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Rising oil prices pushes up PVN's 1H after-tax profit

Released at: 13:48, 14/07/2017

Rising oil prices pushes up PVN's 1H after-tax profit

Photo: PVN

First-half profit of $576 million largely attributable to rising crude prices.

by Duy Anh

Amid the recent crackdown on its loss-making projects, the Vietnam Oil and Gas Group (PetroVietnam) saw after-tax profit for the first half of this year rise to VND13.1 trillion ($576.3 million), equal to 79 per cent of the annual plan, mainly due to a surge in the global crude oil price and an increase in crude oil extraction to back Vietnam’s economic growth.

The group extracted a total of 7.9 million tons of oil in the first half, 141,000 million tons higher than the half-year target, with some 0.97 million tons also coming from abroad, while gas extraction output stood at 5.25 billion cu m.

During the period, PVN’s total revenue rose by 16 per cent year-on-year to VND247.1 trillion ($10.9 billion), equal to 56 per cent of the annual plan. After-tax profit rose by 15 per cent compared to the target, to VND13.1 trillion ($576.3 million), equal to 79 per cent of the annual plan.

“The surge in domestic oil extraction significantly contributed to the country’s GDP growth,” PVN CEO Do Chi Thanh told a meeting to review the group’s performance on July 13, adding that despite many difficulties, PVN has managed to surpass all business production targets set by the government by 2-19 per cent.

Once representing 20 per cent of the country’s GDP growth, Deputy Minister of Industry and Trade Do Thang Hai said that PVN plays a crucial role in the economy and is now contributing roughly 10-12 per cent of the country’s GDP.

The Deputy Minister then asked PVN to focus all resources on oil and gas projects in the second half of 2017, affirming that the Ministry of Industry and Trade (MoIT) will coordinate with the group to propose adjustments to financial mechanisms and measures to remove bottlenecks.

The main factor behind PVN’s growth in the first half was rising crude oil prices, which stood at an average of $54.4 per barrel during the first six months, 8.8 per cent higher than the annual estimate of $50 per barrel. Brent oil is currently fluctuating around $45-48 per barrel.

Following a directive from the Prime Minister, PVN will strive to reach the annual extraction target of 13.28 million tons of crude oil and 10.61 billion cu m of gas during the remaining months of this year, Mr. Thanh said.

Criticism earlier arose over PVN’s plan to raise its annual oil extraction by 1 million metric tons this year, as experts believed it would not present much of a boost to Vietnam’s economic growth.

According to estimates by the National Center for Socio-Economic Information and Forecasting (NCIF), 1 million additional tons to PVN’s production would only lead to a 0.25 per cent boost to the country’s economy.

Last week, Deputy Prime Minister Vuong Dinh Hue openly criticized PVN for the ineffective handling of unprofitable projects, at a meeting with the MoIT and some State-owned enterprises to seek measures for dealing with 12 loss-making projects, five of them at PVN.

Of the five projects, the MoIT decided to declare the Phu Tho Ethanol Biofuel Plant and the Dung Quat Ship Building Industry Company bankrupt.

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