VietNamNet Bridge – Though anticipating revenue could drop by billions of dong this year if low oil prices continue, PetroVietnam says this will not seriously affect its production and business.

PetroVietnam Exploration Production Corporation’s (PVEP) general director Do Van Khanh on December 29 said the group has drawn up several business plans corresponding to different oil price levels as per the government’s instruction released a couple of weeks ago.

If the crude oil price surges to $100 per barrel in 2015, the expected exploitation output would be 5.86 million tons of equivalent oil, while the corporation expects revenue of VND64.5 trillion and post-tax profit of VND16 trillion.

However, with the latest news, Khanh believes PVEP will have to lower its business targets.

In the first scenario, if the oil price is at $80-85 per barrel, PVEP, which makes up 30 percent of the total exploitation output, would see profit down to VND10.3-11.7 trillion.

In second scenario, with oil price at $70-75 per barrel, the profit would decrease by another VND3 trillion.

And in the third scenario, with the oil price at $60 per barrel as currently seen, the profit would be modest at VND4.6 trillion.

“If the oil price stands at $70 per barrel in early 2015, the corporation’s revenue would decrease by $3 million a day, a huge sum of money for any business,” Khanh said. “if so, the expected profit of VND16 trillion would be unreachable.”

Therefore, PVEP has drawn up some measures to cope with the difficulties. It may stop implementing difficult projects and exploiting the oil fields which have high exploitation costs. It will also have to try possible measures to reduce production costs.

Meanwhile, according to Nguyen Xuan Son, president of PetroVietnam, the group’s profit would fall to VND21 trillion in 2015, if the oil price falls to $60 per barrel.

Son declined to give information about the break-even point, but said he heard from the managers of a South Korean oil and gas company during his working visit to the country that the low oil price at under $60 per barrel has placed big difficulties for the company.

According to Son, trying all possible measures to cut down expenses is a must. Besides, PetroVietnam will have to consider “different possible business solutions”.

“It is necessary to find out where to invest to reduce risks and how to allocate our financial resources to obtain the optimal profit,” Son said. “It is necessary to draw up  financial solutions with a long-term vision, at least for five years.”

Khanh of PVEP noted that it is now a good time for Vietnam to consider buying oil fields.

Kim Chi