New dock planned to support oil refineries

Much coverage has been given of the potential for Vietnam to follow China?s recent advance and mount a competitive challenge to the established Asian shipbuilding nations. However Nguyen Quoc Anh, director of the business and international department at Vietnam Shipbuilding Industry Corporation (Vinashin), believes the coverage has been overstated and that talk of global competitiveness is premature.

“Vinashin is planning firstly to meet the local demand and then be ready for export,” he says.

Anh points to the group?s financial projections for 2002 to support this. Vinashin expects total income of $120 million for the year, with exports accounting for only $20 million of this. This relatively small projection, particularly compared to the sums big Japanese and Korean yards talk in, also demonstrates just how much ground Vinashin has to make up on an international scale.

However China, like Korea before it, has demonstrated that political will and direction can easily create an environment for rapid growth. And the Vietnamese government certainly has the desire to create a viable shipbuilding and repair industry as evidenced by its planned investment strategy for Vinashin.

Much of the dockyard development is focused around the government?s investments in oil refining capacity. Currently Vietnam has no refining capacity, which as an oil producing nation means it has to export crude oil and import refined products. Its oil fields produced about 17 million tons of crude oil last year, while the national demand for refined products is currently about 10 million tons/ year, a figure that the government forecasts to double by 2010. The belief locally is that the absence of local refining capacity is losing the country significant sums of money.

To overcome this, state-owned oil company PetroVietnam, with the support of Russia?s Zarubeznheft, is investing in a $1.3 billion, 6.5 million tons/year capacity oil refinery at Dung Quat, in central Quang Ngai province. It is planned to have the refinery in operation by 2004. The government has also issued approval for the building of a second $2.5 billion refinery at Nghi Son in the northern Thanh Hoa province, 125km south of Hanoi. This is planned to be operational by 2008. Together the two refineries would have a capacity of 13.5 million tons/year.

Vietnam stretches 1,650km from north to south and has about 3,000km of coastline making the shipping highway convenient and relatively inexpensive for transporting oil products. As things stand today, shipping crude oil in and refined products out would require the use of foreign-owned tonnage. The government, naturally, is keen to develop opportunities for local business so PetroVietnam is taking the opportunity to develop a local fleet to serve the refineries, both in terms of ownership and build.

Last year, PetroVietnam signed a letter of intent with Vinashin for the construction of a fleet of tankers up to Aframax size. Vinashin currently has the capacity to build such ships, but only at its joint venture yard with Korea?s Hyundai, Hyundai-Vinashin, at Ninh Puoc, 50km north of Nha Trang City. It is the lesser partner in this joint venture, with a 30% holding.

Subsequent to receiving the letter of intent from PetroVietnam, Vinashin set about investigating building its own 100% owned 120,000 dwt capacity dock in order to meet the commitments. The site chosen for the dock is adjacent to the first refinery in Dung Quat. Feasibility studies are complete and Vinashin is now negotiating with a building contractor. It is expected that first ground for the dock will be broken next year.

Sources close to the project indicate that the new yard would be in a position to start assembling its first blocks by the end of 2004, with a first ship taking 18 months to complete and a subsequent delivery rate of one per year. The dock is intended to be available for both building and repair. At the conclusion of Vinashin?s investments at Dung Quat, in 2010, it is intended for the site to be able to drydock VLCCs.

“It is an ambitious plan, which we shall concentrate very much our resources into performing,” says Anh.

It is, however, not the only shipyard development plan in progress. Vinashin has allocated D6,325 billion ($413 million) for development projects over the years to 2010. D4,210 billion of this is for projects up to 2005.

“With this new investment we should be able to build Handysize vessels in Halong and Namtrieu shipyards by 2005,” says Anh.

The fruits of investments already made are starting to materialise. In the second half of last year, the slipways at Halong and Bachdang were upgraded to allow small handy vessels up to 15,000 dwt to be built on them. In September, the first of two 11,500 dwt freighters ordered by Vinashin Shipping and Service Company from the Bachdang and Halong shipyards was launched at Bachdang. The second is launched at Halong in a few months.

Small as the ships might seem in global terms, in Vietnamese terms they are big. For equipment exporters, bigger ships bring greater opportunity. The Danish two-stroke division of engine-company MAN B&W, for example, secured its first sale into Vietnam courtesy of these two freighters. In August two 7S35MC engines, each with an output of 5,180kW at 173 rev/min ? one for each ship ? arrived in Vietnam from MAN B&W?s factory in Frederikshavn, Denmark.

Other successes for Vinashin this year include the delivery of three 6,500 dwt dry cargo ships, one 2,000m3 LPG carrier and three 1,500m3 dredgers. In addition the group?s yards have undertaken a 30,000 dwt heavy-lift conversion and cut steel for two 1,016 TEU container feeders, two 4,000 dwt dry cargo ships and one 13,500 dwt oil product carrier. n

* Special thanks to Tommie Berntsson of Bytecommunication Sweden, a consultant on conducting business in Vietnam, who provided invaluable assistance in compiling this report.

Advanced offshore support

Vietnam?s oil reserves are under the South China Sea, off the country?s southern coast. Like any offshore network the rigs and production platforms that extract and process the oil require a fleet of support vessels to service them. Vietnam is also, therefore, exploring the possibility of building offshore vessels.

There is a heightened need for greater operational capability than the current fleet servicing the offshore industry provides. A good example of this is Vung Tau, a 1,900 dwt tug/supply ship owned by Vietsovpetro, one of several companies formed as a joint venture between Vietnam and Russian business to develop the Vietnamese oil and gas fields. The Korean-built ship is to be equipped with dynamic positioning technology later this year.

The equipment ? an ADP11 stand alone simplex DP system supplied by France?s Alstom ? will be installed and commissioned at the vessel?s base port of Vung Tau. It is a first order for Alstom for a dynamic positioning system from Vietnam.

“We?re delighted to have penetrated this new market and hope it leads to further orders for our technology,” says Chris Brannigan, business manager DP, Alstom.

Philippines

Tsuneshi examining

Philippines

expansion

The Filipino shipbuilding division of Japan?s Tsuneishi Group is seeking to expand facilities with the building of a second, larger slipway. An official at Tsuneishi Heavy Industries (Cebu) explains that a study is presently underway to examine the potential – in both physical engineering and market demand terms ? for constructing a second, larger building facility.

“We want to have a slipway or graving dock capable of building bigger ships,” explains the official. “At this moment the idea is to have a slipway.”

The official is unable to confirm when the study will be complete although he indicates the yard authorities are trying to get it completed as soon as possible. Only if the study proves that market demand exists will the plans progress to a construction stage says the official.

Presently Tsuneishi Heavy Industries (Cebu) has a single 200m x 34m slipway, serviced by a 100t gantry crane and two 50t jib cranes, on which bulk carriers up to 52,300 dwt are built. This is the size of Tsuneishi Group?s Tess52 design handymax bulk carrier, which has a loaded draught of 12m and a cargo hold capacity of 67,500m3 (TESS ? Tsuneishi Economical Standard Ship). The MAN B&W 6S50MC powered design is a flush deck type, without forecastle and poop. It has a curved stem bulbous bow, transom stern, a semi-balanced rudder with SURF (Swept-back Up-thrusting Rudder Fin)-bulb and is capable of 14.5 knots.

The Tess design has proved popular with owners and Tsuneishi Heavy Industries (Cebu) has a healthy orderbook stretching into 2004. The Tsuneishi Group also markets a Tess76 design panamax bulker. It presently only has the facilities to build this design in Japan, at its Tsuneishi and Tadotsu factories. The Japanese yards are also marketed with designs of aframax, capesize and suezmax bulkers and various tankers, container ships and car carrier designs.