Tapping extra 1 mln tonnes of crude oil challenging hinh anh 1Offshore oil field Bach Ho (White Tiger) of Vietnam. (Photo: VNA)

Hanoi (VNA) – The government’s goal to extract an additional 1 million tonnes of crude oil by the year’s end to meet its economic growth target is very challenging, according to Chairman of the Vietnam Oil and Gas Association (VOGA) Ngo Thuong San.

At a meeting with state-run corporations to seek stimulus for the national economic growth in early June, Deputy Prime Minister Trinh Dinh Dung asked the Vietnam National Oil and Gas Group (PVN) to add 1 million tonnes of crude oil to its projected output in order for the country’s GDP to grow by 6.7 percent this year.

The goal is not easy to achieve as the initiative came late so PVN might struggle to ensure the target and sustainable mining, San warned. Moreover, it will be harder for the firm to fast-track construction of facilities in new oil fields since the typhoon season started last month, he added.

Large reserves like Bach Ho, Su Tu and Te Giac have passed their peak while small ones don’t produce much. In addition, global oil prices have crashed to below 50 USD per barrel, putting exploiters at risk of incurring more losses if they increase production, the chairman explained.

The PetroVietnam Exploration Production Corporation (PVEP), a member of PVN, said suspended investment in new oil fields and oil rigs during the past few years due to falling oil prices has affected its capacity to maintain and raise productivity.

The future for the oil and gas industry will be tough, with major oil fields near shore about to be exhausted while exploring new reserves offshore is costly, said Deputy Director the Vietnam Institute of Economics Le Xuan Sang. The cost of production in Saudi Arabia and Russia is only about 12 – 13 USD per barrel. For Vietnam, it is 40 USD, he said.

[Inflation projected to drop to below 3 percent in 2017]

VOGA Chairman Ngo Thuong San suggested the PVN seek advice from experts in mining production and management to devise effective solutions for the matter. He also urged the government and ministries to provide the PVN with special mechanisms, for example, establishing a fund for the firm to invest in high technology and equipment for exploration and production activities.

PVEP stressed that the company needs support from the government, Ministry of Trade and Industry and the PVN to apply for a loan of 65 – 132.7 million USD to fulfill the goal.

If the oil price keeps hovering around 50 USD per barrel, the extra one tonne of crude oil will contribute to the growth of 0.3 percent in GDP, San noted.

By June 28, the PVN had produced 7.89 million tonnes of crude oil, equivalent to 55.6 percent of its yearly target. It has discovered a new reserve and put oil platform Tho Trang 3 into use from May 7, 13 days ahead of schedule.-VNA