Oil fields depleted, exports hit threshold, GDP growth slows

24.07.2016

VietNamNet Bridge – The oil price keeps dropping dramatically, leading to a decrease in Vietnam’s state budget revenue. Meanwhile, other indicators that measure the health of the national economy all show worrying signs.

 “2015 was believed to be the toughest year in dozens of years in the global and Vietnamese oil & gas industry,” said Nguyen Vu Truong Son, CEO of the Vietnam National Oil and Gas Group (PetroVietnam).

Son said the oil price in the first six months of the year stayed at $38 per barrel, which was even lower than the average price of $54 per barrel in 2015. The sharp fall in oil price which has lasted since 2014 has made it ‘more difficult than ever’ to develop and exploit oil fields.

PetroVietnam has had to delay the mine development plans and cut billions of dollars worth of expenses on operation costs and logistics. This will certainly affect oil exploitation in 2017 and the following years.

“The number of mines planned to be put into exploitation in 2016 would be decreasing. The number of newly drilled oil wells will be cut by a half to 58 from 100,” he said.

It is foreseeable that the crude oil output to be exploited in 2016 would not be as high as in 2015. Vietnam plans to exploit 14.2 million tons in 2016, while the figure is 12.4-12.9 million tons in 2017.

PetroVietnam is considering increasing the oil output by 1 million tons as requested by the government by drilling new oil wells and increasing the productivity at existing wells. However, it is difficult to increase the oil exploitation at existing wells because they are being exploited at maximum levels already.

At a conference reviewing the 6-month implementation of the industrial production plan, Minister of Industry and Trade Tran Tuan Anh repeatedly used words ‘meeting many difficulties’ when talking about the production results of some major industries such as coal mining, mechanical engineering, chemicals, fertilizer, textile & garment and footwear production.

Le Quoc Phuong, deputy director of the Vietnam Industry and Trade Information Center, commented that the export volumes of Vietnam’s major export items had nearly hit the highest possible peak and there was no possibility for continuous increase. This means that if Vietnam wants to increase export turnover, it needs to export new products.

The mobile phone exports in 2011 once helped Vietnam’s total export turnover soar. However, the exports of the products are not likely to increase further. Meanwhile, new products with high export turnover have not turned up yet.

VEPR, in its latest report about GDP growth rate released on July 14, pointed out that the GDP growth rate in 2016 may be lower than 6 percent.

Source: Vietnam.net

Photo: CBR Investment AG