Vietnamese oil companies continue to grapple with the plunging crude oil price.
The continued tumble in global oil prices has battered oil and gas shares on Vietnam’s stock market in recent times and is a problem for the industry in country, according to Mr. Le Minh Hong, Deputy General Director of PetroVietnam (PVN).
Leaders in Vietnam’s oil industry, such as the PetroVietnam Exploration Production Corporation (PVEP), have all felt the pinch and made little in the way of profit in 2015.
Vietsovpetro, a joint-venture between Vietnam and Russia with sales in the billions of dollars each year, is also facing tough times. General Director Tu Thanh Nghia confirmed it is experiencing the greatest difficulties in its history. Last year it had to cut costs, reduce staff, and slow down less-important projects. It even closed exploitation wells with high production costs. Despite these efforts it still lost more than $200 million.
PVN’s normal exploitation price is $24.4 per barrel. If crude oil dips below $20 per barrel the impact on the industry and the State Budget will be substantial. PVN has prepared plans in case the price continues to fall, emphasizing that it would complete existing projects on schedule to prevent extra costs. Notably, it already planned to cut costs by 20 to 30 per cent.
Despite oil being one of Vietnam’s most important industries it is not the biggest. “The falling oil price is a concern for countries that rely only on oil to grow,” said Dr. Tran Ngoc Tho, Head of Corporate Finance at the HCMC University of Economics. “It is a problem for oil companies in Vietnam but not for the country as a whole.”