PetroVietnam sees difficult year for oil business

By Manh Quan, Thanh Nien News

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PetroVietnam employees at work. Photo credit: Vietnam News Agency PetroVietnam employees at work. Photo credit: Vietnam News Agency

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Sharp drops in global oil prices will make 2015 a tough year for Vietnam’s fuel giant PetroVietnam, which contributes a fifth in state revenue. 
Leaders from the group, known officially as Vietnam Oil and Gas Group, said Friday that they achieved most and surpassed some of the targets set for 2014. 
But this year, they said, would be a different story. 
Tu Thanh Nghia, CEO of Vietsovpetro, a joint venture with Russia, said the output target of 5 million tons, for instance, would be very hard to meet. 
Nghia said the venture, the producer of about one third of Vietnam’s crude output, is expecting its revenue to sink to below $2 billion. That would be a 50 percent drop, compared to last year's number as reported by local media.  
Vietsovpetro previously announced that it might stop drilling at some rigs if oil prices continue to plummet. Some exploration activities could also be called off if necessary. 
Nghia said his company will try to reduce production costs, but "that probably won't help much." 
Hoang Ngoc Dang, chairman of PetroVietnam’s exploration arm PVEP, said the current oil prices mean that it will have to take out more loans.
Dang said PVEP had planned to borrow $700 million, based on a projected oil price of $100 a barrel.
“Now that prices have dipped to $40-50 barrel, we will have to double the borrowings to around $1.4-1.5 billion.”
But he said securing more loans is not easy in this condition. 
Several PVEP projects overseas have been halted, and Dang said further investment cuts could be made. 
PetroVietnam's members said they might be focusing on gas projects, which have not been affected as much by changing oil prices.
The group generates more than 20 percent of the state's revenues, according to official figures.

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