PVN reaches target at the expense of efficiency

According to the state-run group's report released last week, PetroVietnam (PVN) increased total revenue for the first six months of this year by 16.4 per cent to VND380 trillion ($18 billion), meeting 57 per cent of the government's annual target.

However, average after tax Return on Equity (ROE) of the first half of the year reached 6.5 per cent and average Return on Asset (ROA) reached 3.3 per cent compared with the same period of last year of 7.5 and 3.8 per cent respectively.

Efficiency falls were blamed on a decline in crude oil volumes from some fields compared to the same period last year.

Moreover PVN figures revealed that the firm’s highest revenue was mostly sourced from core and monopoly sectors, while PVN did not fare any where near as good in markets in which it faced higher competition.

The group recorded high revenues in oil and gas exploration and exploitation, oil refining and gas.

Outstanding affiliates and subsidiaries which recorded high revenue included Vietsopetro, PetroVietnam Exploration Production Corporation, Petrovietnam Drilling & Well Service Corporation and Drilling Mud Corporation.

However the group’s revenue from power, fertiliser and petrol fell 10.8 per cent compared to the same period of last year, mainly because of Dung Quat refinery’s down-time for maintenance earlier this year.

In terms of power production, due to tough competition with many other manufacturers and problem in the PM3-Ca Mau pipeline, PVN’s power manufactures produced 8.44 billion kWh, a fall of 6.6 per cent compared to the same period last year.

Lower revenues compared to the same period of last year were also seen in a range of other non-core fields, such as services (12 per cent), finance (25 per cent) or consultation and construction (68 per cent).

PetroVietnam Energy Technology Corp, PetroVietnam Oil Corporation and PetroVietnam Insurance Joint-Stock Company all posted poor results.

In the second half of this year, PVN planed to promote production and business, continue its restructuring plan – including withdrawal of capital from non-core businesses, equitisation and adjustment of its 2015-2035 development strategy.

It would continue to develop markets for new products, including fibre and bio fuel.

PVN produced 13.87 million tonnes of crude oil and gas in the first half of this year, 11.4 per cent higher than its target, including 5.39 million tonnes of gas and 8.48 million of crude oil used at home and abroad.

It produced 2.46 million tonnes of petrol and oil, an increase of 16 per cent compared with its target for the first half.

This year, the group planned to produce 26.63 million tonnes of crude oil and gas, including 16.83 million tonnes of crude oil, produce 4.76 million tonnes of petrol and oil products and need VND100 trillion ($4.74 billion) in capital for implementing its projects.

PVN expected to gain a year-on-year increase of 6.8 per cent in its total revenue to VND673.3 trillion ($31.91 billion) for this year.