“We are taking tangible actions to recreate PetroVietnam’s culture, with the first value being ‘aspiration.’ ”- Le Manh Hung CEO of PetroVietnam

Overcoming challenges

In the first nine months of 2023, PetroVietnam has sailed through a tough period of complex and unpredictable international scenarios. There have been more challenges than advantages in light of the intensifying geostrategic competition between major countries. Although inflation in other countries has eased, it is still anchored at high levels. Alongside global supply chain disruption, there are also risks of losing energy security, food security, and traditional and non-traditional security.

Meanwhile, Vietnam’s economy is in a transitional phase with limitations in scale, openness, adaptability, and resilience. Lingering problems existing in Vietnam for many years have become more evident in recent months.

Although the headwinds in the domestic and global markets are lingering, PetroVietnam recorded positive results for its production and business activities in the first nine months, making an important contribution to the economy and national energy security. Nevertheless, it is not an easy journey, as PetroVietnam also faces various challenges pertaining to markets and policies for investment and business activities.

Specifically, there has been a downward trend in gas mobilisation for power generation over the past few months, which affects the company’s exploitation and production. Increased petroleum imports also affect domestic consumption, while shrinking demand leads to higher inventories.

The liquefied natural gas (LNG) sale and purchase agreement is another bottleneck, which makes it difficult to supply LNG to electricity buyers. This not only affects the business efficiency of new products but also creates risks for LNG-fired projects.

In the first nine months of 2023, the average price of petroleum products decreased by 18 – 22 per cent on-year. There is an increasing decline in the natural output of oil and gas fields after a long period of exploitation.

Meanwhile, there is narrowing room for increasing exploitation output. There are fewer opportunities to make additional investments in new projects. In addition, exchange rate fluctuations also have adverse impacts on the operations of businesses, including PetroVietnam.

Accordingly, the group has closely followed market movements, especially finance and the prices of energy products. The group also pays special attention to price fluctuations of crude oil, gas, oil refining, petrochemicals, and fertilisers to effectively implement management and operation solutions from exploitation to transportation and processing, from inventory to production and business organisation. The group also focuses on handling a large volume of tasks to resolve long-standing problems and newly arising problems. Therefore, the group’s production results and financial targets both exceeded the targets.

PetroVietnam posted a revenue of VND655 trillion ($26.78 billion), exceeding the yearly plan by 35 per cent. The contribution to the state budget is estimated at $4.32 billion, surpassing the 2023 annual plan by 35 per cent. The consolidated pre-tax profit of the group reached $1.73 billion, exceeding the annual plan by 22 per cent.

What is more, PetroVietnam also pays special attention to social security by implementing many meaningful activities to support the community. The prudent spending and anti-wastefulness programme is estimated to reach $62.16 million.

Officers and engineers at Ca Mau Fertiliser Plant

The port area for manufacturing bases for PTSC’s offshore wind power projects

Turning pressure into growth

At the beginning of the year, PetroVietnam set very high-pressure targets on the back of its record results in 2022. As over three-quarters of 2023 have passed, there is not much time left for the group to fulfill this year’s plan. Despite mounting pressure, PetroVietnam’s staff and leaders are on the same page to turn pressure into a growth driver.

At the regular CEO briefing meeting in October, CEO of the group Le Manh Hung, along with other leaders of the group and subsidiaries, focused on analysing macroeconomic and market trends and identifying challenges and barriers. The leaders proposed solutions with a view to removing bottlenecks and promoting business and investment activities in the last few months of 2023.

Hung said that PetroVietnam does not set growth targets for achievements alone. The targets are expected to create pressure for the group to innovate, compete in its governance model, unlock resources, and create high-value added services. This strategy not only creates growth drivers but also improves the resilience of PetroVietnam in response to crisis.

“This is a testament to the responsibility of PetroVietnam’s leaders to the Party, government, and employees. At the same time, we are taking tangible actions to recreate PetroVietnam’s culture, with the first value being ‘aspiration,’” Hung said.

The market shows more signs of difficulties in the last few months of the year, especially the issues pertaining to exchange rates and oil prices, as well as the complicated and unfavourable developments in the petroleum product market.

To fulfill the yearly targets, the general director proposed that the group and its subsidiaries review the goals and tasks in the last three months of 2023 while closely following the government’s economic management scenario, especially monetary and fiscal policies and market-related issues.

He outlines several specific tasks, including focusing on production with safety, improving exploitation output to compensate for the decline and shortage, and stepping up mine development and exploitation.

Besides controlling operations and maintaining a high-capacity utilisation rate in factories, the group actively invests, innovates business models, and takes advantage of market opportunities to increase revenue. Another task is adjusting the structure of petroleum products to suit market needs.

In addition, the group should review its LNG strategy for investment and business while expanding the market share of product distribution in the downstream stage. At the same time, the group not only bolsters its capital management and cash flow but also evaluates the quality of revenue and profits and controls financial risks, especially exchange rate fluctuations. Priority is also given to improving policy mechanisms to create conditions and reduce risks in production, business, and investment.

Hung also directed the units to address outstanding issues in line with the guidance of management agencies and to improve the effectiveness of internal management.

PetroVietnam will also accelerate digital transformation by building ERP systems, big databases, and other measures. All concerted efforts will be made to achieve fourth-quarter goals, thereby fulfilling 2023 targets.