PetroVietnam - giant SOE and notorious loss-making business
PetroVietnam has dozens of loss-making projects abroad and many senior officials in jail.
Vietnam National Oil and Gas Group (PetroVietnam-PVN), one of the biggest state-owned enterprises in the country of nearly 100 million people, is known for both contributions to the economy and notorious loss-making operations. 
Oil and gas exploitation is PetroVietnam's core business. Photo: PVN
|
PVN has a registered capital of VND281.5 trillion (US$12.24 billion) with two subsidiaries, 14 members in which it holds stakes of more than 51%, five companies with less than 51% stakes, 12 project management boards and branches, two representative offices, one institute, one university, and one vocational training school.
Loss-making projects
The Tuoi Tre newspaper reported that PVN has 13 overseas investment projects with only two making a profit namely Nhenhexky in Russia (with an investment of US$533.2 million) and one in Algeria (with an investment of US$1.26 billion).
The remaining 11 projects are in troubles including those already shutdown, causing big losses, the Thanh Nien newspaper reported.
In Venezuela: PVN incurred a loss worth US$500 million by investing in Junin 2 oil field from 2010. The newspaper reported that the project cost an investment of US$1.82 billion.
In Peru: in 2012, PVN approved PVEP’s investment project via buying a 52.6% stake at Perenco Peru Limited’s PPL Bahamas for US$647.4 million. Currently, the project is believed to face capital loss. The unallocated costs are estimated to hit US$514 million. PVEP, which stands for PetroVietnam Exploration Production Corporation, is an upstream arm of PVN.
In late 2011, PVN approved PVEP’s investment project in Block 39 in Peru with a total investment of US$323.6 million. As of 2017, PVEP had invested US$75.5 million in this project. Currently, the project is suspended and PVEP plans to transfer above projects.
In Congo: PVEP invested more than US$30.3 million in Block Marine XI following the investment approval in 2009.
In Myanmar: PVEP invested in Block M2 at the end of 2008 but it was then unable to finish the project as the investor failed to pay enough tax to the host country, owed contractors, and unable to finish the project after the deadline, according to Thanh Nien.
In Malaysia: in 2017, PVEP decided to raise investment to US$292.2 million in Block SK305. The project has been warned of inefficiency by domestic agencies.
In Vietnam: besides a series of troubled projects abroad, PVN has bogged down in five big projects domestically with millions of dollars each.
Dinh Vu Polyester project in the northern city of Haiphong cost an investment of VND7 trillion (US$304 million), suffers a loss worth VND1.7 trillion (US$74 million) and is now stalled. Dung Quat Shipbuilding Industry Company Ltd was transferred to PVN in 2010 from debt-ridden Vinashin.
Dung Quat Ethanol Plant in the central province of Quang Ngai (with an investment of VND1.9 trillion or US$83 million), Phu Tho Ethanol Plant (VND2.4 trillion), and Binh Phuoc Ethanol Plant (US$81 million) are either unfinished or suspended due to inefficient operations, according to Thanh Nien.
The online Nong Thon Ngay Nay newspaper reported another long-stalled project: Thai Binh 2 Thermal Power in the northern province of Thai Binh has consumed an investment of VND41 trillion (US$1.78 billion). Kicked off in 2010, it is expected to put into operation in 2017. So far, the plant remains under construction.
PVN also lost VND800 billion (US$36 million) when it invested in OceanBank, which is struggling with bad debts.
PetroVietnam's headquarters in Hanoi.
|
PVN’s revenues have been dropping for recent years.
Its revenues hit VND406 trillion (US$17.65 billion) in 2013. In 2014, the figures fell 6% to VND381 trillion (US$16.56 billion). In 2015, it plunged 23% to VND293 trillion (US$12.74 billion). In 2016, it dropped 20% to VND234 trillion (US$10.17 billion). The revenue in 2017 was at VND271 trillion (US$11.78 billion) and hit VND627.8 trillion (US$27.3 billion) in 2018.
The group's profit was at VND42.4 trillion (US$1.84 billion) in 2012, then rose to VND46.2 trillion in 2013. The figure fell to VND42.9 trillion in 2014, VND30.7 trillion in 2015 and plunged to VND16.6 trillion in 2016 (down 61% from that in 2012). The profit climbed to VND38 trillion in 2017 and VND47 trillion in 2018.
Liabilities: PVN’s liabilities accounted for roughly 38% of its equity in the 2012-2016 period. In 2017, the liabilities reached VND342 trillion (US$14.87 billion).
Infringements
PVN's General Director Nguyen Vu Truong Son. Photo: PLO
|
His resignation has to be approved by the State Capital Management Committee and the prime minister.
Reasons for the resignation have not been disclosed but a series of PVN’s loss-making investment projects began at the time he was general director of PVEP between July 2009 and February 2012, and deputy general director of PVN from February 2012 to March 2016.
Former PetroVietnam Chairman and Politburo member Dinh La Thang. Photo: VOV
|
They were punished for charges of “deliberately breaking regulations on state economic management, causing serious damage”, “influence peddling”, and “property appropriation.”
Trinh Xuan Thanh at a court. Photo: VNA
|
Meanwhile, former Chairman of PetroVietnam Construction Corporation (PVC) Trinh Xuan Thanh, who had sought asylum in Germany, got a life sentence for “deliberate infringlement” and “embezzlement.”
22:59, 2024/12/24
Hanoi to attract US$768 million in industrial parks in 2024
Companies in Hanoi highlighted the significant improvements in the business environment in Vietnam, particularly in the capital, where it has become easier to operate in the industrial zones.
21:35, 2024/12/21
Regulatory efforts underway to strengthen e-commerce in Vietnam
By 2025, Vietnam's e-commerce is expected to reach 10% of retail sales and contribute to the digital economy which is estimated to account for 20% of GDP.
16:51, 2024/12/14
Hanoi honors key industrial products in 2024
This recognition is a testament to the city government's ongoing support of local businesses.
18:09, 2024/12/12
EVs take the spotlight on Vietnam's urban streets
On the streets of Hanoi, a quiet but powerful shift in transportation is underway.
13:43, 2024/12/12
Hanoi names 83 institutions Green Energy User 2024
More than 80 facilities and projects have been recognized for their innovative use of green energy in manufacturing.
12:07, 2024/12/09
Bat Trang artisans innovate to meet global market demands
To boost competitiveness, Bat Trang pottery businesses leverage information technology for product promotion.
- Vietnam youth gears up for a greener future
- Hanoi to create over 213,000 jobs in Jan-Nov
- Update on worker conditions in South Korea from Vietnamese labor authorities
- Vietnam partners with NVIDIA to establish AI research center
- Hanoi grasps opportunities to drive semiconductor industry growth
- Internet users in Vietnam to hit 100 million by 2029