The government said Wednesday that the PetroVietnam Group, as it more widely known, had been deeply involved in money-losing operations that had hurt the core oil and gas business. Financial details weren’t disclosed.
PetroVietnam’s website said operations had extended into areas such as banking and securities, construction to build public housing, and operating hotels and a taxi firm.
Vietnam’s highly charged growth has shown recent signs of strain, and the government announced in July that it wanted to restructure and revive a dozen large state-owned groups that dominate the economy. Vietnam Shipbuilding Industry Group, or Vinashin, was broken up in 2011 after piling up debts of more than $4 billion.
PetroVietnam will be restructured to focus on oil and gas exploration and production, petrochemical production, gas development, electricity generation and services for oil and gas operations, the government said.
Vuong Quan Hoang, a Hanoi-based economist with the Centre Emile Bernheim of Université Libre de Bruxelles, said that the breakup was needed because "those noncore activities have caused big losses for the state budget."
The government said PetroVietnam should reconsider its direct involvement in the exploration and production of oil and gas in Venezuela. It didn’t elaborate.
A 78%-owned financial affiliate, PetroVietnam Finance Joint Stock Corp., may possibly be spun off as a bank, an executive said.
Vietnam is facing an economic slowdown; its GDP grew 4.38% in the first half of this year, the slowest in three years. Full-year GDP targets have been revised downward from as high as 6.5% to 5.2%.