The Vietnam Oil and Gas Group (Petrovietnam) is striving to achieve the “dual goal” in the context of “dual crisis” from the COVID-19 pandemic and the plunge in oil price.

Petrovietnam currently provides most of the key products of the economy as input materials for many other manufacturing sectors.

However, the “dual crisis” has hit the industry hard. According to reports of Petrovietnam subsidiaries, the key projects on exploration and production are currently affected by COVID-19. Many contractors will not be able to mobilise manpower to carry out the work on projects, while the supply of materials and equipment to those projects from the pandemic-hit countries under blockade and quarantine is also interrupted or delayed.

Worse still, petrol stations and agents are restricting imports to wait for price plunge and discount increase of retail price in the market compared to January 2020, thus seriously affecting the products of Dung Quat and Nghi Son refineries in the central provinces of Quang Ngai and Thanh Hoa, respectively.

In the first months of this year, although the output of most fertiliser products of Petrovietnam's plants reached and exceeded the monthly plans, the consumption of urea and NPK fertiliser did not come up to expectation because demand was still low in most areas of agricultural production. 

In terms of oil and gas technical services, similar difficulties were encountered as investors and contractors tended to cut and optimise production costs. In the immediate future, the COVID-19 pandemic will cause a sharp drop in the international freight rates for all vessel sizes. The sharp drop in oil prices will also affect the price of drilling rigs as when re-signing the contracts, the users will request re-negotiations of prices.

When the consumption of petrochemical products and the efficiency of oil and gas production decrease sharply, the revenue from oil sale and contribution to the State budget from crude oil will also drop dramatically as compared to the planned price of US$60 per barrel.

Specifically, if the oil price is at US$60 per barrel, revenue from selling crude oil is US$4.668 billion. But if it drops to US$30 per barrel, the revenue is only US$2.362 billion. The contribution to the State budget will fall from US$1.594 billion to US$806 million. Correspondingly, Petrovietnam has lost US$2.3 billion in revenue and nearly US$800 million contributed to the State budget.

Perceiving that difficulties and challenges are considerable, during the recent past, with the motto of “Managing fluctuations, optimising values, promoting consumption, striving to overcome difficulties, seizing opportunities and finishing safely”, the group has drastically implemented short-term, medium-term and long-term solution packages in each field of activity: administration, investment, finance, market and policy mechanism to respond to and minimise losses caused by the “dual crisis”.

In the January-April period, the group produced 7.2 million tonnes of oil, exceeding the four-month plan by 7.7%. Fertiliser and petroleum production was estimated at 601,600 tonnes and 4.53 million tonnes, respectively, surpassing the plan by 7.8% and 2.2%.

The group’s total revenue in the period was estimated at VND203.9 trillion (US$8.7 billion), and contribution to the State budget, at VND24.1 trillion.

In addition to ensuring production and business activities, Petrovietnam and its subsidiaries have focused on responding to COVID-19. The safety, security and prevention work of the pandemic at the units, construction sites and plants has been carried out seriously and effectively by petroleum contractors and units.

Speaking at a meeting on May 8 on the production and business activities in the period under review, Petrovietnam President and CEO Le Manh Hung said the macro-economic situation is still volatile, and many factors related to the growth motivation still challenging. The group will continue to face many difficulties. Therefore, for May and the remainder of the second quarter, the leader suggested the units change their management way to make it suitable to the fluctuations as well as capture opportunities for growth recovery.