Tumbling oil price results in workforce restructuring over next five years.
Vietsovpetro will cut its employee numbers down to 5,000 over the next five years from 7,200, Mr. Tu Thanh Nghia, CEO of Vietsovpetro, the largest joint venture between Vietnam and Russia, told local media on February 19.
Over the last two years Vietsovpetro has already cut 600 jobs: 200 in 2014 and 400 in 2015.
“We have a plan but have not announced these cuts because we prefer not to attract public attention,” Mr. Nghia said.
The task of sacking 2,000 employees over five years is a major challenge, he said, adding that he hopes that after completing the cuts the company will be in a better position to cope with the lower oil price.
In 2015 Vietsovpetro also merged two of its 17 factories and closed one.
In need of capital
Mr. Nghia supports the view that the company should explore more oil despite the declining oil price. He therefore plans to borrow over $1 billion in oil capital the Ministry of Finance is holding. “We really need this capital,” he emphasized.
He acknowledged that Vietsovpetro is already having difficulties in securing $75 million of this capital. If this is not done by April it will have no funds, he said.
He also supports the view that smaller oilfields should be closed. The Vietnamese and Russian parent companies are aware of his views but no answer has been received as yet. He believes that oilfields with high operation costs should also be closed, as losses will continue if they are not.