Vietnam cautious on plan to raise crude oil output for growth

Thanh Nien News

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 A file photo of a Vietnamese oil rig
While some officials have proposed an increase in Vietnam's crude output to counter the falling oil prices and achieve an economic growth of 6.2 percent, the government is not yet sure if that is an optimal strategy. 
The government will continue studying "all relevant factors" to have the best plan for oil production, spokesman Nguyen Van Nen told the press on Tuesday. 
At a government meeting at the end of June, several cabinet ministers said Vietnam may need to raise its oil production by between 1 and 2 million tons, as sharp declines in world prices have reduced earnings, which are a key driver of economic growth.
However, at Tuesday's press briefing, Nen said the government has already prepared some response plans and will be ready even if oil prices fall to US$40 per barrel, from around $53 at the moment. 
A key solution will be to reduce production costs further to increase profit margins, he said.
Not much contribution
The spokesman also denied that the government wanted to increase oil production to generate more revenues for the state budget. 
An increase in output will not contribute much to the budget, he said, adding that without careful calculations, the move will affect the safety and sustainability of oil fields.
Vietnam plans to produce 14.74 million tons of crude oil this year. But the state-owned oil and gas group PetroVietnam said it may ramp up output to 15.74 million tons.
Nen said it is PetroVietnam's own plan. 
He said the government will increase revenues from other sources such as exports, taxes and fees.
Nen quoted the finance ministry as saying that the current oil price will not prevent the government from achieving its revenue targets.
Total revenues were VND618.14 trillion ($27.12 billion) in the January-August period, or 67.8 percent of the annual target, the finance ministry recently reported.
Oil production brought in VND47.1 trillion ($2.06 billion), or 50.7 percent of the target for the year, it said.

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