Electricity production increases 48% against last year; revenue exceeds 20% of the plan amid a sharp drop in oil prices

On June 12, PetroVietnam President and CEO Le Manh Hung chaired a regular June meeting with heads of the Group’s member companies to evaluate the production and business performance for May and the first 5 months of the year and to discuss implementation plans for June and the following months.

In May, the world and domestic macroeconomic situation continued to decline following a decrease in global production. The global PMI index fell below 50 points, remaining at 49.6 points for 3 consecutive months. More particularly, the PMIs of major economies of the US, EU, and China all dropped compared to April. High interest rates hindered economic growth; inflation continued to be high, and growth rates were weak. Domestically, the PMI of the manufacturing sector in May decreased to 45.3 points compared to 46.7 in April, recording the third consecutive month of decline. This was also the most remarkable decrease since September 2021. In addition, the global electricity shortage, low credit growth, shrinking exports, especially in large markets showed that production and business activities of enterprises were facing many difficulties, especially for large manufacturing enterprises like PetroVietnam.

In addition, in May the prices of crude oil and petroleum products continued to decrease, affecting the production and trading efficiency of the Group and its member companies. Average crude oil prices in May were 11% lower than average prices in April and 7% lower than the average rate in the first quarter of 2023, down 33% against the same period last year. The oil refining profit margin and the prices of crude oil, gas, petroleum, fertilizer, and gasoline all decreased.

PVOIL ensures petroleum supply. (Photo: PetroVietnam)

In such a context, PetroVietnam did the utmost to increase production to partly offset losses from fluctuations in energy prices, to limit negative impacts from the macro and market situation, and to take advantage of opportunities. As a result, it fulfilled the production and business plan and supplied strategic goods – gas, electricity, nitrogen, and gasoline – for the economy.

In early June, testing at the Dai Hung Nam‑4X appraisal well by PetroVietnam Exploration Production Corporation (PVEP) returned positive results. The test results as of 12:20 a.m. on June 8, 2023 showed that it has a flow of about 6,350 barrels per day and 4.5 million cubic feet of gas per day, meeting conditions for commercial development and operation soon. This is the premise for PVEP to continue to exploit Block 05.1(a) and other blocks in the Nam Con Son Basin, helping to increase PetroVietnam’s oil and gas exploitation output in the future.

PetroVietnam’s gas exploitation output in May reached 0.75 billion cubic meters, exceeding 27.6% of the monthly plan, up 2.8% compared to April’s volume, and up 6.8% over the same period last year. Overall, the output in 5 months reached 3.44 billion cubic meters, exceeding 21.8% of the 5‑month plan. The average daily gas output in May was at its highest level since the beginning of the year.

Fertilizer production in May reached 158,400 tons, exceeding 5.5% of the monthly plan, up 53.8% compared to the April volume, up 3.8% against last year, with overall production volume for 5 months reaching 719,500 tons, exceeding 11.1% of the 5‑month plan.

Petroleum production (excluding the NSRP) in May reached 570,200 tons, exceeding 14.4% of the May plan, helping the overall production for 5 months to reach 2.92 million tons, exceeding 13.3% of the 5‑month plan, up 4.7% against last year.

More particularly, when there was a shortage of electricity for production and use, especially in May, PetroVietnam provided maximum fuel for electricity production, optimizing the operation of the Group’s power plants to increase the supply to the system, thus reducing electricity market supply pressure.

The Group’s electricity production in May reached 2.36 billion kWh, up 12% against April, up 85.5% over the same period last year, pushing the overall production for 5 months to reach 10.12 billion kWh, an increase of 48% against last year. In May the Group’s accumulated electricity output reached an average of 75.5 million kWh/day, up 5.3 million kWh/day which is equivalent to a rise of 7.5% compared to April’s volume. Of the combined figures, the May average output of PetroVietnam Power Corporation (PV Power) reached 51.5 million kWh/day, up 5.9 million kWh against the average level of April. In addition, to reduce the electricity shortage in the North, Thai Binh 2 Thermal Power Plant also operated at 100% capacity.

PetroVietnam’s financial targets were exceeded in the first 5 months of the year, making an important contribution to the national economy. The Group’s total revenue was estimated at 334 trillion VND, exceeding 20% of the 5‑month plan, contributing 54.5 trillion VND to the State budget (excluding the NSRP). It exceeded 45% of the 5-month plan. The consolidated pre-tax profit is estimated at 21.7 trillion VND, exceeding 63% of the 5‑month plan and equal to 63% of the plan set for this year. The positive result outpaced the decline in oil prices. PetroVietnam’s average oil price in May decreased 7% compared to the oil price in April and 27.7% against the same period last year. On average, oil prices in the 5 month period were 18.4% lower than the same 5 months last year.

Production and business targets in line with national targets

Speaking at the June 12th meeting, PetroVietnam Chairman Hoang Quoc Vuong asked the entire PetroVietnam Group to do their utmost to complete their company’s set targets to contribute to offsetting the difficulties that the national economy is suffering and to meet the Prime Minister’s expectations. He directed the implementation of the Block B‑O Mon gas pipeline project and component projects in the chain to ensure its progress.

Concluding the meeting, PetroVietnam CEO Le Manh Hung cited the Prime Minister as saying that the goals of State‑owned enterprise must be in line with the common goals of the nation. As a result, PetroVietnam must be fully awake to this direction and closely follow the State’s directives to serve the common goal. More particularly, against the current difficult economic context, the role of state-owned enterprises is urgently needed now more than ever, said the Prime Minister.

CEO Hung noted a number of other issues that need focus in the coming time. First, based on the production and business outcomes from the first 5 months and their updated reports, the Group and its member companies need to review and update goals and allocate implementation targets for the following months.

Second, it’s necessary to implement the production and business plans and management activities to maintain and ensure growth of production, especially in the search for new oil and gas reserves – exploration, exploitation, petrochemical refining, to supply the gas and electricity industries.

Third, it’s essential to review investment and investment portfolio management to increase the disbursement of investment capital.

Fourth, key projects – Block B‑O Mon project chain and upgrading and expansion of the Dung Quat Oil Refinery, Nhon Trach 3 and 4 Power Plant projects – are all given high priority for implementation by balancing capital resources and cash flow for them.

Fifth, it’s necessary to outline a plan to organize a conference on service work in June to evaluate and put forth plans, goals and solutions for this field.

Sixth, it’s necessary to strengthen chain connections, review ongoing chains and deploy new chains to promote the strength of the PetroVietnam ecosystem.

Last, it’s important to improve the management system through timely review and to update these systems in accordance with new legal regulations.