A Vietnamese oil field invested by PetroVietnam. Photo courtesy of Thoi bao Kinh te Saigon Online
Vietnam fuel giant PetroVietnam has halted work at a Venezuelan oil block as inflation pushes prices up and expands the gap between official and black market prices.
Phung Dinh Thuc, board chairman of the state group which is known officially as Vietnam Oil and Gas Group, told a press briefing Tuesday that Venezuela's problematic economic situation had forced the group to suspend its Junin 2 project, Thoi bao Kinh te Saigon Online reported.
"The economy is sinking, inflation is high and the difference between official prices and outside has surged ten-fold," Thuc said.
Foreign partners including PetroVietnam have halted their projects and are negotiating with Venezuelan partners for terms that are less damaging to them, while waiting for the waters to clear.
"We will only restart the projects when conditions make them more effective."
Junin 2 has an estimated capacity of 1.4 billion barrels (one barrel is 159 liters) and delivered its first batch in September 2012.
PVN leaders at the time told media they expected the block to produce 200,000 barrels a day in the future.
Thuc said the group will continue its investments in foreign oil projects in 2014, including new projects in Algeria and Peru.
The group has invested in three ethanol projects across the country, but one in the southern province of Binh Phuoc was suspended recently after Japanese trading company Itochu, which contributed 49 percent of the project's funds, withdrew over low market demand for the gas in Vietnam.
PetroVietnam sold 32,000 cubic meters of ethanol in 2013, up 44 percent over the previous year, but a rather small amount compared to its capacity.
Thuc said the group is encouraging its member retailers to sell more ethanol, aiming to popularize it nationwide by 2015.
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