PM establishes working group to review PetroVietnam operations amid plunging oil prices

The panel will be headed by a vice minister of industry and trade and participated by representatives from Ministry of Finance, Government Office, Ministry of Planning and Investment and PetroVietnam. The working group is asked to submit a report identifying PetroVietnam’s issues and initiating measures to spur its development to the prime minister in the second quarter for consideration, according to a report from PetroVietnam-run Petrotimes on April 22.

In a meeting with PetroVietnam on Friday, Phuc also told relevant ministries to settle in Q2 problems raised by PetroVietnam.

PetroVietnam was dealing with various challenges this year, particularly the plunging oil prices, which has negatively affected the company’s operations. Its contribution to the state budget declined by 34.7 percent year on year to VND18.6 trillion ($824 million) in Q1. The production of crude oil fell 1.1 percent year on year to 4.56 million tons, it said last week.

One of PetroVietnam’s major projects, the $325-million fiber plant at Dinh Vu in the northern city of Hai Phong, has faced bankruptcy due to mounting losses. PVTex Dinh Vu JSC, the plant operator, incurred losses of VND1.255 trillion last year, even higher than the VND1.085 trillion it lost the previous year. PVTex’s poor financial health has made it impossible for the firm to pay total bank debts of $221.3 million, including $70.7 million in short-term loans. One of the main reasons behind these losses was the significant fall in 2015 global cotton prices that forced the already low prices of PVTex’s products to sink even lower. PM establishes working group to review PetroVietnam operations amid plunging oil prices