VietNamNet Bridge - As the crude oil price keeps falling, state budget revenue has decreased. However, despite the bad news, Vietnam still has to continue exploiting oil and consider opening the Red River coal basin, according to Nguyen Van Phung, a senior official of the General Department of Taxation (GDT). 

According to GDT, the revenue from crude oil was VND5.77 trillion, just equal to 10.6 percent of the estimates. The figure was just equal to 43.1 percent of the same period of last year.

The revenue from crude oil was estimated based on the two-month average price, at $36 per barrel, or $24 per barrel lower than the predicted level.

Also according to GDT, every one dollar price decrease would lead to the loss of VND1.5 trillion for the state budget revenue. As such, if the oil price falls to $30 per barrel, the state budget would see the loss of VND45 trillion.

However, Phung said, Vietnam still has to exploit oil despite the price fall because the revenue from oil exports was taken into account when estimating the state budget.

The oil price for the state budget estimation was based on predictions by international organizations and verified by the National Assembly’s committees.

However, it is difficult to predict the oil price which has been fluctuating. In 2015, the Ministry of Finance estimated the budget with the predicted oil price of $100 per barrel, but the price later tumbled to $50 per barrel.

According to GDT, the revenue from crude oil was VND5.77 trillion, just equal to 10.6 percent of the estimates. The figure was just equal to 43.1 percent of the same period of last year.

Phung went on to say that though the crude oil revenue just accounts for a small proportion of the state budget revenue, the oil exploitation has connections with a lot of other industries and influences a large labor force. Therefore, it is necessary to consider revenue from oil exports when estimating the state budget to ensure macro balances.

When asked if Vietnam would close some oil fields if the price continues falling, Phung said the closure of oil fields may even bring bigger losses.

“You should still keep mining even if you have to sell products at prices a little bit below the production costs,” he said. “You need to anticipate that you will have to pay to resume the mining if you close oil fields now.”

“In many cases, you will still have to accept loss at some certain moments because you don’t want to see bigger losses in the future,” he said.

Thanh Nien in February quoted a senior executive of PetroVietnam as saying that if the oil price falls to $30 per barrel, the exploiter would halt the work at some oil fields.

Dat Viet