In the context of unprecedented oil prices in history, PetroVietnam Exploration Production Corporation (PVEP) is facing enormous challenges, requiring outstanding efforts to cope with market fluctuations.

Acknowledge the difficulties affecting the implementation of work in 2020, from the beginning of the year, PVEP has developed a specific program to maintain stable and safe business activities. Along with the active prevention and control of the Covid-19 epidemic, PVEP has developed and forecasted oil price scenarios, even in the worst case; regularly reporting, updating the situation, exchanging information with Vietnam Oil and Gas Group (PVN) and other units for timely solutions to the effect on oil & gas exploration and production.

PVEP presents Ventilator to Bach Mai Hospital to help prevent Covid-19

With the initiative in coping with dual effects of the Covid-19 epidemic and the plummeting oil prices, the efforts of the leadership and employees, PVEP has achieved some praiseworthy results in the first 3 months of 2020: Production of 1.02 million tons of oil equivalent (0.73 million tons of oil and 294 million m3 of gas), reaching 102% of the quarter plan; turnover reached 5,947 billion VND; contributed to the State budget 1,551 billion VND.

However, abnormal fluctuations in the market have seriously affected the activities of PVEP and its units. In particular, the world has witnessed unprecedented volatility with the last trading session on April 20th 2020, WTI oil fell to -37.63 USD / barrel, indicating a recession and surplus crisis. Accordingly, it will be extremely difficult for PVEP to continue completing its tasks in the coming time.

At the current extremely low oil prices, most oil & gas projects in the world face difficulties and losses, including projects with large output and favorable production conditions. PVEP is managing many small, marginal and complex geological fields, which are difficult to avoid the fact that the output is not enough to cover expenses.

In addition, PVEP actively implements the overall solution package with PVN and specific solutions for the E&P sector to optimize governance and improve cash flow. Along with the development of a scenario to cope with each oil price rate, PVEP reviewed all projects to look at specific operating and production plans in the new situation, including carefully consider related factors such as cost, capacity of storage, ability to sell, technical issues of the project, the supply of materials.

Accordingly, PVEP sets the direction: Ensuring stable production in all projects; increase production at low-cost projects; join investors to ensure cash flow and lowest costs; speeding up the repair of wells, maintenance and repair of rigs and equipment to meet the increase in production when oil prices recover; extend disbursements to long-term jobs; mobilizing medium and short-term credit limits up to USD 300 million to ensure liquidity along with reduction of financial costs, loan interest; reduce and save apparatus costs of at least 5-15% for each item; strengthen communication to all employees to further enhance the responsibility, sharing, and dedication to help PVEP overcome difficulties and challenges.

According to the plan approved from the beginning of the year, the total operating cost of projects in 2020 is 10,948 billion VND with the oil price of 60 USD/barrel. In the current period, in order to adapt to the situation, PVEP drastically cooperated with the operators in finding all measures to reduce operating costs, initially achieving some positive results: total reduction over 1,300 billion VND; concurrently cut management costs by 85 billion VND (10%); reduce administrative costs by 10-30%.

Oil and gas production at Te Giac Trang field

Regarding market solutions, PVEP has been actively working with PVN and partners, Dung Quat Oil Refinery to sell oil blocks in April and May 2020 from long-term oil purchasing contracts, avoiding the effect on production, and promoting optimal oil sales method in the second half of the year in accordance with the actual situation of each field. Regarding gas consumption, PVEP also has specific proposals to PVN on getting maximum amount of associated gas at reasonable price to help key projects stabilize production.

For the financial solutions, according to Circular 01/2020/TT-NHNN of the State Bank related to the impact of the Covid-19 epidemic, PVEP has been actively working with many banks to restructure schedule of repayment in 2020, negotiating to reduce interest rates on existing loans and promoting short-term loans, arranging capital for key projects to ensure cash flow and timely deployment of works.

The initial results of the implementation of coping solutions in the current period are prerequisites for PVEP to achieve the main goals in 2020, complete the output, safe production and sustainable development. .