When did oil prices start to fall in 2014

/ March 12, 2020

Declining oil prices set to boost Vietnam’s external balance by US$1.5 billion

The Hanoitimes - Vietnam posted net spending on offshore crude oil of nearly US$1.8 billion in 2019. Vietnam’s external balance is set to improve by over US$1.5 billion in 2020 as a result of a sharp decline in global oil prices, according to Viet Dragon Securities Company (VDSC). Crude oil price (USD per barrel). Crude oil prices crashed by over 30% last Friday because of disagreements between the OPEC and Russia on cuts in production. Meanwhile, Vietnam is a net crude imporer and its net spending on offshore crude oil in 2019 reached nearly US$1.8 billion. Regarding fiscal policy, VDSC expected no unanticipated changes caused by strained public finances in 2020 because of the weakening of oil revenues and taxes from export/import goods, said the VDSC in its latest report. In the context of the oil crash accompanied by a global economic slowdown, it is predicted real income gains for consumers will be limited in Vietnam, due to the people’s current preference for saving rather than spending. The clearest impact is the pass-through into slowing inflation which may ease pressure on the State Bank of Vietnam, the country’s central bank, and present a window of opportunity to implement policy accommodation. As a result, the circumstance may lead to the SBV’s decision to lower interest rates in the second half of the second quarter. In the past, the plunge in crude oil prices has led to significant real income shifts from exporting to importing countries. Although that is a zero-sum game between oil exporting and importing countries, the economic models of the World Bank showed that declines in crude oil prices likely result in a net positive effect for global activity over the medium term. The losses of oil-exporting countries are entirely offset by stronger growth in oil-importing ones via rising consumption, lower inflation and widening policy room that would lower macroeconomic vulnerabilities. However, in reality, the impact …

/ April 23, 2020

Vietnam state oil producer proposes temporary halt of oil imports

The Hanoitimes - A representative of the trade ministry, however, suggested measures should be in compliance with current regulations and international agreements that Vietnam is a part of. State-run Vietnam Oil and Gas Group (PVN) has proposed to temporary halt oil imports as global oil prices have crashed recently. Dung Quat Oil Refinery plant. However, Nguyen Viet Son, head of the General Department of Energy under the Ministry of Industry and Trade (MoIT), said measures should be in compliance with current regulations and international agreements that Vietnam is a part of. As of present, output of Vietnam’s two oil refinery plants, Nghi Son in Thanh Hoa province and Dung Quat in Quang Ngai province, are capable of meeting 80% of domestic demand. However, as the Covid-19 pandemic is weakening demand, Son expected energy firms to streamline operating costs and adjust production capacity. Son said the WTI oil prices falling to below zero is actually the transaction price between traders on the stock market, not the price between oil producers and oil refinery plants as the end user, not to mention the tiny volume volume of oil changed hands at prices below zero. In the coming time, the MoIT would continue to provide supporting measures for the energy industry in forms of taxes and fees reduction, Son stated, while encouraging oil and fuel distributors to prioritize over domestic products instead of imported ones. According to the PVN, a sharp decline in oil prices would severely affect the group’s revenue targets. In case the average oil price in 2020 hits US$30 per barrel, PVN’s revenue is set to decline by 19% compared to the year’s target, to VND520 trillion (US$22 billion), resulting in a 38.4% decrease against the year’s plan in contribution to the state budget at VND50.6 trillion (US$2.14 billion). PVN estimated each US$1 reduction in oil prices would cause the state firm to lose VND4.6 trillion (US$194.73 million) in …

/ April 2, 2020

Vietnam crude oil and natural gas production face downside risks on Covid-19

The Hanoitimes - Overall crude oil and natural gas production in Vietnam may suffer year-on-year declines of 5% and 1%, respectively, in 2020. Vietnam’s crude oil and natural gas production face downside risks, in light of a double-whammy of global oil price collapse and sluggish demand due to continued spread of the Covid-19 pandemic, according to Fitch Solutions. Vietnam - Crude Oil & Natural Gas Production. As of March 31, benchmark Brent had lost almost 60% of its value since the start of 2020. This has occurred next to an apparent price war between Saudi Arabia and Russia, in the aftermath of failed OPEC+ talks in March, and global demand fears created by the Covid-19 pandemic. This has triggered widespread reactions from across the globe as oil and gas firms announced significant capex cuts, reduced output targets and other cost cutting measures, in order to ride out the downturn. By comparison, responses from Asia’s national oil companies (NOCs) have been more measured, although many have indicated that they are closely monitoring the situation. Vietnam’s state-owned oil producer PetroVietnam (PVN) has yet to commit to any spending cuts. However, the state-owned enterprise (SOE) did concede through an official statement, that its 2020 revenues are likely to be halved, due to the drop-off in crude and losses incurred from some ongoing projects as a result. The SOE is also believed to have ordered its subsidiaries to prepare business scenarios for different oil price levels, as it contemplates the likelihood of a protracted downturn in prices. Such a scenario would be highly negative for PVN’s upstream portfolio, which mostly comprises of joint-ventures (JVs) with foreign entities in offshore and mature producing areas. According to industry sources, PVN’s breakeven cost per barrel is believed to be in the region of US$51/bbl, far above the US$36.3/bbl averaged in March and also above the US$43/bbl that Brent is expected to …