PetroVietnam in need of investment capital

Hanoi (VNS/VNA) - Demand for investment capital at the Vietnam Oil and Gas Group (PetroVietnam) and its member units for 2018-20 is estimated to reach 620 trillion VND (26.7 billion USD), PetroVietnam Securities Inc (PSI) recently announced.

According to Bui Huy Long, deputy general director of PetroVietnam Securities Inc, of the 620 trillion VND, loans accounted for more than 30 percent through traditional credit and bond issuances.

Urgent projects such as Thai Binh 2 Thermal Power Plant, Long Phu 1 Thermal Power Plant, Block B-O Mon Gas Project, Blue Whale Gas Project and Sao Vang – Dai Nguyet Gas Project, will require 4 billion USD, Long said.

Fitch Ratings last month assigned PetroVietnam first-time long-term foreign-currency issuer default rating (IDR) at 'BB' with a positive outlook.

This is a positive credit rating that will help PetroVietnam improve its ability to mobilise capital in the international market and diversify capital sources for investment projects in the context of restrictions for loans guaranteed by the Government.

This showed PetroVietnam’s strong financial status and business performance as well as its bright business prospects, instilling confidence in domestic and foreign investors, financial institutions and strategic partners, especially during the group’s restructuring process.

However, despite the increase in foreign investment inflow into Vietnam, FDI in the oil and gas industry was on the decline, from 2 billion USD per year previously to only a few hundred million USD, Long said.

In addition, policies related to the oil and gas industry are being tightened, making investors worried, he told the Energy Journey 2019 conference organised by PetroVietnam Securities Inc (PSI) late November in the southern province of Ba Ria-Vung Tau.

Speaking at the conference, economist Vo Tri Thanh said that international organisations have forecast a deceleration for the global economy in 2020, amid ongoing worldwide uncertainty.

For the energy sector, businesses need to be ready to response to fluctuating oil prices. OPEC countries have cut production and Iran is under an oil embargo while the world witnesses an oversupply, and the US has become a major exporter thanks to shale oil exploitation, Thanh said.

According to Nguyen Son, chairman of the Vietnam Securities Depository Centre, bond issuance channel has become an effective way to raise capital on the stock market.

The new provisions in the recently-passed Securities Law would create a healthy development environment for the bond market, he said.

For petroleum enterprises, besides mobilising capital via bank credit, it is necessary to diversify capital sources such as export credit, bond issuance, financial leasing and FDI attraction, Son said./.