Overall for the past week, WTI oil prices dropped 30%, Brent lost 20% while downward price pressure still weighed heavily on crude oil.
Oil and gas rig on the Vietnamese continental shelf.
Calculations of the Vietnam Oil and Gas Group (PVN) show that, with oil prices down 30 USD per barrel compared to the price approved by the National Assembly and the basis for calculating estimates, which is 60 USD, PVN’s oil sales revenue decreased by 2%.
At an online meeting with units earlier this week, PVN General Director Le Manh Hung said `this is one of the most difficult times in history`.
With crude oil prices around 30 USD per barrel, many PVN contracts, after paying taxes, do not have enough revenue to cover costs.
Domestic petroleum production and trading units also complain of difficulties.
`Petroleum production and trading activities suffered a double impact, crude oil prices plummeted, causing the price of petroleum products to plummet, and at the same time, consumption demand decreased by over 30% due to the impact of Covid-19,` said Mr.
Mr. Tran Duy Dong – Director of the Domestic Market Department (Ministry of Industry and Trade) cited data from key enterprises showing that some units only consumed half of the goods compared to before, some units recorded losses.
As a petroleum distributor in the Northern region, Mr. Nguyen Van Tiu – General Director of Tu Luc I Petroleum Joint Stock Company said that consumption has decreased by 25-30%.
Refuel customers at a gas pump in Ho Chi Minh City.
In response, PVN General Director Le Manh Hung said, PVN still tries to maintain exploitation in most projects and reviews overall oil and gas lots and wells, determining feasible oil prices.
Agreeing with this plan, but Dr. Le Dang Doanh – former Director of the Central Institute for Economic Management (CIEM) noted that market fluctuations are very unpredictable, accurate predictions are needed to avoid losses.
Mr. Ngo Tri Long said that PVN needs to evaluate if it imports oil, how much storage capacity the warehouse has, and how long the oil price reduction will last.
According to Mr. Le Dang Doanh, PVN also needs to consider the worst scenario of having to stop operating mines and refineries whose exploitation costs are too high.
Falling oil prices also mean budget revenue is affected.
In addition to revenue from crude oil falling sharply, according to Mr. Ngo Tri Long – former Director of the Price Market Research Institute (Ministry of Finance), the State budget will lose another amount when revenue from import and export taxes also decreases.
To solve difficulties for businesses, Mr. Nguyen Viet Son proposed that the Ministry of Finance review tax and fee policies such as VAT on urea fertilizer, corporate income tax on oil and gas exploitation activities, and financial mechanisms for the Fund.