the initial three years, tax exemption or reduction periods begin from the
fourth year.
6
No.14/2008/QH12 (Law No.14/2008/QH12 on Corporate Income Tax) is the foundation for taxpayers, taxable profit,
earnings exempt from tax, as well as methods, tax rates, systems and favorable taxation conditions. Specifics are
outlined in, Decree No. 124/2008/ND-CP, Circular No.130/2008/TT-BCT, Circular No.134/2008/TT-BCT.
111
Table 45 PetroVietnam project taxation case
Project name
Business name
Location
Dung Quat Underground Oil
PetroVietnam Oil
Dung Quat Economic
Storage Terminal Project
Stockpile Company
Zone
Taxation outline
• Corporated Income Tax incentives:
- 0% for first 4 years
Ltd (PVOS)
- 5% for next 9 years
- 10% for next 2 years
- 25 % afterwards
• Import Tax incentive: 0% for Imported
Equipments
Long Son Oil Refinery
Vietnam Oil and
Long Son Petroleum
The Government has issued the incentive
Gas Group
Industrial Zone,
package applied for Long Son refinery as
(PetroVietnam)
follows:
• The government is responsible for all
related infrastructures such as road, power,
water, communication system to the fence
of the Refinery.
• The Corporate Income Tax applied for
Project is 10% afterward up to 30 years as
follows:
- 0% for 4 years following the first year of
profitable operation
- 5% for the next 9 years
- 10% for the next 17 years
• Import tariff
- Exemption of Import Tax for crude oil
import.
- Exemption of Import Tax for machinery
and equipment imported in the complete
production line which is not able to be
produced domestically and created fixed
assets.
- Exemption of VAT for machinery,
equipment, material imported in the
complete production line which is not
able to be produced domestically and
created fixed during construction phase.
Source) Warmly Welcome to PetroVietnam, Vietnam Oil and Gas Group
Depreciation is outlined in Table 46. It is possible to choose between the straight line method, reducing
balance with adjustment method, and depreciation based on quantity or volume of products. This
project will adopt the straight line method. The useful life of equipment is outlined in Table 46. In this
study, the option with the longest useful life of harbor facilities (of 30 years) is adopted.
112
Table 46 Depreciation of fixed assets (Decision 206/2003/QD-BTC)
The method for calculation of the depreciation of fixed assets, as well as
the factoring in of losses and credit limits are covered in Decision 206,
2004. The details of the methods of depreciation and financial losses in the
target number of years of depreciation are shown in Decision 206, 2004.
Depreciatio Previously only the straight line method was observed,
n Methods
however in line with the reforms of the laws on
corporation tax, straight line, straight line with rapid
depreciation, reducing balance with adjustment and
output proportion methods are recognized.
Fixed Asset The useful life is equivalent to or exceeds one year
Criteria
The value is from 10 million dong or more.
Useful life
A table outlines the useful life for every kind of fixed
(years)
asset, and depreciation is taken accordingly. In Viet
Nam, it is possible to set useful life in terms of the
longest and shortest periods.
The enterprise shall be allowed to select depreciation methods suitable for
Depreciation
methods
each kind of its fixed assets.
Straight line method and straight line method with rapid depreciation
The reducing balance method with adjustment
The depreciation method based on quantity or volume of products
1.Straight
line Enterprises operating and gaining high economic efficiency shall be
method
and allowed to conduct a rapid depreciation of their fixed assets in order to
straight
line quickly renew technologies, however the rapid depreciation rate shall not
method with rapid exceed two times the depreciation rate provided for in accordance with the
depreciation
straight line method. When conducting the rapid depreciation, enterprises
must ensure that they get profits in their business.
2.The
reducing The reducing balance method with adjustment shall apply to enterprises
balance method with technologies required to be rapidly replaced or developed.
with adjustment
3.The
【Scope of application】
depreciation
Machinery and equipment
method based on 【Conditions】
quantity
or Directly relating to the production of products;
volume
of The total quantity or volume of products turned out on the basis of the
products
designed capacity of fixed assets can be determined.
The average actual capacity used during the months of the financial years
is not lower than the designed capacity.
(See the details: Decision 206/206/QD-BTC)
Frame of Useful
Life of Fixed
Minimum useful Maximum
Assets
List of categories of fixed assets
life (years)
useful
life
(years)
Means of transport for waterway 7
15
Transportation equipment being 10
30
Depreciation
113
①
pipelines
Other equipment and means of
transport
Strong buildings(1)
Other buildings
Storehouses,
Containers,
bridges,
roads,
parking lots･･･
Dikes, dams, canals, drains,
ports, docks
Other architectural structures
Source)
6
10
25
6
5
50
25
20
6
30
5
10
Decision 206/2003/QT-BTC-Depreciation of fixed assets, Ministry of Finance Socialist Republic of Viet
Nam, Dec.12,2003
An outline of value-added tax is given in Table 47. The standard tax rate is 10%, however, ODA
projects are exempt from taxation. Therefore, VAT is not considered in this project.
Table 47 VAT
Value Added Tax Goods and services, as well as the transactions of applicable p16
(VAT)
organizations and individuals must be registered for VAT.
The taxpayer must submit a monthly VAT statement within 20 days
of the following month (returns are also decided at this time).
Taxpayers applying reductions are required to submit an adjustment
declaration and final declaration for each financial year.
The three categories of VAT
Standard rate: 10%
Necessary goods and services: 5%
Items sold by entities which are not permanent establishments of Viet
Nam: 0%
※
The transfers of technologies, software services, petroleum
and gas, and international financial aid including that of ODAs and
contributions from other countries to governments and individuals
(within restrictions) are eligible for VAT exemption.
Source) Viet Nam Pocket Tax Book 2011, PwC
( 3 ) Project Cash flow
Based on the above assumptions, an outline of the project profit and loss, as well as cash flow is
illustrated below.
1）Business and financing plan
Assuming project starts in 2013, and 4 years are required for construction, the start of operation would
be in 2017. However, the financial burden of obtaining and storing 1 million m3 oil immediately after
the start of service would be high. It is therefore anticipated that the facility will be supplied with
200,000 m3 per year from the start of service, completing the 1,000,000 m3 supply by 2021.
It is anticipated that the initial investment would be provided evenly over the four years of
114
construction, and 25% of entire loan amount is scheduled to be borrowed at the beginning of each
fiscal year. The ratio of payable loan to raised capital is 7:3, and the borrowed amount is provided
entirely by the STEP yen loan (interest rate of 0.2%; grace period of 10 years).
The commission of USD 38/m3 shall be paid by the government of Viet Nam as the revenue defined in
Section 1: (1) 1). Although the first four years after the start of storage service is less than 1,000,000
m3, sales gradually increase to reach USD 38 million in the fifth year.
2）Project profit-and-loss / cash flow calculation sheets
Based on the above conditions, a profit-and-loss sheet as well as a cash flow calculation sheet are
outlined in Table 48. The balance will be negative for the first year and the following year only, and
will be positive thereafter. From the fifth year after the start of service, sales reach USD 38 million,
and the EBIT becomes USD 18.39 million.
115
Table 48 Project profit-and-loss / cash flow calculation sheet
Operation Status / Parameters
Remarks
2013
2014
2015
2016
2017
Construction (Phase I)
Project status
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
120
395
Crude oil price (Jan 5, 2012 USD/bbl)
Initial Investment cost (USD million)
25%
Distribution of initial investment
25%
25%
25%
276.4
40
10
0.0
40
4
118.4
Concession loan amount
Concessional loan: repayment period (yrs
Concessional loan: grace period (yrs)
Other debt amount
Other Debt: repayment period (yrs)
Other debt: grace period (yrs)
Equity amount
3
0
Storage volume (10000 M )
Years elapsed since operation
Years elapsed since construction
Price regulation period
NA
0
NA
3
3
0
NA
0
NA
2
0
NA
Special discount
0
NA
1
Storage charge(USD million/10000 M )
Income tax rate
2018
Operation
4
0
NA
20
1
5
40
2
6
60
3
7
80
4
8
100
5
9
100
6
10
100
7
11
100
8
12
100
9
13
100
10
14
100
11
15
100
12
16
100
13
17
100
14
18
100
15
19
100
16
20
100
17
21
100
18
22
100
19
23
100
20
24
100
21
25
100
22
26
100
23
27
100
24
28
100
25
29
100
26
30
100
27
31
100
28
32
100
29
33
100
30
34
100
31
35
100
32
36
100
33
37
100
34
38
100
35
39
100
36
40
0 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368 0.38368
0%
0%
0%
0%
5%
5%
5%
5%
5%
5%
5%
5%
5%
10%
10%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
NA
Profit and Loss
Formula
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
Revenue
0
0
0
0
0
0
0
0
0
0
0
0.00
0
0
0
0
0.00
0
0
0
0
0.00
0
0
Revenue from storage
Other income
Total revenue
0 7.67352
0
0
0 7.67352
15.347 23.0206 30.6941 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
15.347 23.0206 30.6941 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676 38.3676
Operating Expenses
Storage leasing fee
Franchise fee
Depreciation cost
Operating expenses
Corporate overhead
See asset book value table
1.6% of investment cost
Assume USD 0.5 M per year
0
Total operating expenses
0
0
0
0.00
0
0
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
0
-13.16
-6.32
-0.50
0
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-19.98
-6.82
-6.82
-6.82
-6.82
-6.82
-6.82
0
-12.30
0
-12.30
-4.63
0
-4.63
3.04
0
3.04
10.72
0
10.72
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
18.39
0
18.39
31.55
0
31.55
31.55
0
31.55
31.55
0
31.55
31.55
0
31.55
31.55
0
31.55
31.55
0
31.55
0.00
0.00
0.00
0.00
-0.92
-0.92
-0.92
-0.92
-0.92
-0.92
-0.92
-0.92
-0.92
-1.84
-1.84
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-7.89
-7.89
-7.89
-7.89
-7.89
-7.89
0
0
0
0.00
-6.32
-0.50
0
0
0.00
-6.32
-0.50
0
0
0.00
-6.32
-0.50
0
0
0.00
-6.32
-0.50
0
0
0.00
-6.32
-0.50
0
0
0.00
-6.32
-0.50
Operating Income and EBIT
Operating balance
Non operating income
Revenue - Operating Expense
-
0
EBIT (Earnings before Interest and Taxes)
0
0
Net Income
Special discount
0%
0%
-
0
0
0
0
0
0
0
-0.92
-0.92
-0.92
-0.92
-0.92
-1.84
-1.84
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-4.60
-7.89
-7.89
-7.89
-7.89
-7.89
-7.89
Net interests
See loan repayment table
-0.14
-0.28
-0.41
-0.55
-0.55
-0.55
-0.55
-0.55
-0.55
-0.55
-0.55
-0.53
-0.52
-0.50
-0.48
-0.46
-0.44
-0.43
-0.41
-0.39
-0.37
-0.35
-0.34
-0.32
-0.30
-0.28
-0.26
-0.24
-0.23
-0.21
-0.19
-0.17
-0.15
-0.13
-0.11
-0.09
-0.08
-0.06
-0.04
-0.02
Net income
EBIT - taxes - interests
-0.14
-0.28
-0.41
-0.55
-12.86
-5.18
2.49
10.16
16.92
16.92
16.92
16.94
16.95
16.97
16.99
17.01
17.03
16.12
16.14
13.40
13.42
13.44
13.46
13.48
13.49
13.51
13.53
13.55
13.57
13.59
13.60
13.62
13.64
13.66
23.55
23.57
23.59
23.61
23.63
23.64
Corporate tax
Property tax
Value added tax
Total tax payment
-
-
-
0 -0.9195 -0.9195 -0.9195 -0.9195
Cash Flow
Formula
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
-12.30
+13.16
0.86
0.00
0.86
-4.63
+13.16
8.53
0.00
8.53
3.04
+13.16
16.20
0.00
16.20
10.72
+13.16
23.88
0.00
23.88
18.39
+13.16
31.55
-0.92
30.63
18.39
+13.16
31.55
-0.92
30.63
18.39
+13.16
31.55
-0.92
30.63
18.39
+13.16
31.55
-0.92
30.63
18.39
+13.16
31.55
-0.92
30.63
18.39
+13.16
31.55
-0.92
30.63
18.39
+13.16
31.55
-0.92
30.63
18.39
+13.16
31.55
-0.92
30.63
18.39
+13.16
31.55
-0.92
30.63
18.39
+13.16
31.55
-1.84
29.71
18.39
+13.16
31.55
-1.84
29.71
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
18.39
+13.16
31.55
-4.60
26.95
31.55
+0.00
31.55
-7.89
23.66
31.55
+0.00
31.55
-7.89
23.66
31.55
+0.00
31.55
-7.89
23.66
31.55
+0.00
31.55
-7.89
23.66
31.55
+0.00
31.55
-7.89
23.66
31.55
+0.00
31.55
-7.89
23.66
-8.95
-8.97
69.0929 138.186 207.279 276.372 276.372 276.372 276.372 276.372 276.372 276.372 267.424 258.458
-0.14
-0.28
-0.41
-0.55
-0.55
-0.55
-0.55
-0.55
-0.55
-0.55
-0.55
-0.53
Fixed amount repyament
-0.14
-0.28
-0.41
-0.55
-0.55
-0.55
-0.55
-0.55
-0.55
-0.55
-9.50
-9.50
USD million
0
0
0
0
USD million
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
USD million
0
0
0
0
0
0
0
0
0
0
0
0
10.0%
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Fixed amount repyament
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
68.95
68.82
68.68
68.54
-0.55
-0.55
-0.55
-0.55
-0.55
-0.55
-9.50
-9.50
-8.98
249
-0.52
-9.50
-9.00
240
-0.50
-9.50
-9.02
231
-0.48
-9.50
-9.04
222
-0.46
-9.50
-9.06
213
-0.44
-9.50
-9.07
204
-0.43
-9.50
-9.09
195
-0.41
-9.50
-9.11
186
-0.39
-9.50
-9.13
177
-0.37
-9.50
-9.15
168
-0.35
-9.50
-9.17
159
-0.34
-9.50
-9.18
149
-0.32
-9.50
-9.20
140
-0.30
-9.50
-9.22
131
-0.28
-9.50
-9.24
122
-0.26
-9.50
-9.26
113
-0.24
-9.50
-9.28
103
-0.23
-9.50
-9.29
94
-0.21
-9.50
-9.31
85
-0.19
-9.50
-9.33
75
-0.17
-9.50
-9.35
66
-0.15
-9.50
-9.37
57
-0.13
-9.50
-9.39
47
-0.11
-9.50
-9.41
38
-0.09
-9.50
-9.43
28
-0.08
-9.50
-9.44
19
-0.06
-9.50
-9.46
9
-0.04
-9.50
-9.48
-0
-0.02
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0.00
0
0.00
0.00
-9.50
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Cash Flow from Operations
0.00
+0.00
0.00
0.00
0.00
EBIT
plus : Depreciation
EBITDA
Minus : Tax
Operating cash flow
0.00
+0.00
0.00
0.00
0.00
0.00
+0.00
0.00
0.00
0.00
0.00
+0.00
0.00
0.00
0.00
Cash Flow from Financing
Concession loan: incoming
Repayment of principal
Loan outstanding
Repayment of interest
Total repayment
Other loan: incoming
Repayment of principal
Loan outstanding
Repayment of interest
Total repayment
Financing cash flow
69.0929 69.0929 69.0929 69.0929
USD million
USD million
USD million
0.2%
Cash Flow from Investments
CAPEX
Investments cash flow
-98.70
-98.70
-98.70
-98.70
-98.70
-98.70
-98.70
-98.70
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-98.7
-98.7
-98.7
-98.7
0.9
8.5
16.2
23.9
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
30.6
29.7
29.7
27.0
27.0
27.0
27.0
27.0
27.0
27.0
27.0
27.0
27.0
27.0
27.0
27.0
27.0
27.0
23.7
23.7
23.7
23.7
23.7
23.7
0.00
-98.70
-29.75
0.00
-94.18
-29.89
0.00
-89.86
-30.03
0.00
-85.73
-30.16
0.71
0.00
0.30
6.75
0.00
7.98
12.23
0.00
15.65
17.19
0.00
23.32
21.67
0.00
30.08
20.68
0.00
30.08
19.73
0.00
21.13
18.82
0.00
21.13
17.96
0.00
21.13
17.14
0.00
21.13
16.35
0.00
21.13
15.60
0.00
21.13
14.88
0.00
21.13
14.20
0.00
20.21
13.55
0.00
20.21
12.93
0.00
17.45
12.34
0.00
17.45
11.77
0.00
17.45
11.23
0.00
17.45
10.71
0.00
17.45
10.22
0.00
17.45
9.75
0.00
17.45
9.31
0.00
17.45
8.88
0.00
17.45
8.47
0.00
17.45
8.08
0.00
17.45
7.71
0.00
17.45
7.36
0.00
17.45
7.02
0.00
17.45
6.70
0.00
17.45
6.39
0.00
14.16
6.10
0.00
14.16
5.82
0.00
14.16
5.55
0.00
14.16
5.30
0.00
14.16
5.05
0.00
14.16
0.00
0.00
0.00
0.00
22.64
45.29
67.93
90.57
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
113.22
0.50
0.50
0.50
0.50
50.00
-6.32
134.76
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
0.50
50.00
-6.32
157.40
2047
2048
2049
2050
2051
2052
Cash Flow for FIRR Calculation
Project Cash Flow
Project IRR
Discounted Opr CF
Discounted Inv CF
Equity Cash Flow
Equity IRR
Opr CF + Inv CF
4.8%
4.81%
4.81%
Opr CF + Fin CF + Inv CF
12.2%
Risk hedge benefit w/ call-option premium
USD million / barrel
Job creation
15.0%
Shipbuilding industry promotion
Cost (OPEX + CAPEX)
Cash Flow for Economic IRR
-98.70
-98.70
-98.70
-98.70
-98.70
-98.70
-98.70
-98.70
-6.32
16.83
-6.32
39.47
-6.32
62.11
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
-
-
-
-
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
-13.16
19.8%
Economic IRR
Weighted average interests rate
0.2%
WACC
4.9%
Asset Book Value
Formula
Depreciation Condition
Annual depreciation amount
30 years of straight line
Salvage value = 5%
0.00
0.00
0.00
0.00
0.00
0.00
Book Value of Depletable Assets
Opening book value
Depreciation cost
Year end book value
Construction Period
394.82 407.977 421.138 434.298 447.459 460.619 473.78 486.94 500.101 513.261 526.422 539.583 552.743 565.904 579.064 592.225 605.385 618.546 631.706 644.867 658.028 671.188 684.349 697.509 710.67 723.83 736.991 750.151 763.312 776.472 789.633 789.633 789.633 789.633 789.633 789.633
13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606 13.1606
0
0
0
0
0
0
407.977 421.138 434.298 447.459 460.619 473.78 486.94 500.101 513.261 526.422 539.583 552.743 565.904 579.064 592.225 605.385 618.546 631.706 644.867 658.028 671.188 684.349 697.509 710.67 723.83 736.991 750.151 763.312 776.472 789.633 789.633 789.633 789.633 789.633 789.633 789.633
116
( 4 ) FIRR and Validity
The FIRR, WACC and storage charge per m3 of this project are outlined in Table 49.
3
Storage charge / m
3
USD 38 / m
Table 49 FIRR and validity
FIRR
4.9%
WACC
4.9%
As this project is subject to rate regulation by the government, irrespective of the scale of initial
investment and operating costs, it is expected that storage charges will be set to ensure a certain degree
of profitability (details outlined in (1)). Therefore, FIRR is dependent on how rate regulation is
determined, and it is essentially of no consequence to address the level of FIRR. It is important to
compare the unit storage charge per m3 of this project with WACC or storage charges of different
systems financed by other methods.
Since the expected capital return is set at 16%, which is high enough that the debt can be repaid even in
the case of cost overrun. On calculating anticipated capital return, figures from the last six months of
government bonds of more than 10 years, corporate restructuring with loan guarantee from
government (Table 50), and Interbank Rates (Table 51) were used. As for government bonds, interest
rates vary according to time frames and conditions, however these variations are generally between 8
and 12%. The Interbank Rate as of 22 November 2011 was 13 to 16%, and the anticipated capital
investment return of 16% is thought to be higher than that of the capital cost of PetroVietnam.
Table 50 The Price and Trading Volume of Government-Bond over 10 years
(2011.5.27 to 2011.11.15)
Bond Code Bond Type
Tenor
VDB111028 Gvt G-Bond
VDB111028 Gvt G-Bond
QHB0823049Gvt Bond
TP4A0206 Gvt Bond
VEC10712 Gvt G-Bond
TP4A0706 Gvt Bond
VDB111029 Gvt G-Bond
VDB111010 Gvt G-Bond
VDB111037 Gvt G-Bond
QHB0823049Gvt Bond
VEC10712 Gvt G-Bond
VDB111033 Gvt G-Bond
VDB111037 Gvt G-Bond
VDB111037 Gvt G-Bond
VEC10712 Gvt G-Bond
QH062126 Gvt Bond
10Y
10Y
12Y
10Y
11Y
10Y
10Y
15Y
10Y
12Y
11Y
10Y
10Y
10Y
11Y
10Y
Note)
Maturity Date Maturity Type
5/19/2021
5/19/2021
9/23/2023
1/22/2021
11/20/2022
2/23/2021
1/28/2021
1/28/2026
6/14/2021
9/23/2023
11/20/2022
6/9/2021
6/14/2021
6/14/2021
11/20/2022
8/11/2021
Coupon
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
12.20
12.20
15.00
9.25
9.00
9.25
11.50
11.50
12.00
15.00
9.00
12.20
12.00
12.00
9.00
9.25
Volume
3,000,000
3,000,000,
300,000
1,900,000
630,000
500,000
250,000
600,000
500,000
1,000,000
630,000
382,970
500,000
500,000
630,000
600,000
Clean price
128.106
128.006
122.716
87.405
78.926
87.188
99.566
99.926
102.19
122.949
71.623
104.113
102.984
105.331
71.937
86.584
Yield
8.00
8.01
11.44
11.46
12.55
11.50
11.55
11.49
11.60
11.40
14.21
11.45
11.45
11.05
14.17
11.60
Trading
Trading Date
value
385.52 5/30/2011
385.52 6/2/2011
40.02 6/9/2011
173.05 6/13/2011
53.05 6/21/2011
45.20 6/29/2011
26.21 7/14/2011
63.32 7/22/2011
52.05 8/10/2011
136.22 8/11/2011
50.00 9/29/2011
41.38 10/4/2011
53.38 10/6/2011
54.73 10/17/2011
50.71 11/1/2011
53.21 11/1/2011
Gvt Bond: Government Bond, Gvt G-Bond: Corporate restructuring with loan guarantee from government
Maturity Type：one-time lump-sum repayment
Source) Samcobank Securities HP: http://www.sbsc.com.vn/TabId/185/Default.aspx. Original data from Hanoi Stock
Exchange
117
Interbank Rates in Viet Nam as of 22 November 2011 are outlined in Table 51.
Term
Over Night
1 Weeks
2 Weeks
1 Months
3 Months
6 Months
Table 51 Interbank rates in Viet Nam (2011/11/22)
VNIBOR
Volume(billion VND)
Volume (million USD)
13.36
17,964
917
10,275
14.58
525
3,896
15.46
199
1,926
14.37
98
395
12.47
20
704
15.71
36
Note) Exchange rate: USD/100VND=0.005107
Source) The State Bank of Vietnam
1 ) EIRR and Validity
The purpose of the national oil stockpiling facility is to prevent domestic industries from being
confused and avoid sudden price rise of petroleum by providing oil upon emergency when oil supply
may temporally cut off. That means potential economic effects to avoid economic confusion would be
very large. On the other hand, it is difficult to show quantitative effects at ordinary times.
In this section, the economic effects of the national oil stockpiling facility is expressed by calculating
expenses to pay call premium in the NYMEX crude oil option trades. The option trade is a transaction
contract to buy/sell crude oil at a fixed price after a certain period of time. Airline companies use this
trade to hedge price risks of petro-products.
The national oil stockpiling system plays the same role of a call option trade (a transaction contract to
buy crude oil at a fixed price after a certain period) which hedges oil price risk by physically reserving
and providing oil in emergencies.
The crude oil price as of 2011.2.4 is USD 89.03/barrel. If crude oil is purchased at the price of call
option as of the beginning of June at the same price, the premium is USD 10.71/barrel7, 15% the price
of crude oil. Therefore, the premium for 1 barrel8 is assumed to equal USD 10/ barrel in this study.
Based on these conditions, the EIRR becomes 15.9%, as outlined in Table 54.
The 15.9% EIRR of this project is sufficiently higher than the 8.0% Opportunity Cost of Capital in
Viet Nam used in the World Bank projects, and therefore, this project is regarded as very
cost-effective.
The NYMEX crude oil call option premium close prices as of 2011.2.1 are shown in Table 52.
7 USD 89.05/barrel: at the closest contract end June2012; exercise price USD 89.03/barrel
8 A Sampled History of Crude Oil Prices at The New York Mercantile Exchange From 2006 to The Present, Including the Most Recent, Week-ending
Close Value; used the closest date on 1 February 2012
118
Table 52 NYMEX Crude oil call option premium (close price at 2011.2.1)
Call Option premium
Delivery month
Mar, 2011
Apr, 2011
May 2011
June 2011
Final trading date
Feb. 16
Mar. 17
Apr. 14
May 17
Future previous day
90.77
93.50
95.42
96.52
price
Exercise price
Closing
price
Change
Closing
price
Change
Closing
price
Change
Closing
price
Change
93.00
1.38
-0.82
4.16
-0.65
6.43
-0.42
8.10
-0.32
91.00
2.14
-1.05
5.30
-0.71
7.67
-0.44
9.35
-0.35
89.00
3.26
-1.22
6.61
-0.76
9.04
-0.46
10.71
-0.36
87.00
4.67
-1.34
8.07
-0.79
10.51
-0.46
12.15
-0.38
85.00
6.30
-1.40
9.66
-0.80
12.09
-0.46
13.68
-0.38
Note)
Transaction unit: 1 ticket=100 barrel, nominal price currency: USD/barrel, nominal price unit: USD 0.01
Source)
NYMEX
The merit of usage in emergency not exclusive for the Mega-Float: it is anticipated to be the same in
the case of the aboveground and underground tank methods at USD 113 million per year. However, for
this project, as the technology transfer of the Mega-Float involves local production, it is expected to
provide merits in job creation, development of the shipbuilding industry, the supply of parts and the
payment of employees’ salaries which accompany local production.
With regards to job creation, on assuming that 500 jobs will be created at GNI USD 1,101 per year,
USD 500,000 per year will be generated as a result of the project.
For the development of the shipbuilding industry, the local shipyard will begin the construction of
Aframax tankers by 2020. For the shipyard, it is predicted that it would be possible to construct three
Aframax tankers per year, however, as a conservative estimate, 1 newly-build ship per year is
estimated in this case. In addition, the Mega-Float and the majority of this ancillary equipment are
produced locally, and economic benefit is expected as a result of the payment of employees’ salaries,
and the supply of parts (Table 53).
Emergency usage merit
USD 0.5 million per
year
Job creation merit
Shipbuilding
development
industry
Economic impact
local production
Table 53 Economic impact of this project
Economic impact
Remarks
USD 113 million per Crude oil price USD 120 ／ Barrel, cost
year
hedging of 15% assumed
of
USD 50 million per
year
USD 439 million
500 jobs will be created at the local shipyard at
USD 1,010 per person (GNI per capita)
assumed
Building of Aframax tankers will commence
from 2020 at USD 52 million per vessel. A
maximum of 3 vessels per year is anticipated,
however, 1 is adopted for conservative
estimate.
10 billion yen per vessel; the impact of 10
billion yen being spent on local civil
engineering, (calculated from input-output
tables).
119
Adding the merits of emergency usage, job creation and shipbuilding industry development, the
Economic IRR becomes 19.8%
Table 54 Economic IRR of this project
Economic IRR (considering the economic impact of local production)
Economic IRR (not considering the economic impact of local production)
15.9%
19.8%
Economic IRR of 15.9% can be anticipated regardless of the method used, however the merits of job
creation and shipbuilding industry development that equate to an Economic IRR of 19.8 are exclusive
to this project. The 3.9% difference is brought about via technology transfer and local production and
cannot be obtained by other methods.
2 ) Sensitivity Analysis
In the case of national oil stockpiling facilities, the storage charge is set to recover expenses such as
CAPEX and OPEX by the regulation. In other words, regardless of the size of initial investment, it is
normally assured to keep a certain profit. Therefore, from the viewpoint of sensitivity analysis, it is
desirable to usage charges of the Mega-Float in terms of financing methods to construct facilities
(Table 55).
Table 55 Usage charges by financing method
STEP
Yen Loan
IRR 7% case
(Reference case)
Loan interest
0.2%
NA
Loan term
40 years
NA
Grace period
10 years
NA
Viet Nam
Government
bond
10%
(Recent rate:
9-12%)
Maximum 15
years
(40 years with
refinancing
predicted)
0 years
WACC
4.9%
7.0%
11.8%
Usage charge
USD 38/m3
USD 50/m3
Remarks
Government bonds around 8 to
12%, interbank rate of 13 to 16%
There is no alternative to the yen
loan with regards to long term
financing
There is normally no alternative to
the yen loan in terms of grace
period
Expected equity yield is 16%.
USD 101/m3
In the event that the Mega-Float is not financed by the yen loan, it would be financed by a government
bond. It is therefore important to compare the resultant usage charges of the yen loan and government
bond financing methods.
With regards to Viet Nam government bonds, the interbank rate is high at 13 to 16%, and that of Viet
Nam’s government bonds varies between 8 to 12%. Therefore should the government of Viet Nam
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raise funds in Dong, the government bond would be the appropriate choice. Therefore, here the STEP
yen loan is conservatively compared with that of the Viet Nam government bond, and the interest of
the bond is set at 10%.
As a result, the usage unit price is USD 38/ m3 for the yen loan, and over double that at USD 101/ m3
for the government bond. In addition, USD 101m3 equates to USD 16 per barrel, which is
comparatively high in terms of cost hedging. As for the storage and release of oil in emergency, it is
possible to conduct cost hedging in a similar manner as is done by option trading of aviation fuel.
The recent one-year-term option trading premium of crude oil is more than 10%, and the usage charge
of when financing with a government bond is high at USD 16 per barrel, however, if financed by the
yen loan, it becomes as low as USD 6 per barrel.
It is therefore not possible to implement this project without the STEP yen loan.
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122
Chapter 6
Planned Project Schedule
123
124
To install the mega floating oil storage system, the following implementation schedule is adopted.
First, prior to commencement of the total basic design, the survey is executed for the installation site of
the mega floating oil storage system and the marine meteorological condition and geological condition,
in order to clarify the design conditions.
Next, the basic design is carried out. To do the basic design, the designs for both the stockpiling bases
and the mega floating oil storage should be simultaneously executed through coordinating the
requirements of the both designs.
After completion of the basic design, the execution design for the offshore civil engineering works and
the detailed design of the mega floating oil storage are carried out. After completion of the anterior
half of this execution design, the land creation of the caisson yard and the dredging work in the
anchorage are started. After that, the construction works in the mega floating oil storage anchorage and
the onshore equipment works are started, and then the installation works of the sea berth are executed.
In the shipyard, the building of the mega floating oil storage is started. The works in the anchorage in
the offshore base, the land creation of the onshore base and the building works of the mega floating oil
storage are simultaneously executed, by controlling the mutual contact points. Especially, the mega
floating oil storage are to be built by taking into consideration both the completion time of the mega
floating oil storage and the time when the mega floating oil storage can be received in the stockpiling
bases, so that the mega floating oil storage may be towed and installed in the stockpiling bases as soon
as the stockpiling bases is ready for receiving the mega floating oil storage system.
For building of the mega floating oil storage in the shipyard in Viet Nam, it is assumed that an interval
of one year or so is required to be taken between the completion time of the mega floating oil storage
No. 1 and that of No. 2, because the building dock of the shipyard is occupied for almost one year for
building of one mega floating oil storage.
After completion of the mooring construction works of the mega floating oil storage No. 1, the safety
of the stockpiling bases shall be validated by performing the demonstration confirmation of the
mooring state. After that, the comprehensive adjustment operation confirmation with the onshore
equipment is carried out and the operation is started.
In this way, it is possible to receive the oil stockpiling in about three and a half years after
commencement of the construction work, for the construction of the mega floating oil stockpiling
bases. The advantage is that the construction period is shorter than other systems.
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Figure 57 Approximate Building/Construction Schedule
Source) Mitsubishi Heavy Industries, Ltd
According to the schedule determined by the Prime Minister of Viet Nam, the construction of the oil
stockpiling bases shall be started within the year of 2016. Accordingly, it is required to implement the
preliminary survey and make a basic plan in order to start the construction of the oil stockpiling bases
according to the schedule below:
・ 2014: Implementation of field survey (meteorological, oceanographic and geological surveys,
etc.)
・ January 2015: Start of basic design
・ January 2016: Start of construction works
By following the above schedule, operation of the oil stockpiling bases will be made possible in the
middle of the year of 2019. Further, by adopting the mega floating oil storage system, it will be
possible to achieve the project ahead of the master plan.
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Figure 58 Schedule for Achievement of Master Plan in Viet Nam
Source) Mitsubishi Heavy Industries, Ltd.
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128
Chapter 7
Implementing Organization
129
130
Section 1 : Implementing Organization Outline
It is anticipated that the main candidates for this project will be the Ministry of Finance, the Ministry
of Industry and Trade and PetroVietnam.
The Department of National Reserve of Ministry of Finance of Viet Nam manages the country’s
reserve policies. On the other hand, the Ministry of Industry and Trade have drawn up the master plan
for national oil reserves, and the Prime Minister’s office as well as the national reserve office of the
Ministry of Finance are both politically involved. There is no concern with regards to a Yen Loan for
both of the above mentioned organizations, and PetroVietnam’s experience of managing commercial
oil storage facilities suggests that there would also be no problems on the technical side.
Figure 59 Host country implementing organization outline
Ministry of Finance
General Dept. of State Reserve
Ministry of
Industry and Trade
Energy Department
PetroVietnam
(parent company)
Capital Ties
Dung Quat Shipyard
(wholly-owned subsidiary)
The largest shipyard in Vietnam
Source) Mitsubishi Research Institute
( 1 ) Ministry of Finance of Viet Nam Outline
The Ministry of Finance of Viet Nam are the organization which is generally in control of the country’s
financial affairs. It has many departments, and its organizational structure is outlined in Figure 60.
A lower branch of the Ministry, the Department of National Reserve, manages national reserve policy,
emergency response, reserves concerning national safety, and market price stabilization. In addition to
those which are managed by the Ministry of Industry and Trade, there are many organizations related
to national reserves, however, all of these are funded by the Ministry of Finance. There are 22 regional
offices in all areas of the country under its leadership and management.
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Figure 60 Ministry of Finance organizational chart
Professional
Specialized
Units
Ministry of Finance
Leaders
General Department of
National Reserves
<In charge of National Reserve
Policy, including Oil Stockpiling>
Other 10 Divisions
（General Department of Taxation,
Department of Price Management,
etc.)
Minister supporting
apparatus
14 Divisions
（Department of State Budget,
Legal Department, etc.)
Subordinate Units
10 Divisions
（Institute of Strategy and Policy
on Finance, etc. ）
Source) Ministry of Finance website
( 2 ) Ministry of Industry and Trade of Viet Nam Outline
The Ministry of Industry and Trade was formed when the Ministry of Industry and the Ministry of
Trade merged in 2007. The primary objective of the merge was “adaptation to rapid economic
development and implementation of assertive economic development” and the current Ministry of
Industry and Trade’s main missions are economic development and foreign trade policy.
As previously mentioned, the Energy Department, which drew up the national oil reserve master plan,
is in charge of national oil reserves. With regards to the strategic oil reserve on this occasion, as the
commercial reserves of PetroVietnam and Petrolimex differ in nature, it is anticipated that
implementation will be carried out under the leadership of the Ministry of Industry and Trade. In
addition, the Ministry of Industry and Trade are currently preparing a Directorate General for Energy.
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Table 56 Ministry of Industry and Trade organizational chart
MINISTERIAL LEADERS
Ministerial units
┣ Planning Department
┣ Finance Department
┣ Organization and Personal Department
┣ Legal Affairs Department
┣ International Cooperation Department
┣ Ministry Inspectorate
┣ Ministry Office
┣ Science and Technology Department
┣ Heavy Industry Department
┣ Energy Department
┣ Light Industry Department
┣ Export- Import Department
┣ Domestic Market Department
┣ Mountainous Trade Department
┣ Asia - Pacific Market Department (Zone I Department)
┣ Europe Market Department(Zone II Department)
┣ America Market Department (Zone III Department)
┣ Africa, Western and South Asia Markets Department (Zone IV Department)
┣ Multilateral Trade Policy Department
┣ Remuneration and Rewards Department
┣ Electricity Regulatory Authority of Vietnam
┣ Vietnam Competition Administration Department
┣ Market Control Department
┣ Vietnam Trade Promotion Agency
┣ Agency for Industrial Promotion
┣ Industrial Safety Techniques and Environment Agency
┣ Vietnam E-Commerce and Information Technology Agency
┣ Vietnam Chemicals Agency
┣ Ministerial Office In Ho Chi Minh City
┗ Secretariat of the Competition Council
Administrative units
Local Departments
Foreign Trade Offices
Office of The National Committee for International Economic Cooperation
Source) Mitsubishi Research Institute
( 3 ) PetroVietnam Outline
PetroVietnam, Vietnam Oil and Gas Group conducts everything from exploration operations,
development and production, and is a 100% publicly funded organization. Since 2001, the scope of
activities is increasing and it is currently the largest enterprise in Viet Nam, incorporating
technological, insurance and financing operations. As previously mentioned, PetroVietnam are able to
conduct operations from top to bottom, and is the flagship organization of the government in terms of
Petroleum Law.
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Figure 61 PetroVietnam Management Organizational Chart
Source) http://english.pvn.vn/?portal=news&page=detail&category_id=86&id=3281
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Section 2 : Organizational Structure of implementing Organization
It is thought that the implementation of this project will be carried out in line with the structure
outlined in Figure 62 As mentioned above, the Ministry of Finance, Ministry of Industry and Trade,
and PetroVietnam are the main candidates for implementation. As this project is for a national reserve,
the primary organizations are the Department of National Reserve of the Ministry of Finance and the
Ministry of Industry and Trade, however, as PetroVietnam are practically managing oil-related
operations, it is anticipated that fundraising, implementation management and construction
management will be carried out by the Ministry of Industry and Finance, Ministry of Industry and
Trade, and PetroVietnam respectively.
The Department of National Reserve of the Ministry of Finance of Viet Nam manages national reserve
policy and reserves relating to national safety. It is anticipated that the Ministry of Finance will
conduct the financial regulation of this project and the Department of National Reserve will be
involved with practical management. In particular, it is expected that the Ministry of Finance will be
responsible for the guarantee of land and area of ocean. Additionally, fundraising, including the
application for ODA will be carried out by the Ministry of Planning and Investment, and on bureau
level, the Department of Foreign Trade will be in charge of the ODA.
As for the Ministry of Industry and Trade, which drew up the master plan concerning national oil
reserves, it is anticipated that the Energy Department will be a leader in promoting national oil
reserves. It is expected that the Ministry of Industry and Trade will be in charge of implementation
management, and construction and operation etc. will be conducted by PetroVietnam.
It is also anticipated that the PetroVietnam-affiliated Dung Quat Shipyard will carry out the
construction and maintenance of the Mega-Float. This organization has sufficient technical ability, and
implementation will be carried out via technology transfer from Japanese enterprise. The construction
of the hull, installation of the pipeline and electrical engineering will be carried out within the shipyard,
after which the Mega-Float will be taken to its operational location.
Figure 62 Project implementation structure
Ministry of Planning
and Investment
Department of
National Reserve
Borrower:
Government of Vietnam
Ministry of Finance
Financial Agency:
JICA
Ministry of Industry and Trade
Local Reserve
Office
PetroVietnam
Japanese
companies
Dung Quat Shipyard
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Section 3 : Ability of Implementing Organization
( 1 ) Ministry of Industry and Trade of Viet Nam
Changes in the budget of the Ministry of Industry and Trade is outlined in Figure 63. Its budget was
around VND 1.6 trillion Dong in 2010.
Figure 63 Changes in the Budget of the Ministry of Industry and Trade
Source) Ministry of Finance, Annual State Budget Report
( 2 ) PetroVietnam
1 ) Financial conditions
PetroVietnam’s revenue was VND 478.4 trillion in 2010, and which constitutes 24% of national GDP.
Its operating profit was VND 35.6 trillion. Its revenue has been particularly increasing in recent years.
Figure 64 Changes in the revenue of PetroVietnam 2005 - 2010
478.4 trillion
Source) Created from various press releases
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Table 57 PetroVietnam financial conditions 2001 - 2010
Total revenue (billion dong)
2001-2005
460,168
2006-2010
1,347,438
In 2010
440,000
GDP Ratio
Sales of crude oil (USD)
20%
23.3 billion
22%
45.5 billion
25%
8.5 billion
206,378
25%
500,000
27%
120,000
27%
90,000
18%
133,000
20%
35,600
20%
0.5
0.29
0.68
0.36
0.68
0.36
1.33
1.03
1.03
State budget payments (billion dong)
Budget revenue ratio
Net profit (billion dong)
Equity Ratio (ROE)
Debt / Equity Ratio (D/E)
Debt / Total Assets Ratio (D/A)
Incremental Capital-Output Ratios
(ICOR)
Source) Báo điện tử Tầm Nhìn website
http://tamnhin.net/Doanh-nghiep-tu-gioi-thieu/5476/Tap-doan-Dau-khi-Quoc-gia-Viet-Nam-Nhung-buoc-phat-trienGiai-doan-2006--2010-.html
In addition, PetroVietnam are in receipt of extremely favorable political measures, such as financing
from the Vietnam Development Bank, tax reductions at the stages of development and purification,
loans and payment guarantee from the Ministry of Finance, and guarantee of US Dollar supply, etc.
2 ) Technical ability
As for PetroVietnam’s implementation ability, the organization encompasses Dung Quat Shipyard,
which is the country’s largest. The construction of Dung Quat Shipyard began in 2003 and was
completed in 2006. At that time it was entrusted to VINASHIN, however, as of July 2010,
PetroVietnam became 100% owners. Its primary business is shipbuilding, with interests in
maintenance and the construction of machinery and equipment. Its dry dock base is 380m×86m×14m,
and is equipped with a 350 ton crane. Electric power is usually purchased, however, captive power
generation equipment is also available. The site area of 40,000 m2 has been the location of the
construction of various tankers and container ships. Its number of employees is 1800, of whom 400 are
administrative and 1400 are factory based. The training of staff is assertive, and employees are made
to take DNV and ABS qualifications. In terms of recent results, the completion and launch of a
104,000 ton tanker took place on 6 November 2011.
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Chapter 8
Technical
Company
Advantages
139
of
Japanese
140
Japan has constructed and is operating 2 offshore oil storage centers of Kami-Goto oil stockpiling
bases and Shirashima oil stockpiling bases, and has sufficient knowledge on the construction and
operation. Also, these oil stockpiling bases have been safely operated until now.
To design and construct the mega floating oil storage system, a wide range of technologies is required,
including the shipbuilding technology to manufacture super-sized structure and the offshore civil
engineering technology to meet the oceanographic phenomena/meteorological phenomena/geological
conditions at site. Japan has all the required technologies and the operation know-how in the mega
floating oil storage system. These are advantages for Japan.
As shipbuilding technology, Japan also possesses large experiment equipment to execute the water
tank test to meet the oceanographic phenomena/meteorological phenomena conditions of the mega
floating oil storage system, which enables to assure the safety by the water tank test prior to the actual
construction/building. Also, Japan owns the design guidelines focusing on safety, and can design and
build the mega floating oil storage having the life that assures the safety and satisfies a long operation
period.
As offshore civil engineering technologies, Japan has high grade technical capabilities, including
production of caissons, as well as sea bottom foundation works for dolphin installation, undersea
construction works ensuring installation precision, etc.
Also, for operation of the mega floating oil storage system, Japan has know-how regarding daily
maintenance management, establishment of operation organization, periodical inspection, etc. and can
provide the support and advice for safe operation of the mega floating oil storage system in Viet Nam.
In Japan, underwater robots have been also developed for maintenance in the anchorage by utilizing
the underwater device technologies, and the effective operation of these robots enables laborsaving of
maintenance.
As above-mentioned, Japan has experiences that it has actually constructed and operated the mega
floating oil stockpiling bases. Thus, Japan is the only country that can work out effective and smart
design and construction plan by utilizing its know-how, in the future construction of the new mega
floating oil stockpiling bases.
Japanese enterprises will make it possible to construct the mega floating oil stockpiling bases with the
environmental impact minimized, in safe and within a short construction period.
Therefore, the competitiveness of Japanese companies on offshore oil stockpiling facility is high
compared to other countries. If Viet Nam selects the mega oil storage system as its national oil
stockpiling, possibility of Japanese company to get the order is high.
In this case, the equipment used for oil stockpiling system, such as mega oil storage, mooring
equipment, oil shipping and receiving equipment, in land-based facilities, instrumentation equipment,
piping materials and steel plates etc. may be expected to be ordered to Japan. Total amount might be
around 60%.
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Measures to promote Japanese companies to get orders for this project are creation of high technical
value for its products and cost reduction activity.
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