PetroVietnam meets targets despite Covid-19 and oil price drop

PetroVietnam President and CEO Le Manh Hung presided over an October 7 online meeting on production and business results in the first nine months of 2020

Given the heavy impact of the pandemic and falling global oil prices with almost no sign of stability, the Organization for Economic Cooperation and Development (OECD) has forecast a negative growth rate of 4.5 percent for the 2020 global gross domestic product (GDP). Specifically, EU countries were forecast to face a negative GDP growth of 7.9 percent; the US minus 3.8 percent; Russia minus 6.8 percent; France minus 7.3 percent; the UK minus 10.1 percent; and India minus 10.2 percent.

Meanwhile, reputable energy organizations predicted global aggregate demand for crude oil would decrease by 0.5-1.0 million tonnes in the rest of 2020 and the first two quarters of 2021 compared with August forecasts. In a September report, the Organization of the Petroleum Exporting Countries (OPEC) forecast 2020 global demand for oil would decline by 9.46 million barrels per day, more than the 9.06 million barrels forecast in August. Due to declining demand for “black gold” and the shift to renewable energy, many oil and gas giants face losses and had to cut their staff and offer their assets for sale. Exxon Mobil announced 1,600 job cuts in Europe from now until the end of 2021; Royal Dutch Shell intends to cut 7,000-9,000 jobs or about 10 percent of its staff by 2022 to reduce expenses; the US petroleum service group Schlumberger plans to slash one fifth of its workforce, equivalent to 21,000 jobs; in June 2020, BP, the British multinational oil and gas company, announced the loss of 10,000 jobs worldwide or 15 percent of its workforce.

In the domestic market, the Covid-19 pandemic continues to have adverse impacts on investment, production and consumption.

Oil extraction exceeds target

In September 2020, under the guidance of PetroVietnam, member units continued implementing measures to cope with the impact of Covid-19, focusing on reducing expenses, and maintaining stable production and business activities to achieve major targets. In the first nine months, oil and gas reserves increased by 15 million tonnes of oil equivalent (the growth target for 2020 is 10-15 million tonnes of oil equivalent); total extraction output reached 15.71 million tonnes of oil equivalent, exceeding the nine-month plan by four percent; oil extraction reached 8.64 million tonnes, 9.4 percent above the nine-month plan, of which overseas extraction output accounted for 1.38 million tonnes, exceeding the plan by 5.2 percent; nitrogenous fertilizer production reached 1.34 million tonnes, exceeding the plan by 112,000 tonnes or 9.1 percent.

Vietsovpetro welcomed the first oil flow from the BK21 rig on October 2, 2020

In the first nine months, PetroVietnam’s revenue reached VND423.2 trillion and the group paid taxes totaling VND50.2 trillion to the state budget. Despite oil price falls and the Covid-19 impact, its member units achieved positive production and business results, maintaining the group’s stable financial situation.

At a recent online meeting, PetroVietnam President and CEO Le Manh Hung praised the group’s member units, saying the entire group saved VND636 billion in September and VND7.17 trillion in the first nine months. In September, the Vietsovpetro Joint Venture put the BK21 rig into operation one month ahead of schedule, and welcomed the first oil flow from it on October 2; the Binh Son Refining and Petrochemical Joint Stock Company (BSR) completed the fourth overall maintenance of the Dung Quat Oil Refinery; the Petrovietnam Fertilizer and Chemicals Corporation (PVFCCo) and the PetroVietnam Ca Mau Fertilizer Joint Stock Company (PVCFC) exported 320,000 tonnes of fertilizer - the highest on record.

Hung said that successful efforts to improve the management system as well as positive production and business results have resulted in a BB+ Fitch credit rating for PetroVietnam. He affirmed that despite the challenges, the group has effectively maintained stable incomes and employment for oil and gas workers.

He urged PetroVietnam’s member units to continue maintaining stable production and business activities for 2020 and set targets and plans for 2021.