In 2020, the double crisis of the Covid-19 pandemic and the deep fall in oil prices has seriously affected production and business activities of oil and gas enterprises. However, thanks to the recovery of the economy, the business results of these enterprises are still very impressive.

Oil and gas enterprises still seek solutions to achieve positive business results.
Photo: Petrovietnam

Efforts to move "upstream"

According to oil and gas enterprises, 2020 was a particularly difficult year for both coping with the pandemic and unprecedented fall in crude oil price in the history of oil and gas trading to a record low in the last 20 years.

For the first time in world’s oil and gas history, on April 20, 2020, WTI oil price dropped to minus US$37.6 per barrel. On average, in the first eleven months of 2020, the oil price reached US$43.8 per barrel, much lower than the expected price of US$60 per barrel.

Therefore, on the world market, by the end of the third quarter of 2020, large oil corporations such as Shell, BP and Chevron all recorded losses of up to tens of billions of US dollars.

In Vietnam, the impact of the Covid-19 pandemic is less serious than other countries, but the low oil price also causes difficulties for many enterprises. However, thanks to the effort to move "upstream", the business results of oil and gas enterprises are more positive.

The leaders of Vietnam Oil and Gas Group (Petrovietnam) said that, for the first eleven months of 2020, the targets on crude oil extraction, fertilizer production, and petrol and oil have basically been completed and exceeded the plan. Accumulated revenue of the Group in in the eleven months was estimated at VND508.9 trillion, with the amount contributed to the State budget of about VND66 trillion.

Petrovietnam's oil and gas extraction has been optimized at a level suitable to technical conditions; minimized and maintained operating costs, leading to the Group's crude oil production to reach the target 25 days in advance (reaching 10.62 million tons on December 5, 2020). It is expected that for the whole year, the domestic oil output will reach 9.65 million tons, exceeding 9.25%; foreign oil output 1.82 million tons, exceeding 1.31%; total domestic and foreign crude oil output is estimated at 11.47 million tons, exceeding 7.9%.

For Petrovietnam's member companies, their business results are also very positive. According to Petrovietnam's report, in November 2020, 17 member companies recorded profits and at the end of November 2020, 10 member companies exceeded the profit targets, reaching from 105% to 935% of the yearly plan.

For example, Russia-Vietnam Joint Venture (Vietsopetro) has proactively and actively implemented synchronous solutions in all areas of production and business activities. At the end of November 2020, Vietsovpetro basically completed the assigned targets and tasks of the extraction and production plan. It is expected that by the end of 2020, Viesovpetro will exceed the main production targets, such as: extracted oil output will be 3,420.900 tons (reaching 109.4% of the plan); natural gas 77.2 million m3 (109.6% of the plan); supplying more than 1.2 billion m3 of gas, of which from Lot 09-1 will reach nearly 228 million mЗ (151.4% of the plan). The total remittance to the state budget and the profit between Vietnam and Russia in 2020 is expected to be over US$ 860 million (reaching more than 103% of the plan), of which the profit of both sides is estimated at US$247 million (123% of the plan).

What are the expectations for 2021?

By the end of 2020, the potential for Covid-19 vaccines has stimulated oil prices by more than 10%. Experts say that the global economy will soon return to a new normal state, helping demand for oil recover in 2021.

According to General Director of Petrovietnam Le Manh Hung, 2021 is forecast to remain a difficult year for the world oil and gas market. Therefore, to continue to obtain such achievements as in 2020, the leaders of Petrovietnam have instructed its units together with the group to focus on forecasting market, economic and political issues in 2021 to propose responses and appropriate governance directions; carefully analysing and evaluating solutions to avoid and limit the decline, and seeking solutions to restore growth; and analysing investment and controlling the investment portfolio; and focusing on immediately carrying out the tasks in the project on response to energy shifting.

In fact, despite the double crisis, Vietnam's oil and gas market is still very attractive, especially to foreign investors. Vietnam's oil and gas industry is receiving many "huge" energy projects, with the expectation of leading to growth in demand for petrol, oil and gas products.

Typically, Chan May LNG Joint Stock Company (an enterprise with 60% of capital invested by the US) proposed to invest in a US$6 billion LNG gas power project; AES Group (USA) and Vietnam Gas Joint Stock Corporation (PetroVietnam Gas) signed an agreement on Son My LNG import port warehouse project with total investment of US$1.4 billion; and T&T Group proposed to build US$3.5 billion LNG-fired power plant in Vung Ang (Ha Tinh).