With the oil price falling to $30-35 per barrel, the national oil and gas corporation PetroVietnam will lose $3 billion in revenue in 2020.
Commenting about the influences of Covid-19 on the world oil and gas market, Goldman Sachs predicted that the global oil demand in 2020 would see a record decrease of 1.1 million barrels a day.
On March 18, 2020, Brent sea oil dropped dramatically to $24-25 per barrel. With the current 7-8 percent price decrease daily, the oil price may drop to below $20 per barrel in upcoming days.
The price decrease has hit Vietnam’s oil and gas, the key industry of the country.
For every one dollar of oil price decrease, PetroVietnam’s revenue from oil sales would decrease by $225,000 per day. As such, with the oil price hovering around $30-35 per barrel, PetroVietnam would lose $3 billion in revenue in 2020.
|For every one dollar of oil price decrease, PetroVietnam’s revenue from oil sales would decrease by $225,000 per day. As such, with the oil price hovering around $30-35 per barrel, PetroVietnam would lose $3 billion in revenue in 2020.|
Demand for petroleum products of Binh Son Oil Refinery (BSR), PVOil and Nghi Son Petroleum Products Distribution Brach – PetroVietnam (PVNDB) has decreased by 30 percent. The inventory levels at the enterprises are very high, and storage costs are high.
Key projects on oil exploration and exploitation all have been affected by Covid-19 epidemic. Many contractors cannot mobilize personnel for the projects, while the supply of materials and equipment from other countries has been interrupted because of the blockade.
Hung said it is now one of the most difficult moments of PetroVietnam in history. The group needs to apply a special mechanism to overcome the difficulties.
The activities of exploiting oil and gas cannot be offset by petroleum imports at low prices. Even large oil exporters like the US are thinking of increasing imports of low-price oil for reserve. Vietnam needs to consider the problem of maintaining production.
Petroleum production and trading activities have also been negatively affected and oil prices have decreased as need for transportation and circulation has fallen.
Petroleum stores and sale agents have cut orders, waiting for continued price decreases. These have seriously affected sales of Dung Quat and Nghi Son Oil Refineries.
Nghi Son has reported inventory level of 70-85 percent. The level is expected to increase rapidly as clients have delayed delivery time because of the low consumption and difficulties in storing capacity arrangement.
Ngo Tri Long, former director of the Institute for Market and Price Research, said the oil and gas sector needs to reconsider the plan on increasing oil and gas output. In the current conditions, increasing the oil and gas output would bring losses.
The Government will establish a market for mechanic firms to develop, including facilitating the sector to seek for domestic and overseas markets for the country’s oil and gas engineering sector’s products.
Hundreds of aircraft have crammed themselves into the parking area of a deserted Noi Bai Airport as the travel restrictions caused by COVID-19 has seen tourism activities come to a halt and the majority of flights cancelled.