Petrovietnam goes upstream of market, reality of growth aspiration

In the first 6 months of 2023, although the world and domestic economic situation was extremely difficult, the energy market fell sharply over the same period and the following month tended to decrease compared to the previous months, thanks to drastic, effective management and administration, Vietnam National Oil and Gas Group (Petrovietnam) has maintained safe, stable production and business activities with good results, grown over the months, made important contributions to the economy, supported GDP growth of the whole country as well as contributed to ensuring national energy security.

Total revenue of the Group in the first 6 months was estimated at 420.1 trillion dong, exceeding 24% of the 6-month plan; state budget submission (excluding NSRP) was estimated at more than 66 trillion dong, exceeding 63% of the 6-month plan; consolidated profit before tax was higher than the 6-month plan; with stable and maximum supply of such strategic products as gas, electricity, fertilizer, petroleum… for life and production.

Vietnam’s first LNG import ship arrives at Thi Vai terminal

The above results are very different in the context that macro, market and global economic situation continue to be difficult, most characterized by high, unprecedented disruption and fracture. The forecasts for global economic growth in 2023 are now all down from the forecast at the end of 2022. Domestically, although GDP growth in the second quarter was higher than the first quarter, it was still lower than planned; the overall context is more difficult than favorable. 

Along with that general situation, the direct and huge impact on the Oil and Gas industry is that energy market fell deeply over the same period and the following month tended to decrease compared to the previous months; crude oil prices, gas prices, petroleum and oil refining profit margins decreased sharply, electricity demand did not increase much over the same period; On average, the world price of finished petroleum products in the first 6 months decreased by 25-27% over the same period; fertilizer prices were low, consumption was difficult…

Successful load-out of BK-22 rig jacket on VSP-05 barge

One of the major obstacles and difficulties is that EVN has debts in the whole of PetroVietnam up to nearly 23,000 billion dong, of which the debt due is more than VND 14,000 billion dong, greatly affecting the Group’s business activities and cash flow balance. In addition, the priority to mobilizing electricity from renewable energy sources with inconsiderable stability leads to gas thermal power plants mobilizing up and down machines continuously, increasing the probability of failure of the units, and affecting the cost of power production as well as the readiness to ensure the Group’s power output target.

Recognizing major difficulties and challenges of the macro and market situation, from the beginning of the year, on the basis of Resolution 01/NQ-CP of the Government, Resolution of the Group’s Party Committee and the Board of Directors, the Group’s President and CEO decided to assign tasks and targets, set growth pressure for each unit; directly chaired meetings to implement the year-round plan; periodically supervised the implementation of management plans at key units and disadvantaged units to have flexible and drastic adjustment solutions, striving to achieve the set growth goals; implemented investment/ portfolio management/ value chain, in order to ensure the completion of the investment plan and sustainable development of Petrovietnam ecosystem; maintained monthly meetings, group, field/ thematic meetings to promptly solve work during implementation as well as problems at the unit. Petrovietnam employees were united and persistently stick to the theme of work in 2023: Managing volatility, Scaling, Accelerating digital transformation, Shifting paradigm, Improving productivity, Reinventing business”. Promoting the effectiveness of management and administration solutions, the business activities throughout the Group was guaranteed to be safe and stable, the following month was higher than previous month, the second quarter had a very positive growth compared to the first quarter and the same period of 2022. Through the thorough application of technical – technological solutions, the productivity, efficiency, capacity of plants throughout the Group reached over 110%. Crude oil production reached 2.7 million tons, up 3.8% compared to the first quarter and up 0.1% over the same period; gas production reached 2.19 billion m3, up 11.3% over the first quarter and up 3.7% over the same period; electricity production reached 7.01 billion kWh, up 24.1% over the first quarter and up 85.7% over the same period; production of petroleum products (excluding NSRP products) reached 1.79 million tons, up 3.2% over the first quarter and up 2.6% over the same period; Therefore, despite lower export prices, the total revenue of the Group in the second quarter was higher than in the first quarter. 

In the first 6 months of 2023, Petrovietnam achieved accumulated crude oil output of 5.3 million tons, exceeding 14.3% compared to the 6-month plan, of which domestic crude oil production reached 4.4 million tons, exceeding 16.9% of the 6-month plan and foreign crude oil production reached 900 thousand tons, exceeding 3% of the 6-month plan; gas production reached 4.16 billion m3, exceeding 27.1% of the 6-month plan; electricity production reached 12.66 billion kWh, exceeding 4.5% of the 6-month plan; fertilizer production reached 877.5 thousand tons, exceeding 10.6% of the 6-month plan; production of petroleum products (excluding NSRP products) reached 3.53 million tons, exceeding 16.6% of the 6-month plan.  

Thanks to actively increasing production and optimizing production efficiency, the Group’s financial targets in the first 6 months were over-fulfilled and more positive than the decline of oil prices as well as poor export and low investment and consumption. Most of the Group’s member units over-fulfilled the 6-month target, such as Parent company – the Group; Vietsovpetro, PVEP, PV GAS, PTSC, PVDrilling, PVTrans.

Petrovietnam’s investment is focused: Completing investment and operation with high capacity of Thai Binh 2 Thermal Power Plant from 27th April 2023, contributing to the supply of electricity to the country in the context of the recent power shortage, especially in the North; Successful test of the seams with good results for Dai Hung Nam-4X drilling well, with about 6,350 barrels of oil/ day and 4.5 million m3 of gas/ day, ensuring conditions for commercial development and putting into operation as soon as possible; The Block B project chain is currently under the evaluation of dossiers, bidding for EPC technical parts, other packages are actively implementing to bid synchronously with the project progress; Organizing the signing of the document handover  memorandum for the O Mon III and O Mon IV Power Plant Project between EVN and Petrovietnam on 29th June 2023; The Dung Quat Oil Refinery Expansion and Upgrade Project was approved by the Government to adjust the investment policy on 5th May 2023, currently BSR – the investor is completing the bidding for FS; Thi Vai LNG project has been basically completed, successfully received the first LNG import ship on 10th July 2023, ready for commissioning and proceeding to commercial operation. 

In particular, the construction and regeneration of Petrovietnam’s culture is a breakthrough pioneer in the whole Group, realizing the target orientation from the beginning of the year to “recreate the culture that goes ahead, orient, create momentum for business regeneration, promote and support for effective, sustainable production and business”. On 28th June 2023, the Group was honored Top 10 Innovative and Effective Enterprises Vietnam 2023 in key economic sectors. 

Other works have been actively implemented: It is estimated that cost reduction in the first 6 months of the whole Group is 1,152 billion dong, equal to 51.4% of the plan for 2023; implementing social security work with a total value of 80.47 billion dong; digital transformation, ERP and network security are implemented synchronously; releasing 2 publications on Digital Transformation and Energy Transition; actively disseminating and guiding the implementation of the Petroleum Law 2022 and participating in the drafting team to submit to the Government for promulgation a Decree guiding the implementation of the Petroleum Law 2022; proactively and actively proposing and participating in formulating new policies, removing obstacles in mechanisms and policies related to the Group’s operations. 

Dung Quat Oil Refinery regularly operates at over 100% capacity

In the last 6 months of the year, according to PetroVietnam President and CEO Le Manh Hung, the Group will consistently achieve its growth goals, striving to achieve the highest management goals. To do this, Petrovietnam and each unit will have to regularly evaluate and develop management plan based on the country’s economic growth scenario and governance objectives to concretize, closely follow and strictly manage the implementation of the plan; Review the outstanding problems and difficulties of the unit so that the Group has policies, mechanisms, as well as decentralization to support the unit to resolve; Review, update and promote investment, especially focus on achieving important milestones of the Block B project as well as promoting the reception and handover of O Mon III and O Mon IV projects; evaluate digital transformation, ERP, build databases, implement energy transition, implement sharing and circular economy models throughout the Group; expeditiously implement Decree 45/2023/ND-CP on guiding the implementation of the Petroleum Law 2022 and related regulations; Safely operate gas pipelines, ensure gas sources for power plants, and ensure the high availability of plants to provide maximum electricity for the economy; operate the production plants at high capacity to increase output, offset reduced price fluctuations; expand markets, market share, diversify products; develop capital strategies, plan to arrange capital for new areas of operation, energy transition; Review and handle debts inside and outside the Group, combined with assessment and management of financial risks, cash flow; actively prepare to implement the restructuring project when approved, especially for the enterprises and projects in difficult situation to focus on solving definitively with a specific roadmap.      


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