The falling global oil prices are a challenge as well as opportunity for companies in the oil and gas industry in Viet Nam. -- File Photo

HCM CITY (Biz Hub) — Oil and gas industry players should optimise operations and costs to sustain their margins as prices continue to decline, Steven Yap, consulting firm Deloitte's Southeast Asia energy and resources leader, told a seminar in HCM City yesterday.

While a number of oil and gas operations would be suspended temporarily, others could increase production as the cost of input services tend to reduce due to the impact of the falling oil prices, he said.

"Companies drilling for oil and gas in Viet Nam, both local and foreign, should reassess prudently the economic effects of every project to defer and/or cut costs.

"A more sustainable strategy would be to pursue innovative means of investing and managing capital and operational expenditures that would include stress testing current processes and collaboration through multiple means."

He reminded participants, who were from the oil and gas industry, service providers and bank, that they should consider mergers.

Pham Van Thinh, country managing partner of Deloitte Vietnam, said the falling global prices were a challenge as well as opportunity for companies in the industry globally and in Viet Nam.

"The challenge is how to cut costs while maintaining the efficient performance of a project as prices have declined more than 50 per cent but the opportunity is that as input costs reduce, the operating costs will also be lower.

"Despite the price fall that began in late 2014, M&A activities in the industry have been hectic."

He said businesses could suspend or defer some projects to focus on key ones to replenish funds for investing when the marker recovers.

"The cycle of an oil and gas field is relatively long, which requires a large capital source for investing in exploration and development before gaining profit.

"Though the short- and medium-term goals are cutting costs to improve efficiency, businesses need to think of sustainable growth."

The seminar, titled "Managing the New Challenges of Oil and Gas Projects", was organised by Deloitte Vietnam. — VNS