PetroVietnam explains various petroleum-related troubles

The main reason why Viet Nam Oil and Gas Corp (PetroVietnam) failed to fulfil its petroleum development target was because of the inept planning, explained Dinh La Thang, chair of PetroVietnam at the press conference on business results in 2008 held on December 30.

Thang said that forecasts for oil prices in 2009 range from US$20 a barrel to US$60 a barrel. "That means it is very difficult to forecast oil prices," said he.

Currently, PetroVietnam has already put forward some oil price levels in 2009 including the worst case scenario of US$30 a barrel.

Thang added that in case the oil price is US$30 a barrel, plans on developing fields, particularly small fields may not be carried through because it will become very hard to compensate costs.

Furthermore, if oil prices reduce deeply, this will surely impact revenue, business and production and budget contribution of PetroVietnam.

Thus, Vietnam has to put in place preventive measures for the worst case scenarios of reducing oil prices including restructuring investment portfolios, promoting savings and others.

In short-term, in 2009, PetroVietnam will stop buying automobiles, assign standards of production costs, plans, reduce advertising expenses for all products for affiliates, limit meetings and so on.

The corporation's revenue target, PetroVietnam said, is basically not higher than 2008.

Thang said that there were subjective reasons to the corporation's failure to fulfil its petroleum development targets in 2006-2008. Namely, the corporation failed to make definitive plans for three successive years. There were also other reasons such as weather, inflation and economic recession which need to be taken into account.

Explaining the relationship between PetroVietnam promoting overseas crude oil development investment and domestic crude oil stock, Thang said that Vietnam's oil stock is not large and ranks fourth in Southeast Asia. Thus, the Politics Ministry approved PetroVietnam's development strategy on becoming a multi-sector economic group, investing abroad, and posting revenue from petroleum services of some 40 -50% compared to the current figure of only over 20%.

Thang said that in the recent times, PetroVietnam has promoted overseas petroleum investment with 16 projects including six in Southeast Asia and Middle East, six in Africa and four in America. As planned, by 2012, the group will develop oil in Venezuela with a volume of nearly 10 million tonnes of oil a year.

Thang declined to reveal the specific forecast on crude oil volume of Vietnam.

Regarding the plan on selling stake of Dung Quat Oil Refinery, Thang said that the government has allowed PetroVietnam to sell 49% stake when the refinery comes into operation and will prioritise foreign businesses who commit to supply crude oil to the refinery in the long-term.

Answering the reason why the group's petroleum projects have been taken over by foreign contractors, particularly Chinese contractors, Thang said that because our expenses remain modest, we should consider economic efficiency.

However, he noted that not all equipment and technologies are of Chinese origin. Based on different items and contractors, we acquire technologies of different origins in order to make our operations most efficient.

According to Tran Minh Hong, vice general director of PetroVietnam, in 2008, the group has over-achieved the targeted revenue, export and state budget contribution. Namely, the group's oil volume developed this year reached 22.50 million tonnes of oil, achieving 95.7% of the yearly target and 98.8% of the realised figure in 2007.

The group also posted revenue of 280.05 trillion dong, reporting 149.6% of this year's target and increasing by 31.2% against last year, accounting for over 20% of the country's GDP.

PetroVietnam also contributed 121.80 trillion dong to the state budget, making up over 31% of total state budget revenue.

In 2008, PetroVietnam earned US$11.15 billion from export, reaching 146.7% of this year's target, accounting for over 18% of Vietnam's export. (TBKTVN)