HÀ NỘI — The rapid exhaustion of its main oil discoveries is putting the Việt Nam National Oil and Gas Group, better known as PetroVietnam, under great pressure to reach its oil exploration and production targets for 2018.

PetroVietnam produced 15.52 million tonnes of oil in 2017, surpassing its set target by 1.3 million tonnes. However, the country’s sole oil exporter has reduced its 2018 production target by one million tonnes, due to concerns over the depletion of natural oil resources.

Its general director, Nguyễn Vũ Trường Sơn, acknowledged that most of the oilfields have been exploited for many years and are in their final stages, with production declining by 15-30 per cent per year.

Bạch Hổ (White Tiger) field, the country’s largest and longest-producing oilfield, contributing about 60 per cent of the nation’s total oil production for PetroVietnam, is in a state of depletion and can only be explored in 4-5 years.

In addition, the rapid flooding, at over 60 per cent, in many fields due to intensive exploitation, such as Hải Sư Trắng (White Sea Lion), Tê Giác Trắng (White Rhino), Sư Tử Vàng (Yellow Lion) and Rạng Đông (Dawn), is posing a challenge that may reduce oil production in the coming years, Sơn said.

According to Vietsovpetro’s general director, Từ Thành Nghĩa, the largest problem facing the company is the sharp decline in output at its major oilfields, such as at Bạch Hổ and Rồng (Dragon), while new discoveries, such as Gấu Trắng (White Bear) and Thỏ Trắng (White Rabbit), are small fields with low reserves.

Therefore, the production plan of four million tonnes of oil per year remains a large challenge for the Russian-Vietnamese oil and gas exploration joint venture, Nghĩa said at PetroVietnam’s conference to set 2018 tasks.

Under-funded exploration

The year 2017 proved to be the most difficult year for PetroVietnam’s exploration activities, when oil reserves increased by only four million tonnes, which was much lower compared to the strategic target of 28-42 million tonnes per year.

In previous years, PetroVietnam often invested over US$2 billion to drill 30-40 oil wells and replenish its oil reserves by 35-40 million tonnes per year, but from 2015 onwards, investments from the group and its foreign partners have decreased by five times.

“It all started with exploration,” said Nguyễn Quỳnh Lâm, PetroVietnam’s deputy general director, who is in charge of exploration activity.

Lâm said weak exploration would lead to oil shortages for other activities, including petrochemical refining, electricity and fertiliser production. He expected the Government would soon approve the group’s financial regulations, allowing it to extract money for the exploration fund.

While awaiting the Government’s approval, Lâm said PetroVietnam would continue to call for foreign funds for developing some oil and gas fields, and would give up its executive role, in exchange for needed capital.

Ngô Hữu Hải, PetroVietnam Exploration and Production Corp’s (PVEP) representative, said the company currently lacked at least $150 million for exploration activity in 2018. Its production target this year would also decrease by about one million tonnes of oil equivalent.

Hải said the company was implementing measures to improve the financial condition and rank projects to restructure its project portfolio, as well as break or relax investment agreements, along with reducing costs. — VNS