Bpl foreign players price list 2019

The Hanoitimes – Overall crude oil and natural gas production in Vietnam may suffer year-on-year declines of 5% and 1%, respectively, in 2020.

Vietnam’s crude oil and natural gas production face downside risks, in light of a double-whammy of global oil price collapse and sluggish demand due to continued spread of the Covid-19 pandemic, according to Fitch Solutions.

Vietnam – Crude Oil & Natural Gas Production.

As of March 31, benchmark Brent had lost almost 60% of its value since the start of 2020. This has occurred next to an apparent price war between Saudi Arabia and Russia, in the aftermath of failed OPEC+ talks in March, and global demand fears created by the Covid-19 pandemic.

This has triggered widespread reactions from across the globe as oil and gas firms announced significant capex cuts, reduced output targets and other cost cutting measures, in order to ride out the downturn. By comparison, responses from Asia’s national oil companies (NOCs) have been more measured, although many have indicated that they are closely monitoring the situation.

Vietnam’s state-owned oil producer PetroVietnam (PVN) has yet to commit to any spending cuts. However, the state-owned enterprise (SOE) did concede through an official statement, that its 2020 revenues are likely to be halved, due to the drop-off in crude and losses incurred from some ongoing projects as a result. The SOE is also believed to have ordered its subsidiaries to prepare business scenarios for different oil price levels, as it contemplates the likelihood of a protracted downturn in prices. Such a scenario would be highly negative for PVN’s upstream portfolio, which mostly comprises of joint-ventures (JVs) with foreign entities in offshore and mature producing areas.

According to industry sources, PVN’s breakeven cost per barrel is believed to be in the region of US$51/bbl, far above the US$36.3/bbl averaged in March and also above the US$43/bbl that Brent is expected to average in 2020, according to Fitch’s forecast. This risks most of the SOE’s existing output, while Fitch predicted overall crude oil and natural gas production in Vietnam may suffer year-on-year declines of 5% and 1%, respectively, in 2020.

Capital spending cuts and FID delays inevitable

Capital spending cuts and foreign indirect investment (FID) delays appear inevitable, as upstream operators come to grips with a lower oil price environment and sluggish demand.

% Stake In Selected Upstream Projects (LHS) & % Share Of Total Oil, Gas Production (RHS).

Many of Vietnam’s largest oil and gas fields boast large foreign ownership. For many of these firms, upstream plays in higher-risk emerging markets such as Vietnam, are outside of their core portfolio, and as such, budgeted spend in Vietnam have potential to be among the first to go, in the event of any capex cuts.

Indeed, a breakdown of ownership across nine select upstream developments (including those in the pre-FID phase) shows that apart from the Dai Hung field – output contribution from which is small – and Block B project, the remaining seven projects boast at least 50% foreign ownership. A large number of foreign firms operating in Vietnam are NOCs, and while this could see activities within the sector prove more resilient in the face of elevated headwinds, anecdotal evidences point to a gradual, cautious turn in sentiment.

For instance, in March 2020, Zarubezhneft participated in discussions with other Russian oil companies and Energy Minister Alexander Novak, which reportedly ruled out output increase in the near-term due to weak demand in light of the Covid-19 pandemic. Thailand’s PTT has not revised its capex plans for 2020 and subsequent years, although has urged the government to release barrels in strategic storage, so as to stave off first quarter losses due to a drop in prices.

Delays of FIDs that were initially slated for 2020 also appear increasingly inevitable, and pose risks to our medium-term output growth projections for Vietnam, as drilling activities and major contract awards are postponed. In March 2020, Jadestone Energy put developments of the Nam Du and U Minh gas fields on hold, in order to maintain its balance sheet.

Other projects at risk of facing delays include Block B and Ca Voi Xanh. The two projects are expected to require combined capital input of about US$15 billion. Output from both could climb to a peak of about 15 billion cubic meters, equivalent to 1.5 times Vietnam’s total gas production in 2019.

Contraction in refined fuels consumption

Additionally, Fitch also revised down its demand growth projections for Vietnam, to reflect reduced demand in light of Covid-19. As a result, refined fuels consumption is expected to contract by 1% in 2020, down from previous forecast for 3% expansion. The severity of reported Covid-19 spread in Vietnam has been moderate relative to larger regional peers, although this has proven insufficient to prevent a precipitation in domestic demand. Indeed, PVN’s domestic refined fuel sales registered a year-on-year decline of some 30% over the first two months of the year, mainly due to the implementation of early containment measures– since December 2019 – and subsequent collapse in travelling demand.

Vietnam – Refined Fuels Consumption & % chg y-o-y.

Given the concentration of containment measures in limiting aviation traffic flows, the most pronounced impact will continue to be felt in jet fuel, particularly as Vietnam is expected to deepen travel restrictions in order to curb the growing number of imported cases. Extension of visa restrictions onto arrivals from Europe and North America, on top of measures already in place for Asia-Pacific countries, for instance, would weigh heavily on jet fuel demand in the second quarter.

Outside of jet fuel, diesel demand is also expected to endure heavy hits over the first half of 2020, mirroring the slowdowns in industries, notably manufacturing, due to the sector’s large exposure to raw materials from China and a drop-off in regional export demand. Indeed, according to official statistics, growth in manufacturing output is shown to have slowed to 7.4% year-on-year over the January-February period, compared with growth of 11.4% year-on-year in the same period in the previous year.

The Hanoitimes – The head of Vietnam’s stock market watchdog urged players to trust the internal strengths of the economy and the resilience of Vietnam’s stock market.

The State Securities Commission of Vietnam (SSC), the country’s stock market watchdog, is considering a number of solutions to help investors and securities firms overcome negative impacts of the Covid-19 epidemic and global turmoil, according to the SSC’s Chairman Tran Van Dung.

Chairman of the SSC Tran Van Dung.

Among them are lowering fees for some brokerage services and easing regulations on margin trading, Dung told Vietnam Financial Times.

At the close on March 9, the benchmark Vn-Index plunged 6.28% to 835.49, the biggest tumble since May 2014 when the standoff between Vietnam and China occurred after China moved an oil rig into Vietnam’s waters.

Dung, however, noted the liquidity of the Hochiminh and Hanoi stock exchanges remained abudant with nearly VND6.5 trillion (US$278.69 million) traded, indicating investors were buying in battered stocks.

Besides, foreign investors remained net sellers but at a moderate amount of VND230 billion (US$9.85 million) on March 9, Dung added.

Dung said the freefall of the stock market was a common situation globally, especially as “all bad news came at one time” that directly impact investor sentiment, including the sharpest decline of oil price since 1991, prompting Goldman Sachs to predict Brent oil could drop to US$20 per barrel this year.

On early March 9, the Japanese government issued lower-than-expected economic data for 2019, heightening fears the global economy may come to a recession under the growing impacts of the Covid-19 epidemic.

The Federal Reserves (FED) on March 3 cut interest rates by 0.5% in an emergency move, prompting 65% of traders to expect the FED to continue lowering interest rates by 0.75% in the upcoming meeting on March 17. If it happens, the cut in the federal funds rate would take the borrowing cost in the short-term markets down to a range of 0.25% – 0.5% and raise concern over the US and global economies going to slow down.

For the Vietnamese stock market, new cases of Covid-19 infections were the main reason for shares going downhill, Dung said. However, Vietnam’s successful containment of the epidemic is just a matter of time, given strong determination of the government and the public.

Moreover, in the mid- and long-term, credit and fiscal support packages from the government will no doubt help enterprises recover, Dung added.

Dung urged enterprises, intermediary financial institutions and investors to trust the internal strengths of the economy and the resilience of Vietnam’s stock market.

Such confidence would help the market to rebound sooner and avoid unnecessary sell-offs, Dung stated.

In the coming time, the SSC would continue to closely monitor the market and only intervene out of necessity, Dung added, stating the authority would strictly punish cases of market manipulation or providing false information for unfair gains.

Accountability sought in e-commerce, illustration photo

A draft decree amending 2013’s Decree No.52/2013/ND-CP on e-commerce, which will see comments collected from businesses and consultant firms, has recently caused concern for e-commerce operators if the draft is adopted.

Nguyen Chi Linh, representative of an e-commerce platform which is a subsidiary of the Chinese tech giant Alibaba Group, noted her criticisms to VIR about an adjusted article which orders a searching tool for state authorities to manage all information of their traders to check and inspect any violations or complaints.

“This regulation is unnecessary and can seriously impact the convenience of traders. Even if traders do not violate or make any complaints, they don’t want private information to be monitored by state management agencies. They could jump to other social platforms, and hamper e-commerce development,” said Linh.

She added that the platforms are assisting state management agencies in investigating illegal business acts, saying that providing registration information, transaction histories, and other documents on the issue on the e-commerce trading platform should be enough.

In addition, new regulations related to joint responsibility on goods and services on the platforms has caused headaches for e-commerce operators. The draft decree has added responsibilities in Article 36.11.d, and the representative of the Chinese e-commerce platform said this is impossible for them, which plays a commercial intermediary role only.

Without a legal framework, the role and responsibilities of e-commerce platforms continue to be highlighted. At the end of 2019, sneaker and sports apparel giant Nike ditched its deal with Amazon after two years, after noting its concerns about third-party sellers offering counterfeit products on the marketplace. Many brands are unhappy with how Amazon operates, with fake goods running rampant.

According to Bloomberg, the e-commerce giant is also notorious for identifying popular products sold by third parties on its website and then selling its own similar products at lower prices.

In Vietnam, e-commerce platforms like Shopee and Sendo are used to inspections for massive violations and complaints related to bad service or fake and prohibited goods.

Nguyen Minh Long, director of Dragon Law Company, said that e-commerce platforms should not shirk their duty to provide a management tool for state authorities, and take the joint responsibilities to improve themselves.

“In order to enhance the efficiency of these regulations, we need some sanctions strong enough to ensure owners of e-commerce platforms improve accountability and compliance, ensure good performance of online trading, and protect local consumers,” said Long.

He agreed with new provisions, saying, “In the context that online trading is increasingly developing, especially during the pandemic, strengthening the state management for the sustainable development of the retail market is necessary to maintain both benefit of businesses and consumer protection, and avoid e-commerce platforms developing as a place for trading illegal goods,” explained Long.

The draft decree amending 2013’s Decree No.52/2013/ND-CP on e-commerce is being compiled by the Ministry of Industry and Trade. The draft adds provisions on managing e-commerce activities involving foreign factors, and those on social networks. It also revises several regulations on the responsibility of both e-commerce platforms and their operators.

Some popular e-commerce platforms in Vietnam are backed by Chinese technology giants, or funded by regional venture funds. However, results often fail to match investment, and competitiveness increasing. In 2020, Lazada.vn fell behind Shopee and Tiki, according to Malaysian shopping aggregator iPrice Group, with a sharp month-by-month drop of its traffic, while that of the leading player Shopee has tripled Lazada and Tiki.

The Hanoitimes – PVN accounts for about a third of the country’s refined product output and supplies gas for power plants that make up about 15% of Vietnam’s power generation.

Fitch Ratings has affirmed Vietnam Oil and Gas Group’s (PetroVietnam) Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB’ with a Stable Outlook.

Fitch affirms state-run Vietnam Oil and Gas Group at BB with stable outlook.

PVN’s IDR is capped by that of its parent, the Vietnam sovereign (BB/Stable), under Fitch’s Government-Related Entities (GRE) Rating Criteria, stated the rating agency, adding the company is wholly owned by the state, which exerts significant influence over its operating and financial policies.

Meanwhile, Fitch assesses PVN’s Standalone Credit Profile (SCP) at ‘bb+’, reflecting the company’s conservative financial profile, diversification and integration. Such assessment is support by PVN’s position as Vietnam’s largest upstream oil and gas producer, which has exclusive rights to Vietnam’s oil and gas reserves by regulation.

Fitch expected PVN’s earnings before interest, taxes, depreciation and amortization (EBITDA) to fall by about 55% and 30% in 2020 and 2021, respectively, from 2019, amid the weak oil price environment.

However, it is expected that PVN would continue to maintain a net cash position over the next two years, as Fitch anticipated a delay in PVN expansion plans. Fitch believed the earnings of PVN’s upstream, refining and oil distribution segments will be dampened severely in 2020. However, earnings from its gas distribution, fertilizer and power businesses would remain relatively stable, Fitch added.

PVN holds interests in all of Vietnam’s upstream oil and gas assets, accounts for about a third of the country’s refined product output, and supplies gas for power plants that make up about 15% of Vietnam’s power generation. PVN also accounts for about 80% of Vietnam’s fertilizer production.