2017 saw the lowest addition to the country’s oil reserves in the country’s history with an addition of only 4 million tonnes against a target for the year of 10-15 million tonnes.[1] Another important fact is the fact that having always featured in the country’s top ten exports from 1990 to 2015, it has not featured since 2015 as other exports have grown and featured in the top 10 export products e.g. mobile phones and apps.
Last year, only 4 new wells were drilled against a target of 10, reflecting the drop in oil prices over recent times and the lower economic efficiency. Several of the existing fields have seen declining output, due to the length of exploitation The most famous of Vietnam’s oil fields is the Bac Ho or White Tiger field which has only a few million tonnes left in reserve.
The Prime Minister recently announced plans for the equitisation (privatisation) of PetroVietnam Oil Corporation (“PV Oil”) and Petro Vietnam Power Corporation (“PV Power”). The charter capital for these two organisations post equitisation are PV Power to be 51% owned by PetroVietnam until 2025 (unless a debt restructuring is entered into, in which case PV will need to divest below 50%) and PetroVietnam will retain 35.1% ownership only in PV Oil. For both entities the public offer will be 20% with the balance going to strategic investors. In the case of PV Oil foreign ownership will be capped at 49%.[2]
Whether the change in ownership and privatization of PV OIL helps get exploration back on track to be able to drill their forecast 10 new wells this year remains to be seen but hopefully this will spark some renewed interest from some of the majors who have left Vietnam, to return as strategic partners.
[1] Vietnam Investment review _January 22nd 2018.
[2] Frasers Legal alert “New Decree on Equitisation”.
