Market and product

Pressed by COVID-19 and the oil price war between Russia and the OPEC, local petroleum manufacturers expect great plunges in revenue.

Brent crude has been in a nosedive since early February, hitting the four-year low of $21.2 per barrel. Currently, despite some recovery in price (it is at about $28.5 per barrel), the global oil market still has a dim outlook because the OPEC+ alliance has just agreed to cut daily output by 10 million barrels.

In their adverse circumstances, local oil manufacturers are forecasting lower revenue, such as PV Gas (HSX: GAS) estimating a drop of 12.5 per cent this year to VND17.5 trillion ($760.87 million). Besides, after-tax profit is forecast to reach more than VND2.1 trillion ($91.3 million), down 30 per cent on-year.

SSI Research also predicts the revenue and first-quarter after-tax profit of PetroVietnam Technical Service Corporation (HNX: PVS) to drop 25 per cent and 65 per cent on-year.

The local market has been struggling with maxed out oil inventories for months. That resulted in PetroVietnam recently submitting a proposal to restrict or temporarily halt petroleum imports as they currently make up about 39 per cent of total oil output in the country.

Accordingly, in the first quarter of 2020, the total demand for gasoline across the country was estimated to have dropped by 30 per cent and the plunge will last because tourism, aviation, and logistics are all negatively impacted by the health crisis.

Furthermore, oil inventories at Dung Quat Oil Refinery and Nghi Son Oil Refinery have also been rather high.

The stocks of Dung Quat and Nghi Son refineries on March 30 exceeded storage capacity, except for diesel oil. Specifically, the loads of crude oil at Dung Quat and Nghi Son were 384,256 cubic metres and 533,500cu.m, making up 76 and 64 per cent of storage capacity. Moreover, gasoline inventories were 138,242cb.m and 167,520cb.m, or 87 and 81 per cent, respectively. VIR