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“Commemorating 62 years of the Traditional Day of the Petroleum Industry (27/11/1961 – 27/11/2023): Petroleum – The ‘Pioneer’ of Vietnam’s Economy.”

18/12/2023

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On November 27, 1961, the first petroleum organization in Vietnam, the Oil Exploration Brigade, was established. Through more than six decades, amidst numerous ups and downs, generations of oil industry workers have strived and persevered, determined to fulfill the aspirations of Uncle Ho, which is to “build a strong petroleum industry.” Up to now, the Vietnamese petroleum industry, led by the Vietnam Oil and Gas Group (Petrovietnam), has made significant strides and become the “pioneer” of Vietnam’s economy.

Upholding its role as the “pioneer,” Petrovietnam, the core enterprise of the petroleum industry, has built a comprehensive petroleum industry system, encompassing exploration, drilling, oil and gas extraction, as well as the development of gas, electricity, processing, and petroleum services. Among these, exploration and extraction remain the core sectors. Additionally, Petrovietnam has successfully trained a highly skilled and capable workforce in the oil and gas sector.

Since the first crude oil barrel was extracted in 1986, the Vietnamese petroleum industry has extracted approximately 430 million tons of domestic oil and about 180 billion cubic meters of gas. Petroleum activities cover nearly all continental shelves and the 200-nautical-mile exclusive economic zone of Vietnam. Not only ensuring national energy security and making significant contributions to the state budget, but the petroleum industry has also played a crucial role in affirming Vietnam’s sovereignty, sovereign rights, and jurisdiction in the East Sea (South China Sea).

With five major gas pipeline systems, Petrovietnam supplies nearly 9-11 billion cubic meters of gas annually, generating 35% of the national electricity output, 70% of nitrogenous fertilizer, and 70-80% of gas for household consumption nationwide. Petrovietnam is also the second-largest electricity provider, with a total capacity of its power plants reaching 6,605 MW, constituting around 15% of the national electricity production. The Dung Quat Oil Refinery (NMLD), a century project and an icon of Vietnam’s oil refining industry, has produced approximately 6 million tons of oil per year since its official operation, meeting about 30% of the domestic demand for petroleum products, particularly catering to the fuel requirements of the Ministry of National Defense.

Over 30 years ago, the Vietnam-Russia joint venture Vietsovpetro had to transport drilling rig platforms from Baku (Azerbaijan) to install off the coast of Ba Ria – Vung Tau province for oil and gas exploration and extraction at the Bach Ho oil field. Today, Vietnam’s petroleum industry is capable of independently manufacturing, installing, and safely operating oil drilling rigs for exploration and extraction on the continental shelf of Vietnam. Moreover, Vietnam’s petroleum engineering products are exported, significantly contributing to the country’s foreign exchange earnings.

During the 2006-2015 period, Petrovietnam contributed on average 20-25% to the total state budget revenue and 18-25% to the national GDP. Since 2015, Petrovietnam has continuously faced numerous challenges and difficulties due to economic instability, deep oil price reductions, the Covid-19 pandemic, political conflicts, and global supply chain disruptions.

Amidst these circumstances, guided by the spirit of “those who seek fire,” Petrovietnam stood firm and continued to achieve remarkable results. Petrovietnam still contributes on average 10-13% to the national GDP, accounting for 9-11% of total state budget revenue and 16-17% of the central budget. Specifically, the state budget revenue from crude oil constitutes 5-6% of the total state budget revenue.

It’s evident that the petroleum industry has become a pivotal economic sector, a vital macroeconomic regulation tool for the government, and a sector that significantly contributes to addressing the country’s economic and social issues. Many projects and industrial plants within the petroleum industry, such as the Dung Quat Oil Refinery, the Gas-Electricity-Fertilizer Complex in Ca Mau, Vung Ang 1 Thermal Power Plant, Thai Binh 2 Thermal Power Plant, etc., wherever they are implemented, have shown positive socio-economic development results.

In Quang Ngai, the provincial GDP in 2005 increased by 11.7%, with a budget revenue of only 500 billion VND. However, by 2016, Quang Ngai’s total budget revenue reached 22.66 trillion VND, with over 90% of it coming from the Dung Quat Oil Refinery.

In the southernmost region of the country, contributing nearly 30% to Cà Mau’s budget, the Ca Mau Fertilizer Plant, Ca Mau Power Plants 1 and 2 with a designed capacity of 1,500 MW, PM3 – Ca Mau gas pipelines, play a decisive role in the economic development of this southernmost area. Once an ancient purely agricultural area, it has transformed into a region abundant in aquaculture, exporting hundreds of millions of USD worth of products to the global market annually.

Even in a major city like Hai Phong, the petroleum industry leaves its mark by supplying raw materials and fuels for industrial production, contributing significant revenues and profits to businesses while annually contributing billions of VND to the local budget.

Entering a new phase with strength

In 2022, despite facing numerous difficulties and challenges in the post-Covid-19 era, thanks to the serious implementation of the Party’s direction, the Government’s policies, and direct guidance from the Prime Minister, Petrovietnam rallied unified, strengthened responsibility, overcame challenges, and implemented comprehensive and effective solutions. By the end of 2022, Petrovietnam achieved a record crude oil production of 8.98 million tons, produced 1.88 million tons of nitrogenous fertilizers with 606 thousand tons exported, contributing 37.4% to the fertilizer export turnover, and met approximately 75% of the domestic demand for petroleum products.

Since the first crude oil ton was extracted in 1986, Vietnam’s petroleum industry has extracted around 430 million tons of oil and about 180 trillion cubic meters of gas. Petroleum activities cover almost all continental shelves and the 200-nautical-mile exclusive economic zone of Vietnam.

In 2023, amidst adverse impacts from macroeconomic, geopolitical, and market factors over the past 10 months, Petrovietnam has diligently and flexibly managed and operated to maintain stable, safe, continuous business operations and continued growth compared to the same period in 2022. Specifically, Petrovietnam has comprehensively achieved financial targets, reaching goals 1.5 to 5 months ahead of the full-year 2023 plan. This includes submitting the entire Group’s budget, achieving the previous year’s plan by 5 months (reaching 78.3 trillion VND on July 30, 2023); the consolidated profit of the entire Group reached the previous year’s plan by 4 months (reaching 34.7 trillion VND in August 31, 2023); total revenue of the entire Group reached the full-year plan 2 months and 20 days ahead (reaching 677.7 trillion VND on October 10, 2023); and the consolidated total revenue of the Group completed the full-year plan 2 months and 18 days ahead (reaching 413.7 trillion VND on October 12, 2023).

Achieving the target of increasing oil and gas reserves for the full year was done 1 month and 10 days ahead (reaching 12 million tons of crude oil equivalent out of the 8-16 million tons of crude oil equivalent planned for the year by November 20, 2023). Additionally, Petrovietnam discovered 02 new oil and gas findings at Block 16-2 (Hà Mã Vàng -1X drilling well) and at block PM3-CAA (Bunga Lavatera-1 drilling well). This is highly encouraging, marking the first time in 5 years that the Group has had 2 new discoveries in a year. Domestic oil extraction completed the full-year plan 1 month and 18 days ahead, reaching 7.52 million tons by November 12, 2023. By November 21, the domestic oil extraction had reached 7.71 million tons, exceeding the annual plan by 2.5%, significantly contributing to Petrovietnam’s accomplishment of the annual oil extraction plan (both domestically and internationally) by reaching 9.29 million tons by November 21, one month and 9 days ahead of the full-year plan.

Petrovietnam’s petroleum production (excluding Nghi Sơn) completed the full-year plan 2 months and 25 days ahead (reaching 5.53 million tons on October 6, 2023); the petroleum sales volume of the Group completed the full-year plan 2 months ahead (reaching 9.06 million tons on October 30, 2023). PVOIL completed the full-year plan 4 months ahead with 3.3 million tons; PVNDB is expected to complete the full-year plan of 5.76 million tons 20 days ahead (by December 10-11, 2023), playing a crucial role in maintaining the petroleum supply. This affirms Petrovietnam’s successful execution of the tasks assigned by the Government, the Prime Minister, and the Ministry of Industry and Trade: “Under all circumstances, ensuring no interruptions or shortages in petroleum supply to serve the socio-economic development.”

In 2023, Petrovietnam also marked numerous significant milestones. The signing and implementation of the Lot B – Ô Môn Project with partners stood out as the most important event, marking a significant step in the nearly 20-year-long gas power project chain. This is a state-level critical project in the oil and gas industry; it is currently the largest-scale project in Vietnam with an expected gas extraction volume of 5.06 billion m3/year in the stable phase, supplying 4 Ô Môn thermal power plants in Cần Thơ with a total installed capacity of nearly 4,000 MW. It plays a crucial role in balancing energy supply and demand, ensuring national energy security, transitioning to green energy, and socio-economic development.

Moreover, at the end of October 2023, the LNG Thị Vải liquefied natural gas port with a capacity of 1 million tons/year was inaugurated. It is Vietnam’s first and largest LNG port, signifying a breakthrough for Petrovietnam in product diversification, new energy, market expansion, and meeting the objectives of ensuring national energy security, transitioning, and greening the national energy source.

Prior to this, the Nhơn Trạch 3 Power Plant achieved a new milestone by completing the installation of power generators and gas turbines, a significant precursor to ensure the commercial operation date (COD) in Q4/2024 and Q2/2025 for the Nhơn Trạch 4 Power Plant. When these two power plants operate, they will annually supply approximately 9 billion kWh to the national grid, not only increasing local budget revenues by billions of Vietnamese dong each year and providing employment to thousands but also contributing to the promotion of clean energy transition in Vietnam. This opens a new chapter in the development of LNG projects in Vietnam.

Numerous projects and industrial plants in the Oil and Gas sector such as NMLD Dung Quất, the Gas-Electricity-Fertilizer Complex Cà Mau, Vũng Áng 1 Thermal Power Plant, Thái Bình 2 Thermal Power Plant… wherever they are implemented, contribute to significant economic development in those areas.

Furthermore, the high-quality oil and gas service sector also made an impact as PTSC – Petrovietnam’s major service unit – became the first and only investor in Vietnam to be granted a permit by the Ministry of Natural Resources and Environment to conduct marine resource monitoring, investigation, survey, and evaluation activities for offshore wind power projects, serving the development of renewable energy projects offshore in Vietnam and exporting clean electricity to Singapore. This is also one of the important projects contributing to the realization of the agreement on building a green and digital economic partnership between Vietnam and Singapore, collectively achieving the goal of reaching 6 GW of offshore wind power by 2030 as part of the VIII Electricity Plan, as well as Vietnam’s commitment to Net Zero at COP26…

The efforts of Petrovietnam and its member units over the past years have been closely tied to the realization of Petrovietnam’s development strategy, aligning with the national energy development strategy and the country’s socio-economic development strategy. They contribute to ensuring national energy security, emphasizing the efficient and eco-friendly use of resources, actively implementing climate change mitigation and adaptation measures, and promoting the exploration and development of new and renewable energy sources.

Prime Minister Phạm Minh Chính affirmed that Petrovietnam has made positive contributions to the socio-economic development and the construction and defense of the socialist Vietnam, especially in stabilizing the macroeconomy, controlling inflation, ensuring major balances, and promoting economic growth. With its contributions, the Oil and Gas industry can be considered the spearhead of the economy, significantly contributing to national energy security, ensuring the country’s rapid and sustainable economic growth, protecting national sovereignty at sea, and making important contributions to international economic integration.

Under the Prime Minister’s guidance in this new development phase, Petrovietnam needs to focus on digital transformation, energy transition, circular economic development, model transformation, and labor productivity enhancement. “Petrovietnam must continue to unite, elevate the courage to think and act with the ambition to build and develop Petrovietnam as the core unit of the Oil and Gas industry in Vietnam, with strong financial and technological capabilities, high competitiveness domestically and internationally, contributing significantly to the process of building, developing, and protecting the Fatherland,” emphasized Prime Minister Phạm Minh Chính.

With the unity, courage, and intelligence of the oil and gas personnel, coupled with Petrovietnam’s culture of “aspiration, intelligence, professionalism, and camaraderie,” the Prime Minister trusts that Petrovietnam will excellently fulfill the 2023 plan and the upcoming years, achieving numerous new records and accomplishments, maintaining its role as the pillar state-owned economic group, continuing to contribute to the construction and defense of the country, worthy of the trust of the Party, the Government, and the people.

By the tenth month of 2023, Petrovietnam’s total revenue reached 745 trillion VND, surpassing the full-year plan by 10% and reaching the target 2 months ahead. The total contribution to the state budget reached 121 trillion VND, exceeding 54% of the full-year plan and achieving the target 5 months ahead…

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