Vietnam National Oil and Gas Group (Petrovietnam) has experienced a successful year overcoming challenges, setting many records in production and business activities. On the occasion of the beginning of the Lunar New Year 2023, Dr. Le Manh Hung, CEO of Petro VietNam shared about the intentions and plans of Petrovietnam in 2023.

Reporter: First of all, I would like to congratulate the Vietnam National Oil and Gas Group for conquering new records in 2022, and also personally congratulate him on being honored as the Most Typical Entrepreneur in Vietnam in 2022. Looking back at the year In the past, could you tell us about the basic measures for Petrovietnam to successfully implement its business plan and sustainable development?

Dr. Le Manh Hung: In 2022, to successfully implement the business plan and sustainable development, Petrovietnam has focused on 8 groups of tasks:

Revising and updating Petrovietnam’s development strategy: This entails conducting comprehensive research and analysis to identify the prevailing difficulties, challenges, and opportunities encountered by Petrovietnam. Subsequently, a meticulous development plan for the 2021-2025 period, along with adjustments to the Group’s long-term development strategy for 2035 and beyond, have been meticulously crafted and duly submitted to the competent authorities.

Petrovietnam CEO Le Manh Hung introduced Prime Minister Pham Minh Chinh and leaders of ministries and branches to oil and gas exploitation activities at Bach Ho field

Secondly, Petrovietnam has placed utmost importance on strengthening and fortifying its governance framework in conjunction with corporate restructuring and innovation. In recent times, the Group has implemented a comprehensive set of regulations and practices pertaining to corporate governance, incorporating international standards. Notably, decentralization and delegation have been synchronized with the Group’s organizational structure, business model, and governance model. Furthermore, Petrovietnam has developed a well-defined scheme for resource organization, allocation, and business realignment, aiming to achieve greater streamlining, efficiency, and competitiveness.

Thirdly, Petrovietnam is dedicated to cultivating and developing its human capital. With a workforce exceeding 60,000 individuals in the oil and gas sector, coupled with an updated strategy, management system, and post-restructuring model, Petrovietnam recognizes the necessity of fostering a highly skilled workforce. This entails the establishment of a competency framework, accompanied by clear goals and objectives to enhance the quality of human resources. Such efforts aim to align the operational and managerial demands of the Group, both in the present and future.

Fourthly, Petrovietnam places significant emphasis on prudent financial resource management, directly associated with its investment endeavors. This entails ensuring the availability of optimal resources and maximizing asset utilization efficiency. By implementing robust financial management practices and maintaining a healthy cash flow, Petrovietnam strives to cost-effectively manage its operations, while ensuring a steady and consistent cash flow for production, business, and investment activities. Furthermore, meticulous investment management, including portfolio management, focuses on key projects.

Fifthly, Petrovietnam diligently concentrates on developing a strategic product, service, and goods portfolio, catering to both the present and future market demands. This strategic focus enables Petrovietnam to devise comprehensive business plans and expand its market presence. It represents a crucial aspect that propels the Group’s future product offerings and augments
its market share in domestic and international markets.

Petrovietnam CEO Le Manh Hung inspects mining operations at Sao Vang – Dai Nguyet mine

Sixthly, Petrovietnam prioritizes the establishment of an enterprise-wide risk management system, following the COSO and ERM models. This approach entails a three-layered risk management framework. The first layer involves risk ownership through the operational system, while the second layer entails the Board of Directors’ involvement. Lastly, the third layer comprises the Board of Directors, ensuring stringent control over risks within Petrovietnam’s corporate groups.

Seventhly, Petrovietnam places significant emphasis on fostering and revitalizing its corporate culture, recognizing its pivotal role in shaping the organization’s values and behaviors.

Lastly, Petrovietnam actively collaborates with ministries, sectors, and agencies to enhance and refine governance mechanisms and institutional frameworks within the oil and gas sector.

At present, Petrovietnam is working in collaboration with the Ministry of Industry and Trade and relevant agencies to finalize the draft Decree guiding the implementation of the Oil and Gas Law in 2022. This represents a crucial foundation for Petrovietnam to effectively execute its core activities. Additionally, Petrovietnam is in the process of drafting amendments to the Group’s charter of organization and operation, aiming to replace Decree 07, which pertains to Petrovietnam’s previous operational organization. This initiative is driven by the new strategic conditions, evolving business environment, and emerging challenges that necessitate effective resolutions for Petrovietnam.

Reporter: Could you tell us about Petrovietnam’s determination to realize the aspiration to develop the oil and gas industry by what strategies and solutions?

Dr. Le Manh Hung: Throughout its illustrious 60-year history, Petrovietnam has consistently excelled in its paramount mission of safeguarding national energy security, intertwined with the preservation of the country’s sovereignty over its seas and islands. As a vanguard in economic and social development, Petrovietnam has remained at the forefront of technological advancements within the oil and gas industry. This mission aligns with the Group’s long-term objectives, vision, and aspirations of transforming Petrovietnam into a preeminent economic conglomerate in both the nation and the region by 2035. It endeavors to operate across the energy, technology, and industrial sectors, seamlessly integrated at every stage, fortified by robust financial resources and bolstered by scientific and technological prowess, enabling it to competently compete with domestic and international corporations.

In recent years, Petrovietnam has encountered numerous trials and tribulations, most notably the crisis stemming from the Covid-19 pandemic, geopolitical conflicts, and volatile oil prices. However, drawing upon its rich traditions and core values forged over six decades, Petrovietnam has demonstrated resilience, adeptly navigating through fluctuations, and successfully weathering the dual impacts of adversity, thereby attaining remarkable achievements. Leveraging this experience, in order to surmount forthcoming challenges and difficulties, Petrovietnam aims to fortify its foundational culture and cultivate a distinct corporate identity, rooted in the core cultural values of Petrovietnam. Simultaneously, it remains committed to staying abreast of emerging global trends such as energy transformation, digitalization, and the advent of a globalized world, both in its management practices and the execution of the Group’s activities.

CEO Le Manh Hung inspects and urges the progress of the Thai Binh 2 Thermal Power Plant

Petrovietnam has witnessed significant internal transformations in recent years. In terms of organizational structure and operational models, there has been a notable shift from predominantly state or state-capital dominated units to a diverse range of Petrovietnam member companies, including joint-stock companies, joint ventures, and strategic partnerships. The composition of the workforce has also experienced fluctuations, with successive generations assuming new roles and responsibilities, and the challenges and advantages evolving over time.

These dialectical factors have prompted Petrovietnam’s leadership to cultivate an effective management philosophy capable of navigating through volatile periods. As the organization grows in scale, its impact becomes more pronounced. At its core, Petrovietnam endeavors to manage and instigate fundamental changes, including within its corporate culture, with the overarching objective of adapting promptly, minimizing adverse effects on the business ecosystem, and capitalizing on emerging opportunities. The concept of cultural re-creation and a drive for business reinvention persistently underpin this pursuit.

In practice, volatility management has permeated deeply, becoming ingrained within the corporate governance of Petrovietnam, not only at the parent company level but also across all member units. Petrovietnam consistently prioritizes vigilantly monitoring market developments, staying abreast of policy changes, advancements in science and technology, environmental factors, socio-political developments, and other pertinent factors. This proactive approach enables Petrovietnam to conduct extensive research and develop various scenarios with corresponding solutions. Since the onset of 2020, Petrovietnam has issued a Decision on the “Set of Response Solutions” encompassing five key areas: governance, market, finance, investment, and mechanisms and policies. Prior to each operational period, unit leaders proactively forecast, devise scenarios, and adjust production and business plans in alignment with prevailing realities. Petrovietnam fosters synchronized decentralization and empowers those individuals best equipped to make informed decisions and assume accountability, enabling swift, accurate decision-making and timely improvisation. Leadership, resource coordination, support, alongside diligent oversight, supervision, and risk management from Petrovietnam to its member units must remain consistent, systematic, interconnected within the value chain, and ensure continuity of routines and direction.

Volatility management can be considered a crucial factor that Petrovietnam has, does, and will continue to prioritize, as the nature of the industry is inherently dynamic, constantly evolving for the sake of development.

To scale new heights and fulfill the mission in this new era, the leaders of the Group urge all Petrovietnam officers and employees to preserve and amplify the valor and wisdom embodied by the Oil and Gas community. They are called upon to exhibit professionalism in all endeavors, uphold discipline and adherence to protocols, and champion the values of compassion and gratitude entrenched in the Petroleum Culture.

Reporter: How do you evaluate Petrovietnam’s opportunities in developing new energy, offshore renewable energy? What are the obstacles for Petrovietnam today to promote its advantages in offshore renewable energy development?

Dr. Le Manh Hung: In the current context of energy transition in Vietnam and worldwide, with the gradual decline of fossil energy sources, renewable energy, particularly offshore renewable energy, is poised to meet Vietnam’s future energy demands. The draft Power Master Plan VIII sets a target of achieving 7 GW of offshore wind capacity, accounting for 4.8% of the total power capacity by 2030, and reaching 66.5 GW by 2045. Thus, Petrovietnam recognizes the importance of focusing on offshore renewable energy as a means to ensure sustainable development alongside traditional fossil energy sources.

With a forward-looking approach and a commitment to being a proactive pioneer in offshore renewable energy technology, Petrovietnam has conducted thorough analysis and assessment of the challenges, opportunities, technical capabilities, and technological advancements in this field. This evaluation also encompasses identifying Petrovietnam’s areas of strength and the involvement of its units in the renewable energy supply chain. Consequently, Petrovietnam has devised a comprehensive investment roadmap aimed at enhancing its technical capacity, mastering renewable energy technologies, and continuously improving its expertise. Additionally, Petrovietnam proposes the implementation of relevant mechanisms and policies to create favorable conditions and advantages for domestic enterprises operating in the renewable energy sector.

Petrovietnam CEO Le Manh Hung received the title of Top 10 most typical entrepreneurs in Vietnam in 2022

Being a state-owned enterprise engaged in the field of offshore oil and gas exploration and production, Petrovietnam, along with its subsidiary units, possesses numerous advantages, potentials, and capabilities to undertake RE-ENERGY projects on offshore sites. Notably, there are significant parallels between offshore renewable energy projects and offshore oil and gas projects, as both involve the construction of steel structures that are fabricated onshore and subsequently installed offshore. Petrovietnam’s involvement in the construction of offshore renewable energy projects encompasses various work packages, including the provision of offshore services, as well as the development of port systems and related infrastructure to facilitate the successful implementation of renewable energy initiatives. Recent examples highlight the active participation of PTSC in delivering services for numerous wind power and offshore wind power projects, serving both domestic and foreign contractors. Additionally, Vietsovpetro has also made valuable contributions in providing related services for offshore projects. Petrovietnam has firmly established itself as the leading enterprise in Vietnam in the fields of mechanical engineering, construction, and installation of offshore oil and gas projects, earning high acclaim from international clientele.

Petrovietnam CEO Le Manh Hung talks with experts at the assembly site of Equinor’s Hywind Tampen offshore wind power project in Gulen, Norway

Foremost, Petrovietnam ensures the capacity for implementation at all stages of the offshore renewable energy projects. Leveraging its extensive experience, capabilities, resources, and established infrastructure in offshore oil and gas operations, Petrovietnam’s engagement in the offshore renewable energy industry will yield significant benefits. It enables the optimal utilization of domestic resources, avoids unnecessary investments, facilitates service exports to international markets, and notably contributes to safeguarding national sovereignty in maritime areas.

The leaders of the Group have directed its units to prioritize the review and enhancement of the workforce engaged in offshore renewable energy. This workforce represents a fundamental and vital asset for Petrovietnam in venturing into this new field, enabling the effective and appropriate implementation of Petrovietnam’s strategic energy transition. Alongside the consolidation and enhancement of human resources’ quality, Petrovietnam and its units must concentrate on executing projects aimed at mastering offshore renewable energy technology. This encompasses various aspects, including basic design, manufacturing, supply, installation, operation, testing, and maintenance of offshore renewable energy projects.

Regarding long-term strategy, the Group has been focused on conducting comprehensive assessments of the domestic, regional, and international markets for renewable energy, particularly offshore renewable energy. This holistic evaluation serves as a foundation for informed long-term strategic planning in this field. Consequently, Petrovietnam will develop a specific strategy for the development of offshore renewable energy, aligning it with the overall energy transition strategy. Moreover, the Group will identify appropriate and effective investment and deployment models for the renewable energy industry, leveraging the strengths of the Group and its subsidiary units in conjunction with the strategic development of oil and gas resources.

Another critical long-term objective entails streamlining mechanisms and establishing a legal framework to support the offshore renewable energy sector. The Vietnam Oil and Gas Institute has been entrusted with the responsibility of researching and formulating a draft legislative proposal concerning the legal framework for offshore renewable energy. Notably, the Prime Minister has recently recommended assigning this task to the Group. Establishing an appropriate legal framework will be instrumental in promoting the future development of this sector.

Given the limited timeframe until 2030, which marks the transformational period for energy enterprises, including Petrovietnam, the Group and other industry entities must proactively prepare resources and remain ready to generate momentum for business rejuvenation. They should seize the abundant potential and advantages offered by the offshore renewable energy sector as they expand their presence in this domain.

Reporter: Can you share more about Petrovietnam’s goals soon?

Dr. Le Manh Hung: In the year 2023, several challenges are anticipated, including a decline in oil prices, subdued market demand, a global economic recession, and increased interest rates and inflation in major economies such as the US, China, and the EU. Additionally, the ongoing conflict between Russia and Ukraine persists, resulting in a contraction of global production, reduced exports, and a decrease in electricity and gas demand. Petrovietnam recognizes the need to effectively manage these risks, develop contingency plans, and seize opportunities to achieve the highest levels of production and business performance in 2023.

Furthermore, Petrovietnam remains committed to effectively managing its production system and corporate finance. It is actively pursuing major and strategic investment projects such as the Thai Binh 2 Thermal Power Plant, scheduled to commence commercial operations in the first quarter of 2023. Other significant projects include the Long Phu 1 Thermal Power Project, the Dung Quat Oil Refinery Upgrade and Expansion Project, the Long Son Refinery and Petrochemical Complex Project, and the Energy Reserve initiatives. Additionally, Petrovietnam will establish a detailed implementation plan for the Block B Gas Power Project to ensure optimal timing for the first gas flow.

Moreover, Petrovietnam is dedicated to addressing challenging projects and seeking solutions to mitigate losses for struggling companies within its portfolio.

As Petrovietnam enters 2023, it remains focused on enhancing governance practices, particularly in managing volatility. The company will continue to leverage its established digital-based governance systems while fostering resource integration to support substantial investments in large-scale projects. Petrovietnam aims to expand its investment and development cooperation, as well as international business activities, leveraging Vietnam’s advantageous relationships with other countries and markets. Key areas of focus for investment and cooperation include Southeast Asia, Russia, the Middle East, and North America.

For Petrovietnam, “the future will be the traction, the present and the past will be the thrust” to continue to develop sustainably and reach out to the big sea.

Reporter: Thank you for the exchange and wish Petrovietnam will continue the tradition to conquer new heights!