| PVN prepares for bad scenario when oil price plunge to $30 |
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4/25/2009 11:40:00 AM The Vietnam National Oil and Gas Group (PetroVietnam) said it is preparing for a bad scenario when the crude oil price drops to $30/barrel, a decrease of $40/barrel from the initial estimated level. PetroVietnam said that the continued crude oil price decreases over the last few days have created difficulties for the group in seeking partners to consume the oil exports of the group. The oil price upturn has caused the group to lose a big sum of money. In order to deal with the fluctuations of the world fuel market, PVN has prepared three different scenarios, based on the three possible price levels. Scenario 1. The crude oil price hovers at around $50/barrel. If this happens, the total oil export turnover in 2009 will be $4.4 billion, which means a turnover decrease of $6 billion in comparison with 2008 ($10.4 billion). This represents a decrease of $1.7 billion in comparison with the approved state estimates (the oil price at $70/barrel). If so, the total turnover of PVN in 2009 will be approximately VND 212 trillion, down by VND 68 trillion over 2008, and VND 34-49,000 from the estimates. In the second scenario, the oil price is at $40/barrel. PVN estimates that the total export turnover will be $3.5 billion in 2009, down by nearly $7 billion from 2008, and by $2.1-2.6 billion in comparison with the estimates. PVN’s total turnover in 2009 will be VND 199 trillion, down by VND 80 trillion over 2008, and VND 47-64,000 billion over the initial estimates. In the third scenario, the oil price drops to $30/barrel. If so, PVN thinks that it will meet very big difficulties in the oil exploitation at the small wells, as the exploitation will not bring the earnings high enough to cover expenses and bring profit. In this case, the process of exploration and development of oil fields will be influenced as contractors will have to consider the investment efficiency and the capital management capability. This will, in turn, affect the plan to increase the reserves and the exploitation output of the group in the upcoming years. Besides, the cheap oil and gas services from PVN is now contributing 26% of the total receipts to the state budget. |
| VNE |