1. The current global competitive landscape is full of contradictions. That is:
The contradiction between opening up, integration and protectionism. Globalization and international economic integration are still the main trends in economic relations between countries, especially with Asian countries. With over 150 regional and free trade agreements, accounting for 58% of the world’s total, Asia takes the lead in international cooperation and integration. In particular, the international sea route circulates a volume of goods worth 5 trillion USD annually, connecting Asia with Europe and the whole world.
However, protectionism has emerged and developed in some countries that are considered to be leading in the trend of globalization such as the US and UK. President Donald Trump has issued many policies to protect US trade such as withdrawing from the TPP Agreement, preparing to renegotiate the NAFTA Agreement and restricting immigration. Brexit is also considered a barrier to the liberalization process, contributing to accelerating the rise of populist political views, opposing free trade in European countries as well as in the world. .
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Contradictions between economic development cooperation and competition for political position. Countries on the one hand strengthen economic development cooperation, on the other hand have moves to increase political influence such as the issue between Russia and the US and EU, Qatar with other countries in the UAE. This contradiction creates different policy trends across countries from time to time.
Conflict between competition and association. The traditional, honest views on competition are gradually being replaced by complex and multi-dimensional cooperation-competitive relationships. In the international cooperation relationship between countries, major countries tend to focus on adjusting their economic structure and growth model towards focusing on the internal situation, towards sustainable development, at the same time. priority to handle domestic political issues. Therefore, major countries have a need to maintain a favorable external environment, create a framework for long-term relations, thereby creating a common trend of détente and cooperation among major countries on many beneficial issues. common interests, while remaining strategically competitive.
2. Since it was first exploited in 1986 at Bach Ho field, over 3 decades, up to now, Vietnam Oil and Gas Group (PVN) has made an important development, affirming its role. in the socio-economic development of the country. Together with its member companies, PVN has contributed 25-30% of the total State budget revenue for many years, accounting for 16-18% of the country’s GDP.
The development situation of Vietnam’s oil and gas industry in recent years has the following characteristics:
Firstly, crude oil production always ensures the implementation of the set plan, well supports the implementation of the State’s economic development goals and closely follows the situation of regional oil prices and changes in oil prices. world. Currently, the whole country has 12 oil and gas exploitation enterprises, of which 9 are crude oil and only 3 are natural gas exploiters. Vietnam’s oil and gas production since 2006 is around 300-350 thousand barrels per day. The oil and gas exploitation basically met or exceeded the annual plan. From 2014 to now, Vietnam’s oil and gas production has tended to decrease, which is caused by the decline in regional and world oil prices.
Second, the domestic production of refined products from crude oil has begun, however, on a small and insignificant scale. The oil and gas processing industry in Vietnam has just been formed and developed in the past 10 years, starting with Dung Quat Oil Refinery officially operating commercially from May 30, 2010 with a capacity of up to 10 years. meet 30% of domestic petroleum demand.
Third, the competitiveness of Vietnam’s oil and gas industry is still limited. Currently, Vietnam mainly exports crude petroleum products and imports deep-processed petroleum products. Crude oil exports currently account for about 77.2% of the value of petroleum export turnover, while accounting for only about 4% of Vietnam’s total oil and gas imports.
| Products | Unit | two thousand and thirteen | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|---|
| Urea | Thousand tons | 1,602.2 | 1,656.2 | 1,683.5 | 1.622.2 | 1521 |
| Electricity | Billions of kilowatts | 16.17 | 16.69 | 21.98 | 21.13 | 20,10 |
| Petroleum products | Thousand tons | 6,603.2 | 5.736 | 6,911.4 | 6,864.4 | 6,798 |
| Fibers of all kinds | Thousand tons | 4.4 | 51.7 | 61.1 | 166 | 207 |
Some indicators on products produced from petroleum of PVN. Source: Evaluation report on annual production and business results and the last 3 years 2016, 2017, PVN
Import and export turnover of oil and petroleum products in Vietnam in the past 5 years has tended to decrease. Import turnover is higher than export turnover because Vietnam still has to export crude oil at low prices and import finished petroleum products at high prices. In general, Vietnam’s petroleum market is still largely dependent on imports, especially in the context that Vietnam has not been able to build a potential oil refining and petrochemical industry.
Fourth, the petroleum export market in Vietnam gradually diversified. China, Japan and Singapore are still Vietnam’s main crude oil markets. However, export markets are gradually being diversified. Up to now, there have been more than 50 domestic and foreign crude oil buying and selling partners, including: Exxon Mobil, Shell, BP, Total…, national oil companies such as SOCAR (Azerbaijan), Petronas (Malaysia), Petrobras (Brazil), PTT (Thailand), SK (Korea), BSP (Brunei)… or large trading companies such as Glencore, Vitol, Gunvor, Mitsubishi, Sumitomo… Currently, PVOIL sells over 200 oil shipments on average/ year (4-5 trips/week).
3. Assessing the advantages and challenges of Vietnam’s oil and gas industry in the current global competition context can be seen:
Vietnam’s oil and gas industry has the opportunity to attract strategic investors and participate in international projects related to the oil and gas industry. Through the expansion of cooperation and external relations, the oil and gas industry has the opportunity to attract large foreign investors into the industry. PVN has signed 49 investment cooperation agreements with countries around the world, on that basis, PVN has signed and is implementing 22 contracts in 13 countries. Currently, PVN has nearly 40 investment promotion projects in 5 core areas of the oil and gas industry, of which PVN pays special attention to a number of key projects calling for investment from Europe and Japan.
The oil and gas industry has the opportunity to diversify export markets, with suitable prices. As mentioned above, Vietnam’s oil and gas industry currently depends on three main export markets: China, Japan and Singapore. In which, the Chinese market currently accounts for about 46% of Vietnam’s oil and gas export turnover (crude oil). However, the export price to this market is currently assessed to be lower than the export price to other markets (according to the data of the General Department of Customs). This requires the oil and gas industry to further diversify export markets, avoiding dependence on a certain market.
Attract new technologies into the industry. Science and technology is developing more and more, creating favorable conditions for oil and gas exploitation enterprises in Vietnam to have the opportunity to access and handle the process of oil extraction and processing more easily and conveniently. to master oil and gas exploitation technology. Through cooperation with governments of other countries, the Oil and Gas industry has the opportunity to transfer new technologies, improve the efficiency of exploitation and processing of petroleum products.
But besides the above advantages, the oil and gas industry is also facing many challenges, notably the pressure to innovate the governance model to improve competitiveness. Currently, PVN’s governance model is showing some inadequacies, not closely following the governance framework according to good international practices. The current management model shows a contradiction in the operating mechanism between centralization, accumulation (PVN/parent company) and dispersion in management and capital (subsidiaries are usually joint stock companies). . PVN (Parent Company – State-owned one-member company) has legal status responsible for the production and business efficiency of the whole Group, but it is only an agency with a management apparatus, while production and business activities are still limited. Real business is located in member corporations – subsidiaries. The efficiency of production and business of the whole Group is essentially determined by the efficiency of management and administration, organization and operation of production and business in subsidiaries. Corporations/subsidiaries are units responsible for a particular technological area (established to perform a specific task in the oil and gas technology chain). But due to the nature of ownership and the relationship according to the market mechanism through bidding (Enterprise Law), it greatly limits the use of integrated capacity among member units, which is most evident in construction and installation. petroleum projects. It is the pressure to improve the quality of human resources. Compared with the Oil and Gas industry in developed countries, which usually has a percentage of trained workers reaching 100%, the number of workers with college, university and graduate degrees reaches 72% or more, in Vietnam, this number is still relatively low, reaching only 53%.
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| Import-export turnover of petroleum and petroleum products (billion USD) -Source: General Department of Customs |
4. Assessing the current situation and identifying the above difficulties and challenges, in the coming time, PVN needs to focus on the following solutions:
Firstly, about reforming the governance model and improving the performance of PVN: It is necessary to have a separate legal framework for PVN that covers the entire core technology chain so that the Group can accumulate real capital, develop diversify products with great added value and improve autonomy. The legal framework must facilitate the interoperability of each other’s products and services, and there should be a mechanism to facilitate the use of idle capital to expand investment in the fields of creating products with economic efficiency. economy on the principle of efficiency, making the most of internal resources and taking advantage of the positive aspects of international integration. In restructuring PVN, in order to increase agglomeration, asset size and capitalization, create great competitiveness when international integration, management quality and corporate governance, it is necessary to consider the possibility of equitization in Vietnam. Group-wide,
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| Central mining rig of Bach Ho mine |
Secondly, about oil and gas exploitation and processing: Do not continue to build petrochemical projects in Vietnam. Oil and gas exploitation technology in the East Sea is increasingly far from shore. In addition, continuing to improve the technical infrastructure of the petroleum market. Improve the receiving capacity of petroleum import ports; expanding the storage system; additional specialized means of transport; increase investment in fire and explosion prevention and control and ensure safety in transportation, storage and use of gasoline, oil and gas. PVN needs to focus on ensuring the progress of mine development projects, putting them into operation soon to generate revenue and profit, then promote investment in new projects on prospecting and exploration and give priority to buying existing mines. mining output and reserves. The medium and long-term orientation is to continue pursuing traditional oil and gas opportunities,
Third, on human resource development: Sending officials to study and exchange experiences with foreign countries in order to learn and improve knowledge about petrochemical technology. Regularly organize seminars, seminars to exchange and share experiences on oil and gas exploitation and production. From there, progressing to fully mastering the world’s advanced technologies in oil and gas investigation, survey, exploration and exploitation outside deep water areas.
Fourth, exploitation of natural resources must be accompanied by environmental protection: the available oil and gas resources for continuous exploitation within 20-30 years will gradually be exhausted, requiring further investment in public solutions. technology to take advantage of exploitation (to take advantage of oil recovery). Therefore, each company needs to calculate and develop an optimal exploitation plan, perform extraction, treatment, refining and petrochemicals effectively, minimizing adverse effects on the environment. The State also needs to have strict regulations and sanctions for oil and gas exploitation activities in particular and natural resource exploitation in general.
Assoc. Prof. Dr. Tran Kim Chung
Vice President of Central Institute for Economic Management