Oil price war, virus may cost Vietnam’s State energy firm $2.3bln in revenue

Vietnam Oil & Gas Group, known as PetroVietnam, which had targeted 2020 revenue at $4.67 billion with the $60 price scenario, is expected to collect half of the expected revenue with the oil price crashing to $30 per barrel.

The group’s State budget contribution could be reduced to $806 million from 1.59 billion, oil producer said in a posting on its website.

There has been a huge oil demand destruction worldwide since governments in several countries are demanding people to stay home and quarantine to prevent the spread of coronavirus pandemic. Governments’ restrictions of air routes have been leading to the sharp decline in transportation demand.

On March 18, 2020, Brent oil price fluctuated around $24-25 per barrel. With the current reduction rate of 7-8% per day, the world crude oil price is likely to drop to below $20 per barrel in the coming days, the group said, adding oil and gas exploitation activities will suffer losses with the current low oil prices.

Key projects on exploration and exploitation are affected by the pandemic since contractors are not be able to mobilize personnel to carry out work on projects, said Le Manh Hung, the group’s general director said, adding low oil price is seriously affecting operations of the Dung Quat oil refinery and Nghi Son oil refinery.

"This is one of the most difficult times of the group in history," Hung stressed while pressing the group’s units to strengthen governance and have solutions to reduce costs.

PetroVietnam is considering to buy crude oil and petroleum products in order to take advantage of the low oil prices. The plan is expected to increase the country's crude oil reserves and  strengthen energy security.

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Source: PetroVietnam