Logo of Phnom Penh Post newspaper Phnom Penh Post - Vietnam oil, gas firms post mixed business results despite higher crude prices

Vietnam oil, gas firms post mixed business results despite higher crude prices

Content image - Phnom Penh Post
Workers of PetroVietnam Drilling & Well Services Corp (PVD) operate a drilling rig. PVD

Vietnam oil, gas firms post mixed business results despite higher crude prices

Oil prices have continuously increased since the beginning of the year on the production cut agreement of Opec+ and the global recovery in fuel demand. This has been reflected in the market price of oil and gas stocks in Vietnam, however not all businesses benefited.

In the international market, oil prices had risen more than 47 per cent in the first half of the year, resulting in higher prices of refined products. In June, Brent crude even broke over $76 per barrel over rising concerns of a supply shortage. Opec and its allies, led by Russia, then agreed to loosen production caps starting in July.

From the end of 2020 to the first quarter of 2021, oil demand in the Asia-Pacific region hit a peak on Covid-19 control measures. However, the outbreak since the beginning of the second quarter of the year has affected oil demand in this region.

Despite the higher oil price, not all oil and gas enterprises in Vietnam benefited, the latest report of Viet Dragon Securities Corp (VDSC) said.

Of which, for upstream companies, business results were not very positive in the first six months of the year due to the impact of Covid-19 and the stagnation of domestic oil and gas projects.

PetroVietnam Drilling & Well Services Corp (PVD), which operates in the upstream sector, involving oil and gas exploitation, providing most of the drilling services at Petrolimex’s oil fields and also participating in international activities, reported a drop of 47 per cent year-on-year in net revenue to over 1.66 trillion dong ($73 million) in the first half of the year.

The big fall in revenue along with large provision costs caused PVD to record a net loss of 95 billion dong.

Similarly, PetroVietnam Technical Services Corp’s (PVS) net revenue also declined by 35 per cent to nearly 5.7 trillion dong during the period, resulting in a fall of 16 per cent over last year in profit after tax to 347 billion dong.

Even in the same upstream sector, PVS will be less affected by oil prices than PVD because of its diversity in operations including ships, ports, floating warehouses and petroleum engineering.

However, the bright oil price outlook due to the supply-demand gap has helped the prices of PVD and PVS shares increase significantly.

On the Ho Chi Minh Stock Exchange (HoSE), PVS shares had risen 53.2 per cent in the first six months of the year, while PVD shares climbed 27.2 per cent.

Meanwhile, for the midstream and downstream sector, companies witnessed positive business results, boosted by sustainable rallies of oil prices which translated into higher selling prices or improved gross profit margins.

Accordingly, PetroVietnam Gas JSC (PVGas, GAS) finished the first six months with net revenue of 40.27 trillion dong and profit after tax of nearly 4.4 trillion dong, up 23.2 per cent and 4.1 per cent respectively.

PVGas operates in the midstream sector, specialising in gas collection and redistribution to other firms in the market. Particularly in the second quarter, the sharp increase in oil prices boosted the company’s revenue by 45 per cent, while gross profit climbed 57.5 per cent year-on-year.

In the same segment, Petrovietnam Transportation Corp (PV Trans, PVT) also earned 256.5 billion dong in profit after tax in the second quarter, up more than eight per cent.

PV Trans said the gain was driven by higher freight rates, new ships, cost savings and asset liquidations.

In the first half of the year, PV Trans recorded net revenue of more than 3.58 trillion dong, up 5.5 per cent, with profit after tax rising 30 per cent to 439 billion dong.

Binh Son Refining and Petrochemical Co Ltd (BRS), the unit that manages and operates production and business activities of Dung Quat Oil Refinery, posted significant growth on high oil prices.

As it had to continuously produce and process products, Binh Son Refinery always has to maintain a quantity of crude oil and it takes time to process crude oil to products for sale.

In the first six months, Binh Son Refinery’s net revenue reached over 48.9 trillion dong, up 54 per cent over last year. Its profit after tax was 3.58 trillion dong during the period, compared to a loss of more than 4.23 billion dong in the same period last year. Accordingly, the company has achieved 53 per cent of the output plan, 70 per cent of the revenue plan, and quadrupled the profit plan.

PetroVietnam Oil Corporation (PV OIL, OIL) which is also in the downstream sector, recorded an increase of 15 per cent year-on-year in net revenue in the second quarter of 2021 to 13.4 trillion dong. Deducting expenses, PV OIL’s after-tax profit was nearly 272 billion dong, up 45 per cent.

As of June 30, the company’s net revenue reached nearly 25.2 billion dong, down 14 per cent over last year. But it posted a net profit of 359 billion dong, while it lost 241 billion dong in the same period last year.

In its explanation, the company stated that the high profit was due to the fluctuations of gasoline prices in the international market, with the average Brent crude oil prices surging 133 per cent year-on-year in the second quarter of 2021, from $29.56 per barrel to $68.97.

VIET NAM NEWS/ASIA NEWS NETWORK

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