VINACHEM

Boosting crude oil pumping and coal mining to achieve a gross domestic product (GDP) growth rate of 6.7% in 2017 is forecast to face difficulties mainly due to low prices, said the Ministry of Planning and Investment.

The Government has decided to extract an additional one million tons of oil and one billion more cubic meters of gas in the second half of this year, but oil prices are forecast to stay low.

The ministry forecast oil prices in the year’s second half would hover around only US$40-50 per barrel. Low oil prices will affect the business efficiency of the Vietnam Oil and Gas Group (PVN).

However, Vietnam will make every effort to turn out 13.28 million tons of crude oil and 10.6 billion cubic meters of gas this year.

In January-June, the country’s oil output reached over 6.9 million tons, down 12.5% year-on-year, while gas output reached 5.16 billion cubic meters, falling by 8.7% compared to the same period last year.

Average oil price in the year’s first half was US$54.6 per barrel. The oil and gas sector accounted for 5.6% of the country’s GDP and 20.3% of the manufacturing-industrial sector’s GDP.

However, oil prices have dipped to the lowest level over the last seven months, currently at US$46 per barrel, following the global trend.

The decrease of oil output in the first half of 2017 resulted from oil depletion, as most oil mines have passed their peak production.

In addition, low oil prices affected exploration and exploitation activities, resulting in decreasing oil reserves.

Meanwhile, according to the ministry, coal production can meet the domestic demand, with coal output of this year estimated at 41.43 million tons, up 7.6% year-on-year.

However, coal inventory is estimated to amount to 13.85 million tons by the end of this year, including 13 million tons exploited by the Vietnam National Coal and Mineral Industries Group (Vinacomin).

In the first six months, coal output totaled 20.6 million tons, equivalent to 44.5% of the whole year’s plan, while coal inventory reached 10.22 million tons.

Coal mining industry contributed 0.84% to the GDP and accounted for over 3% of the manufacturing-industrial sector’s GDP.

According to the Ministry of Planning and Investment, higher taxes and fees have pushed up coal production costs and reduced the competitiveness of domestic coal against imported coal. In the year’s first half, Vietnam exported only one million tons of coal.

The ministry has asked PVN, Vietnam Electricity Group (EVN), and chemical and cement corporations to use coal produced by Vinacomin. At the same time, ministries have to review coal pricing to ensure that the maximum price of domestic coal is equal to the imported coal’s price. - Source: SGT -