Petroleum firms posting first-half flat business results

According to a recent report, the group extracted 8.92 million tonnes of crude oil in the first six months of this year, an excess of 556,000 tonnes against projection, and equal to 55.6 per cent of the entire 2016 business plan.

Of this figure, 7.91 million tonnes were exploited domestically, up 7.7 per cent compared to the first-half plan and 1.01 million tonnes were extracted abroad, almost achieving the set target.

Its major members, which include the flagship Vietsovpetro joint venture (JV), PetroVietnam Exploration and Production Corporation (PVEP), and Russian-based Rusvietpetro JV, have all failed to achieve other business targets and underperformed compared to last year’s similar period.

Vietsovpetro mined 2.54 million tonnes of crude oil, reaching their first-half target. The JV however, posted VND19.8 trillion ($9.04 billion) in total revenue, equal to 84 per cent of its first-half plan, or 38 per cent of the year’s projection, down 29 per cent on-year.

The oil price dropping by 33.4 per cent, equal to $20 per barrel compared to last year’s similar period, was cited as the main cause for the JV’s gloomy performance.

Consequently, the company’s after-tax profits amounted to just VND3.72 trillion ($170 million), equal to 82 per cent of the first-half plan or 40 per cent of the year’s projection, down nearly VND1.5 trillion ($68.4 million) against last year’s corresponding period.

PetroVietnam’s other member, PVEP, is in the same situation.

While its total mining output surpassed its first-half plan by 5 per cent to reach 2.91 million tonnes, the firm achieved only 78 per cent of its first-half total consolidated revenue, a mere 39 per cent of the year’s projection.

Compared to last year’s similar period, its first half consolidated revenue of VND15 trillion ($685 million), slid 25 per cent. The global oil price plunge of 33.4 per cent was also cited as the chief reason for its poor performance.

In respect to the Rusvietpetro JV, though the Vietnamese side surpassed its first-half extraction output by 7,500 tonnes to reach 785,500 tonnes, the JV only reported $193.5 million in revenue, equal to 40 per cent of the year’s plan.

In fact, the global oil price fall, beyond all expectations, has brought significant challenges to PetroVietnam and PVEP in controlling the production cost and moderating business operations.

This has put pressure on PetroVietnam to increase oil reserves for this year as well as raising its exploration capacity in the long term.

In respect to the challenges faced by PetroVietnam in the wake of plummeting oil prices, the company’s general director Nguyen Vu Truong Son said that early this year, when the global oil price dipped below $30 per barrel, their 12 drilling wells had failed to balance money streams. These wells made up 55 per cent of the group’s total exploitation output.

When the oil price inched up to $45 per barrel, five wells could not reach financial balance, representing 28 per cent of the total output.