PTT Plc, the national oil and gas conglomerate, may have to scrap plans to develop a US$20-billion refinery and petrochemical complex in Vietnam's Binh Dinh province.
President and chief executive Tevin Vongvanich said the local administration has issued a new policy to develop the area adjacent to Binh Dinh province as a tourist destination, which would mean a halt on heavy industry in the area.
"We are waiting for an official confirmation from the local administration before making our own decision about the petrochemical projects," Mr Tevin said.
PTT studied the possibility of investing in central Vietnam for more than three years and had hoped to start construction this year with partner Saudi Aramco, the world's biggest oil producer.
The project included a 400,000-barrel-a-day refinery and olefin and aromatic petrochemical plants with a combined annual output of 5 million tonnes that would meet Vietnam's domestic demand for oil and petrochemical products and help boost Vietnam's exports.
According to the plan, PTT and Saudi Aramco would each hold a 40% stake in the project, which was to be located in Binh Dinh's Nhon Hoi economic zone, while the Vietnamese government would own the remaining 20%.
The shift in economic policy came after elections in Vietnam this year. PTT now faces the choice of cancelling the project or seeking an opportunity to develop it in a different area of Vietnam.
"We would have to reconsider the project rationally, since we need to think about our necessity and appropriation," Mr Tevin said.
He said the company has assigned IRPC, its petrochemical arm, to conduct a feasibility study.
PTT launched the petrochemical complex project in Vietnam in 2014 by joining with Saudi Aramco, which later withdrew from the venture.
IRPC, on behalf of PTT, sought a new partner to continue with the project. However, the project's allotted budget was revised down from $20 billion to $12 billion as weaker oil prices cut profit margins.
IRPC chief executive Sukrit Surabotsopon said PTT and IRPC are awaiting official direction from the Binh Dinh administration on whether it will continue the plan to promote the petrochemical industry in the area.
If the local government aims to stop promoting petrochemicals in the area, the company will seek other partners, he said. The final decision is expected to take a few months.
"There are several petrochemical projects in Vietnam," Mr Sukrit said. "We aim to partner with a company that has already studied the project, which is better than starting a time-consuming and complicated process."