Leaders of the Vietnam National Oil and Gas Group (PetroVietnam) view the successful projects of the PetroVietnam Exploration Production Corporation (PVEP) as being major, effective investments. Stemming from a strategy to explore overseas oil reserves, its results prove PVEP has made the right decisions.
In Vietnam, PVEP has been a pioneer in developing the petroleum business overseas but in doing so has faced more challenges than opportunities, according to President and CEO Dr Do Van Khanh. Cost is often a hindrance to PVEP identifying potential oil reserves or taking part in their exploitation. “Moreover, many destinations with a good investment environment have been covered by others, so PVEP must go elsewhere despite any complicated natural and political conditions,” he said.
As a result, PVEP invested in a project in Algeria in 2002 despite the severe desert climate and unstable political situation. Two years later PVEP also made the effort to buy an oil site in the Amazon rainforest in Peru, where conditions were tricky to say the least. Former PVEP leaders have pointed out that the key steps in their strategy to overcome difficulties is to focus on effective long-term investment. Overcoming the challenges, PVEP found success in its Algeria project and will exploit its first oil at the end of this year. Moreover, the Peru site saw oil flow in 2013 and is operating smoothly.
To achieve its goal of becoming the leading petroleum group in the region, PVEP has adopted three main solutions: accelerating project progress, intensifying the purchase of overseas oil sites, and guaranteeing finances and human resources.
PVEP’s key abroad projects are currently in Algeria, Peru and Malaysia, which are expected to increase oil output in 2016 and 2017 and double the figure by 2020. Another project, the Junin site in Venezuela, begun by PVEP four years ago, is one of PetroVietnam’s largest overseas projects. Contributing 40 per cent of the capital and Venezuela the remainder, PetroVietnam has been able to exploit 600 million barrels of oil out of an estimated reserve of 1.4 billion. Nevertheless, the project has been restrained by skyrocketing inflation in Venezuela (between 30 and 60 per cent) and the fixed exchange rate between the domestic currency and the US dollar, which is lower than its free market value. Costs have spiralled as a result.
Its oil activities in foreign countries are growing and new projects are under negotiation, which will ensure an increase in oil supplies and boost profits in the long term. Finance and human resources are considered the most important factors at PVEP, Mr Khanh emphasised. More staff are being trained as more projects come into play. In the financial sphere, PVEP is concentrating on guaranteeing it meets international standards in finances and transparency and is evaluating its creditworthiness to attract foreign capital. International banks have assessed PVEP as being in financial good health, meaning it can readily access loans to conduct its projects.
Appreciating the support and encouragement from the leaders of the goverment, ministries, overseas diplomatic agencies and PetroVietnam, PVEP is making solid steps to gain more achievements in the future stage of development.