Market and product
Petroleum giants mull pumping cuts
PVN chairman Nguyen Xuan Son said the group is keeping a close eye on the world’s crude oil prices and market developments, and calculating the production cost and business efficiency of crude extractions in every block of the fields.
Currently, the average exploitation cost of PVN is US$30-37 per barrel depending on oil fields.
Previously, when the world’s crude oil prices fell to under US$60 per barrel, PVN had plans to reduce output at several fields with high production cost.
The group now has around four fields with high production cost but low output, Son told a recent media briefing.
Most of the high-cost oil fields previously belonged to foreign investors, who had left after having extracted almost all crude, and PVN had jumped in to pump the remainder, he said.
However, PVN does not plan sharp crude and gas output cuts in 2015. The group plans to extract 16.8 million tons of oil and 9.8 billion cubic meters of gas, year-on-year falls of 500,000 tons and 400 million cubic meters respectively.
In its report on last year’s business performance and the plan for this year, PVN expected revenue of more than VND515 trillion (over US$24 billion) if the global crude oil price is US$60 per barrel, well below the VND745.5 trillion it earned last year, when the export price of crude averaged US$113 per barrel.
The shrinking revenue of PVN will also affect the State budget collections. Given the crude oil price of US$60 per barrel this year, the group could contribute VND104.2 trillion to the State budget, falling by VND74 trillion against last year.
Tu Thanh Nghia, general director of Vietsovpetro, was quoted by Thanh Nien as saying that the joint venture would consider halting operations of several oilrigs and suspend exploration projects if the global crude oil prices keep falling to the levels where it cannot break even.
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