The Government’s goal to extract another one million tonnes of crude oil by December to meet its economic growth target is challenging, the Vietnam Oil and Gas Association (VOGA) said.
At a meeting in early June with State-run corporations on stimulating economic growth, Deputy Prime Minister Trinh Dinh Dung asked the Vietnam National Oil and Gas Group (PVN) to add another one million tonnes of crude oil to its projected output so that the country’s GDP can record 6.7 per cent growth in 2017.
This goal is not easy to achieve as the initiative has come late, and PVN may struggle to meet it and at the same time undertake sustainable mining, VOGA Ngo Thuong San warned. Moreover, the company will find it tough to fast-track construction of facilities at new oil fields to extract the additional oil as the typhoon season started last month, he added.
Large reserves such as Bach Ho, Su Tu and Te Giac have crossed their peak output, while the smaller ones don’t produce much. In addition, global oil prices have crashed to below US$50 per barrel, which puts exploiters at the risk of incurring more losses if they increase production, San explained.
The PetroVietnam Exploration Production Corporation (PVEP), a PVN subsidiary, said that suspended investment in new oil fields and oil rigs in the past few years because of falling crude oil prices has affected its capacity to maintain and increase productivity.
The future for the country’s oil and gas industry will be tough as the major oil fields near the shores are close to exhausting production, but exploring new reserves offshore is costly, said Le Xuan Sang, deputy director of Vietnam Institute of Economics. The cost of production in Saudi Arabia and Russia is only $12-13 per barrel, whereas for Viet Nam, it is $40, he said.
San suggested that the PVN consult experts in mining production and management to devise effective solutions. He also urged the Government and ministries to offer the company special mechanisms, such as establishing a fund for it to invest in advanced technology and equipment for exploration and production activities.
The PVEP said it needed support from the Government, the Ministry of Industry and Trade, and the PVN to apply for a loan of around $65 million to $132.7 million to achieve this target.
If oil prices continue hovering around $50 a barrel, the additional one million tonnes of crude oil will contribute to 0.3 per cent of the GDP growth, San noted.
By June 28, the PVN had produced 7.89 million tonnes of crude oil, which is 55.6 per cent of its annual target. It has discovered a new reserve, and put oil platform Tho Trang 3 into use from May 7, 13 days ahead of schedule. — VNS