Global oil prices have fallen sharply over the last week to below USD 36 a barrel, while Brent crude in London fell to USD37.93 a barrel, which mean that prices have dropped a third compared with May 2015 and nearly two-thirds compared with their peak in June 2014.
While falling oil prices have created mounting pressure on crude oil drilling and exporting companies in Vietnam, economic expert Bui Ngoc Son said the economy would actually benefit.
“Cheaper fuel will help reduce the prices of other essential goods and boost production and consumption,” Son explained. “It is calculated that fuel prices account for as much as 40-50% of input costs.”
In a recent interview with VTV, Deputy Finance Minister Do Hoang Anh Tuan said that budget collection from crude oil export no longer made a significant contribution to the state budget in comparison with five and ten years ago, standing at VND 66 trillion (US$3.1 billion) this year.
“In 2016, Vietnam was projected to import around 12.5-13 million tonnes of petrol. Decreased oil price would lead to lower prices of input materials. So in theory the economy will benefit. Budget collection will actually increase,” Tuan noted.
Vietnam already has good oil reserves of around 4.4 billion barrels, accounting for 0.3% of global reserves, ranking second in East Asia, third in Asia and the 28th in the world.
Vietnam is both a crude oil exporter and importer of crude and other petroleum products. Statistics from the Ministry of Industry and Trade show that in the first 11 months of 2015, Vietnam imported US$4.8 billion worth of oil and petrol, down 31.9% in terms of value compared to the same period in 2014.
The Tam Dao 05 offshore oilrig, the largest ever locally manufactured jack-up rig, was launched in the southern province of Ba Ria-Vung Tau on December 13.
The Vietnam Oil and Gas Group (PVN) has drafted concrete scenarios for oil prices at US$60, 50, and 45 a barrel or even US$40, 35, and 30. With the crude oil output of 16.8 million tonnes in 2015, PVN’s revenues will dropped to VND325.4 trillion if price fall to 35USD a barrel.
Vietnam will likely maintain crude oil output of approximately 340,000 barrels per day in the coming years, ranking 36th in the world in the term of scale of production and the fourth in Southeast Asia in the term of oil exports. Vietnam’s demand for gas and oil in 2015 was estimated at 16.4 million tonnes, an increase of 6% compared to the previous year with 50% imported from abroad.
Slow benefits to consumers
While falling fuel prices are good news, consumers have yet to see much benefit.
According to economist Nguyen Minh Phong, petrol prices in Vietnam usually respond slowly to the prices on the world market due to local price management mechanisms.
“Based on Decree 83, petrol retail prices will be set based on the average price of the 15 days following a change in the world market. Meanwhile various fees including import fees, environmental fees and fees for running the price stabilisation fund, account for 50% of retail petrol prices. As such, petrol prices in Vietnam always go up quickly but always fall slowly in comparison with global prices.”
According to the MoIT, domestic retail prices of oil and petrol have been reduced six times and increased four times in 2015, while oil fell 14 times and increased five times in 2014.
While falling oil prices have created mounting pressure on crude oil drilling and exporting companies in Vietnam, economic expert Bui Ngoc Son said the economy would actually benefit.
“Cheaper fuel will help reduce the prices of other essential goods and boost production and consumption,” Son explained. “It is calculated that fuel prices account for as much as 40-50% of input costs.”
In a recent interview with VTV, Deputy Finance Minister Do Hoang Anh Tuan said that budget collection from crude oil export no longer made a significant contribution to the state budget in comparison with five and ten years ago, standing at VND 66 trillion (US$3.1 billion) this year.
“In 2016, Vietnam was projected to import around 12.5-13 million tonnes of petrol. Decreased oil price would lead to lower prices of input materials. So in theory the economy will benefit. Budget collection will actually increase,” Tuan noted.
Vietnam already has good oil reserves of around 4.4 billion barrels, accounting for 0.3% of global reserves, ranking second in East Asia, third in Asia and the 28th in the world.
Vietnam is both a crude oil exporter and importer of crude and other petroleum products. Statistics from the Ministry of Industry and Trade show that in the first 11 months of 2015, Vietnam imported US$4.8 billion worth of oil and petrol, down 31.9% in terms of value compared to the same period in 2014.
The Tam Dao 05 offshore oilrig, the largest ever locally manufactured jack-up rig, was launched in the southern province of Ba Ria-Vung Tau on December 13.
The Vietnam Oil and Gas Group (PVN) has drafted concrete scenarios for oil prices at US$60, 50, and 45 a barrel or even US$40, 35, and 30. With the crude oil output of 16.8 million tonnes in 2015, PVN’s revenues will dropped to VND325.4 trillion if price fall to 35USD a barrel.
Vietnam will likely maintain crude oil output of approximately 340,000 barrels per day in the coming years, ranking 36th in the world in the term of scale of production and the fourth in Southeast Asia in the term of oil exports. Vietnam’s demand for gas and oil in 2015 was estimated at 16.4 million tonnes, an increase of 6% compared to the previous year with 50% imported from abroad.
Slow benefits to consumers
While falling fuel prices are good news, consumers have yet to see much benefit.
According to economist Nguyen Minh Phong, petrol prices in Vietnam usually respond slowly to the prices on the world market due to local price management mechanisms.
“Based on Decree 83, petrol retail prices will be set based on the average price of the 15 days following a change in the world market. Meanwhile various fees including import fees, environmental fees and fees for running the price stabilisation fund, account for 50% of retail petrol prices. As such, petrol prices in Vietnam always go up quickly but always fall slowly in comparison with global prices.”
According to the MoIT, domestic retail prices of oil and petrol have been reduced six times and increased four times in 2015, while oil fell 14 times and increased five times in 2014.
Source: http://www.talkvietnam.com/
Relate Threads
