Government
Viet Nam Oil & Gas Group, known as PetroVietnam, agreed Tuesday to a financing deal with the nation’s investment arm to pay for expansion as the group plans to develop overseas oil fields to offset decreasing output.
State Capital Investment Corp. (SCIC), the country’s sovereign fund, will buy shares in the group’s oil refineries and other oil and gas projects, ensuring the two state-run companies maintain at least a 51% stake between them, according to an e-mailed statement from the Hanoi-based group Tuesday. The company will also invest in ongoing projects, according to the statement.
Viet Nam is under pressure to expand its crude oil output since its seven proposed refineries, to be in production during the next decade, will need 55 million tons of crude every year.
SCIC will hold stakes in PetroVietnam’s unlisted companies and will also finance overseas projects of the group, according to the statement.
PetroVietnam said in an e-mailed statement Tuesday its crude output dropped for the fourth straight year because of aging fields, technical problems and bad weather, and forecasted that 2009 will be a “very difficult” year.
Production of crude oil and condensate declined 5.7% to 15 million tons in 2008 from 15.9 million tons last year, the state-run group said.
Declining output
PetroVietnam is counting on new areas such as Ca Ngu Vang, Phuong Dong and Su Tu Vang to boost crude production as output at Bach Ho field, in operation since 1986, falls. Crude exports account for 20% of the country’s gross domestic product, according to the group.
“It will be a very difficult year in 2009 as no one can have a sound forecast on where oil prices will be,” said Dinh La Thang, PetroVietnam’s chairman.“ If prices go down to US$30 a barrel, it would deal a severe blow to not just the group but the country’s finances.”
The group’s overall revenue jumped 31% to VND280 trillion ($16 billion) this year after crude in New York reached a record $147.27 a barrel in July. Oil has since plunged 73% as the global economic slowdown curbed energy use.
Production also decreased because of “technical problems” at some fields jointly operated by Vietnam and Malaysia while unfavorable weather delayed output, Phung Dinh Thuc, PetroVietnam’s deputy chief executive officer, said by telephone from Hanoi.
Overseas fields
PetroVietnam aims to produce 16 million tons of crude and condensate and 8 billion cubic meters of gas in 2009, according to the statement Tuesday. The company plans to export 11.68 million tons of crude next year.
Viet Nam plans to offset the impact of decreasing oil production by developing overseas fields, Thang told reporters.
The country has 16 overseas oil and gas projects, six in Asia, four in Africa and the rest in America. A PetroVietnam project in the Orinoco field in Venezuela would add 10 million tons of crude to its annual output by 2014, Thang said.
The group would buy a 40% stake in the Venezuelan project at a cost of $11.4 billion, to be PetroVietnam’s largest overseas investment, Thang said on November 20.
Viet Nam will have seven refineries by the end of the next decade with a processing capacity of as much as 55 million tons every year, the chairman said. The country’s first refinery, Dung Quat, is slated to begin operations in February. (TN)
