China-backed refinery starts operations in Laos

Construction News Laos

China-backed refinery starts operations in Laos

Laos has started operations at its first-ever refinery, a small 20,000 b/d plant majority-owned by Chinese investors.

Operator Lao Petroleum and Chemical (Laopec) plans to add another 40,000 b/d of capacity at the Vientiane refinery in another two phases, with a total estimated investment of around $2bn.

Laopec is owned by the Lao-China Dongyan Petrochemical joint venture, which is 59pc held by China’s state-owned Yunnan Provincial Overseas Investment, 20pc by local firm Lao State Fuel and 16pc by private-sector Chinese company Yunnan Dongyan Industrial.

The project is located in the Saysettha development zone, which is backed by China’s Yunnan provincial government and the Vientiane government under China’s regional ‘Belt and Road’ initiative.

The refinery project was originally backed by Yunnan Dongyan Industrial. Site construction work started in 2014 but was delayed by financing issues. Work restarted after more financing was secured in 2017, when Yunnan Provincial Overseas Investment took over leadership of the project.

The refinery in the capital Vientiane will produce 8,000 b/d of gasoline and 10,000 b/d of diesel when it reaches full capacity, Luoyang Ruize Petchem Engineering, the major shareholder in Dongyan, said in 2017. The refinery, which has 500,000 t/yr of diesel hydrogenation capacity, will also produce 35,000 t/yr of LPG, 12,000 t/yr of pure benzene and 4,000 t/yr of sulphur at full capacity. The benzene and sulphur will be sold to China.

More recent figures are unavailable. Details of refinery feedstock are also unclear.

The 2017 production estimates suggest the refinery will produce enough to supply the majority of Laotian oil demand, which was just 23,000 b/d in the same year, according to estimates from the US Energy Information Administration.

Landlocked Laos has previously on imports to meet its petroleum demand, mainly from China, Vietnam and Thailand. State-controlled PetroChina started exporting diesel to the country from its 260,000 b/d Anning refinery in Yunnan province in 2018.