Russian joint venture to cut 2,000 jobs over five years

Tu Thanh Nghia - General director of Vietsovpetro

Vietsovpetro general director Tu Thanh Nghia was quoted as saying that the company would soon submit to PetroVietnam a plan to cut its headcount.

According to Nghia, the Russian side requested Vietsovpetro to reduce the headcount to under 5,000 from the current 7,200.

Nghia said Vietsovpetro had been implementing a strong policy of restructuring for the past year. In 2014 only they cut 200 job titles. In 2015, they cut 400.

“Vietsovpetro’s cutting its headcount is going to help increase its competitiveness to better come to terms with the falling oil price,” Nghia said.

He also said that Vietsovpetro was facing financial difficulties. Specifically, Vietsovpetro finds itself in a dire need for capital, and it may run out of cash as soon as in April.

In Nghia’s opinion, as the price of oil keeps falling, Vietnam should continue the exploration of oil, but closing some fields would mitigate some of the on-going, temporary difficulties.

“Keeping fields with high operating costs and a high breakeven price open can only mean incurring unnecessary losses,” he said.

Vietsovpetro is a joint venture between PetroVietnam and Russian Zarubezhneft. It is the biggest oil joint venture in Vietnam, boasting the revenue of $66 billion as of mid-2015. In a recent interview with Petrotimes, Nghia said 2015 was a difficult year for Vietsovpetro when the average price of oil decreased from about $100 per barrel in 2014 to about $55 per barrel in 2015.

According to Reuters, oil prices jumped on Monday following steep losses in the previous session. Specifically, US crude futures rose over 3 per cent to stand above $30 per barrel, trading at $30.59 at 0809 GMT, while international benchmark Brent also showed a 2.4 per cent hike to sell for $33.83 per barrel.