PetroVietnam upbeat despite falling oil price

Staff work at a gas pipeline system at the PetroVietnam Nhon Trach Power Plant 2 in Dong Nai Province. The economy is benefiting from declining oil prices, the group's chairman said. While revenue from oil exports could shrink, profits will increase in other sectors. - VNA/VNS Photo Huy Hung

At a meeting yesterday in Ha Noi, PetroVietnam chairman Pham Xuan Son said the whole economy was benefiting from declining oil prices. While revenue from oil exports could shrink, profits would increase in other sectors.

"It's not good to see the oil price plunging too low, but at US$60-70 per barrel, it's not a big deal," Son said.

However, he added that if global oil prices fell below $60 per barrel, PetroVietnam would consider stopping production at the oil fields where production cost exceeded sales price.

The average production cost at most PetroVietnam oil fields was around $30-37 per barrel, according to Son. At four oil fields, production cost was more than $60 per barrel but the production capacity there was small, only around 450,000 tonnes in 2015.

PetroVietnam produced 17.39 million tonnes of oil in 2014, an increase of 7.3 per cent over the group's yearly target, while gas production for the first time hit 10.2 billion cubic metres, 7.4 per cent over the target. Oil and gas reserves also surpassed the goal by 37.5 per cent this year to reach 48.11 million tonnes of oil equivalent.

The group discovered nine new oil and gas places and began exploration at eight.

PetroVietnam deputy general director Le Minh Hong said the group met all business targets ahead of schedule despite the difficult domestic and global economic environment.

The whole group, including affiliates and subsidiaries, saw revenue of VND745.5 trillion ($34.8 billion), exceeding the target by 11.8 per cent. Revenue of the group itself was VND370 trillion ($17.3 billion). Total profit was VND46 trillion ($2.1 billion). The group contributed VND178.1 trillion ($8.3 billion) to the State Budget.

Production of electricity, fertiliser and petroleum exceeded targets by 5-23 per cent. Electricity production reached 16.48 billion kWh, a rise of 5 per cent over the plan. Fertiliser production hit 1.64 million tonnes, up 7.7 per cent, and petrol production reached 5.71 million tonnes, up 23.2 per cent.

In 2015, PetroVietnam aims to produce 26.6 million tonnes of oil equivalent, including 16.8 million tonnes of oil and 9.8 billion cubic metres of gas.

The electricity output target was set at 18.50 billion kWh, fertiliser production at 1.525 million tonnes and petrol production at 5.55 million tonnes.

The group also prepared revenue scenarios depending on global oil prices ranging from VND515.1 trillion ($24 billion) at the oil price of $60 per barrel to VND718.4 trillion ($33.6 billion) at the oil price of $100 per barrel.

On the issue of investment overseas, Son said overseas investment was a long-term strategy and should not be affected by short-term oil price fluctuations. However, the group would strengthen risk management for existing projects while seeking opportunities to buy oil fields overseas at cheap prices.