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PetroVietnam oil production declines for fourth year

PetroVietnam oil production declines for fourth year

Hanoi: Vietnam Oil & Gas Group's crude output dropped for the fourth straight year because of aging fields, technical problems and bad weather, writes Bloomberg. Production of crude oil and condensate declined to 15m metric tons in 2008 from 15.9m tons last year, state-run PetroVietnam, as the Hanoi-based group is known, said in an e-mailed statement today: that's a decrease of 5.7%.

PetroVietnam is counting on new areas such as Ca Ngu Vang, Phuong Dong and Su Tu Vang to boost crude production as output at aging Bach Ho field, in operation since 1986, falls. Crude exports account for 20% of the country's gross domestic product, according to the group.

"It will be a very difficult year in 2009 as no one can have a sound forecast on where oil prices would be," said Dinh La Thang, PetroVietnam's chairman. "If prices go down to $30 a barrel, that would deal a severe blow to not just the group but the country's finances."

The group's overall revenue jumped 31% to 280 trillion dong ($16bn) this year after crude in New York reached a record $147.27 a barrel in July. Oil has since plunged 73% as the global economic slowdown curbed energy use.

Production also decreased because of "technical problems" at some fields jointly operated by Vietnam and Malaysia while unfavorable weather delayed output, Phung Dinh Thuc, PetroVietnam's deputy chief executive officer, said by telephone from Hanoi.
Declining Output

PetroVietnam aims to produce 16m tons of crude and condensate and 8bn cubic meters of gas in 2009, according to the statement today. The company plans to export 11.68m tons of crude next year.

Crude output of Vietnam, Southeast Asia's third-biggest producer, reached a record 20.26m tons, or 415,000 barrels a day, in 2004, data from the state-owned company showed.
Vietnam plans to offset the impact of decreasing oil production by developing overseas fields, Thang told reporters.

The country has 16 overseas oil and gas projects with six in Asia, four in Africa and the rest in America. A PetroVietnam project in the Orinoco field in Venezuela will add 10 million tons of crude to the annual output of the Southeast Asian country by 2014, Thang said.
The group will buy a 40% stake in the Venezuelan project at a cost of $11.4bn, to be PetroVietnam's largest overseas investment, Thang said on Nov. 20.

Vietnam will have seven refineries by the end of the next decade with a processing capacity of as much as 55m tons every year, the chairman said. The country's first refinery Dung Quat is slated to start operations in February.

The group will sign a deal in early 2009 with BP Plc, Europe's second-biggest oil company, to supply at least half of the crude needed by the Dung Quat plant, Thang said.  [30/12/08]