Dow Jones Newswire last week quoted state-run PetroVietnam’s general director Do Van Hau as saying the Vietnamese government had agreed to act as the guarantor for some debt liabilities of the giant project, but it would not guarantee any project loans.

Hau’s statement followed Idemitsu’s executive officer Shunichi Kito telling the press in Tokyo that the main obstacles in the financial negotiations had been settled.

Hau said Nghi Son’s developers comprising PetroVietnam, Kuwait Petroleum International and Japan’s Idemitsu Kosan and Mitsui Chemicals had reached a consensus about the Vietnamese government’s guarantee.

So far, commercial banks have refused to provide loans to the four-year-old project without the government guarantees. "We are in the final stage of negotiations. There are no big problems with the Vietnamese side. The negotiations are not in a state of deadlock,” Kito said.

PetroVietnam chairman Phung Dinh Thuc said the refinery’s construction may kick-off in 2012’s third quarter.

Situated in central Thanh Hoa province, the project’s existing developers are PetroVietnam with 25.1 per cent, Kuwait Petroleum International with 35.1 per cent, Japan’s Idemitsu Kosan with 35.1 per cent and Mitsui Chemicals with 4.7 per cent.

The project when finished will have a designed capacity of 10 million tonnes of crude oil a year, or 200,000 barrels a day, 1.5 times greater than the capacity of the existing Dung Quat oil refinery.

Nghi Son has been designed to refine crude oil imported from Kuwait, while Kuwait Petroleum International will provide all the input materials to the refinery.

Refined products will be sold into the domestic market and various petrochemical products will be produced for domestic and export markets.

Nghi Son will consist of onshore and offshore installations. The onshore installation will feature main refinery and petrochemical complex covering 328 hectares, onshore pipeline route to the jetties and a marine harbour.

The offshore installations include main breakwater, access channel, turning basin, intake channels, crude oil pipelines, and a single point mooring.