TT
Target | Unit of measure | Implemented in 2016 | Plan for 2017 | Implemented in 2017 | Comparison ratio | ||
TH year compared to year plan | TH 2017 vs. 2016 2016 | ||||||
Total Group Revenue group | 1000 billion dong | 452.5 | 437.8 | 498.0 | 113.8% | 110.1% | |
3 | Oil and gas service revenue | 1000 billion dong | 150.3 | 163.6 | 167.2 | 102.2% | 111.2% |
Proportion/total revenue of the whole Group | 33.2% | 37.4% | 33.6% | ||||
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(Source: PVN's 2017 Summary Report)
Although achieving the above great achievements, which are of great significance in developing the national economy and providing many resources to serve the industrialization and modernization of the country, it is also necessary to evaluate and recognize PVN compared to oil and gas corporations in the region and in the world, to reform and improve the operational efficiency of not only PVN and the oil and gas industry but also to reform and improve the efficiency of state-owned enterprises, so that PVN in particular and state-owned enterprises in general are the core force in the state economic sector, the leading component of the market economy, oriented towards socialism in Vietnam.
Table 2.6: Comparison of scale and efficiency of PVN and some typical international oil and gas corporations
Unit Million USD
Target/year
PVN | PETRONAS | Royal Dutch Sell | CHEVRON | Exxon Mobile | |
Year of birth establish/country | 1975/Vietnam Male | 1974/Malaysia | 1907/Anh-Ha Lan | 1879/USA | 1999/USA |
Revenue | |||||
2015 | 12,628 | 57,436 | 272,156 | 138,477 | 249,248 |
2016 | 10,381 | 43,142 | 240,033 | 114,472 | 208,114 |
2017 | 12,915 | 55,028 | 311,870 | 141,722 | 244,363 |
Total assets | |||||
2015 | 33,820 | 137,273 | 340,157 | 260,078 | 336,758 |
2016 | 33,895 | 133,466 | 411,275 | 253,806 | 330,314 |
2017 | 34,617 | 147,609 | 407,097 | 253,806 | 348,691 |
Equity | |||||
Beginning balance 2015 | 18,825 | 82,253 | 171,966 | 156,191 | 181,064 |
Beginning balance 2016 | 19,597 | 82,912 | 162,876 | 153,886 | 176,810 |
Beginning balance 2017 | 19,080 | 104,263 | 188,511 | 146,722 | 173,830 |
Profit | |||||
2015 | 1,367 | 9,576 | 2,200 | 5,278 | 16,551 |
2016 | 729 | 6,423 | 4,777 | 17 | 8,375 |
2017 | 1,691 | 7,432 | 13,435 | 9,523 | 19,848 |
Return on Equity (ROE) | |||||
2015 | 7.26% | 11.64% | 1.28% | 3.38% | 9.14% |
2016 | 3.72% | 7.75% | 2.93% | 0.01% | 4.74% |
2017 | 8.86% | 7.13% | 7.13% | 6.49% | 11.42% |
(Source: Author's compilation of Financial Reports over the years from the websites of the Corporations)
In recent years, due to the sharp and prolonged decline in oil prices, it has greatly affected the results and efficiency of oil and gas corporations. Despite the sharp decline in oil prices, PVN's business results are still very profitable, specifically in 2015, it made a profit of 1.2 billion USD and in 2016, it made a profit of 617 million USD, and the accumulated equity at the beginning of 2016 was 19.6 billion USD; in 2017, it was 19.08 billion USD compared to the contributed capital of 12.54 billion USD. PVN's profit margin is also relatively good compared to the general level while oil prices are falling, however, the profit target in absolute numbers has a large difference due to the impact of the scale of operations, revenue, accumulated capital, and investment capital.
PVN's audited financial statements in 2015, 2016 and 2017 have many exceptions, many auditors' opinions on PVN's unresolved problems and many points are clear so the data cannot be evaluated, which affects the reliability of the audited financial statements.
The above analysis shows that the gap in scale and efficiency of PVN is still quite far from other oil and gas corporations in the world. In terms of scale, it is shown through indicators such as Revenue, Total Assets and Owner's Equity (the process of accumulating profits for reinvestment), these factors will be the lever for businesses in terms of efficiency and profit, that is, due to the influence of scale advantages, when the ratio increases, profits will increase a lot and when the business environment is good or oil prices increase, profits will skyrocket. In terms of efficiency, it is measured by the Equity index (good business will accumulate a lot of profits for reinvestment, expanding the scale of operations); Profit and Profit/Equity Ratio.
In particular, if we compare PVN and Petronas, the national oil and gas corporation of Malaysia in the same region as Vietnam, and Petronas, which is under the government and was established at the same stage, we will see the difference in scale and efficiency. In 2015, Petronas's revenue was nearly 5 times higher than PVN's, its profit was 9 times higher, its efficiency was nearly double, its assets and equity were 4 times higher, not to mention the income for employees of Petronas and PVN, which is also quite different. In terms of profit and efficiency, Petronas is also among the largest corporations in the world. Petronas is now a large global oil and gas corporation, with strong competitiveness and a lot of investment.
successful project in Vietnam. What made Petronas grow so strongly? Although they were established at the same time, are both government-owned enterprises, represent the national oil and gas sector and operate in the same region.
Therefore, reforming and improving PVN's operational efficiency is a mandatory requirement and urgent need for PVN to grow as strong as Petronas.
2.3. Evaluation of the political and social effectiveness of the Vietnam Oil and Gas Group
2.3.1. Contribution to macroeconomic stability
Implementing Decision No. 2452/QD-TTg dated December 15, 2016 of the Prime Minister on assigning the 2017 socio-economic development plan, on December 23, 2016, the Ministry of Planning and Investment assigned the 2017 plan to the Vietnam Oil and Gas Group in Decision No. 1872/QD-BKHDT; however, due to economic growth (GDP) in the first quarter of 2017 not reaching expectations, to ensure the economic growth target (GDP) for the whole year of 2017 is 6.7%, on June 2, 2017, the Prime Minister issued Directive No. 24/CT-TTg, requesting the Ministry of Industry and Trade to direct the Group to readjust the domestic oil and gas exploitation targets in 2017, according to the new plan, oil and gas output increased by 1 million tons of oil and 1 million tons of gas.
Table 2.7: PVN's production output plan in 2017
TT
Target | Unit of measure | Plan for 2017 | ||
The Ministry of Planning and Investment has assigned in Decision 1872/QD- Ministry of Planning and Investment | Adjusted according to Directive 24/CT-TTg | |||
I | Oil and Gas Exploitation | Converted tons | 23.81 | 25.81 |
1 | Crude oil | Million tons | 14.20 | 15.20 |
1.1 | Domestic | Million tons | 12.28 | 13.28 |
1.2 | Overseas | Million tons | 1.92 | 1.92 |
2 | Gas | Billion m3 | 9.61 | 10.61 |
TT
Target | Unit of measure | Plan for 2017 | ||
The Ministry of Planning and Investment has assigned in Decision 1872/QD- Ministry of Planning and Investment | Adjusted according to Directive 24/CT-TTg | |||
II | Product manufacturing | |||
1 | Electricity | Billion Kwh | 20.10 | |
2 | Protein | Thousand tons | 1,521 | |
3 | Gasoline of all kinds | Thousand tons | 6,798 | |
(Source: PVN Summary Report 2017)
According to Table 2.4, in 2017, PVN exploited oil output exceeding the target assigned by the Government according to the new plan and for gas exceeding the old plan and almost reaching the new plan. Thus, it can be said that PVN contributed to the Government's macro-regulation, contributing to the country's GDP growth of 6.8%, exceeding the plan of 6.7% in 2017.
In addition, PVN participates in many activities to stabilize consumer prices under the direction of the Government such as: In the period of 2011-2013, PVN played an important role in stabilizing the prices of gas, electricity, fertilizer, gasoline, etc., thereby contributing to regulating and stabilizing the price index in the short term. PVN's financial report (2017) shows that PVN's gasoline price stabilization fund in 2017 was 434 billion VND and in 2016 it was 58 billion VND.
In addition, PVN also contributes a large amount of domestic and foreign currency to the state budget for the government to implement fiscal and monetary policies and stabilize exchange rates. According to Table 2.4 in 2017, PVN contributed VND 97.5 billion to the state budget and crude oil alone earned about USD 6 billion in foreign currency.
2.3.2. Ensuring national energy security and food security
By fully establishing the oil and gas industry, by 2015, PVN had produced and processed enough to meet 33% of the national electricity output and 70 - 75% of the Urea demand.
and 44% of liquefied gas demand for industry and domestic consumption, gasoline 33.7%, DO oil 32.7%, aviation gasoline 8.9%, kerosene 7.8%.
In addition, PVN is investing and completing new fertilizer factories such as NPK, DAP, Binh Son refinery and petrochemical plant which is preparing to upgrade and can meet 50% of the domestic market, Kien Giang gas power plant, Bac Lieu gas power plant, O Mon Can Tho, Nghi Son refinery and petrochemical plant (meeting 60% of domestic demand), biofuel factories... to increase output and products to serve the domestic market to replace imports and orient exports, proactively ensure national energy security and serve industrial production and people's consumption.
Table 2.4 and Table 2.5 show that in 2017 PVN's great contribution to our country's energy security and food security.
According to a survey by the British oil and gas group BP in 2013, Vietnam is the 28th out of 52 countries with oil and gas, Vietnam's crude oil reserves are 4.4 billion barrels of oil, ranking first in Southeast Asia, and its gas reserves are 0.6 trillion m3 of gas , ranking third in Southeast Asia. In addition, PVN also cooperates in searching and exploring abroad to increase Vietnam's oil and gas output, showing that the potential for exploitation and development of the oil and gas industry is still large and capable of meeting and ensuring national energy security. However, this potential will be exploited depending on exploitation technology, searching, exploration, East Sea disputes and accumulated capital for investment.
2.3.3. Participate in ensuring security and sovereignty of territorial waters
By searching, exploring in the East Sea and building, developing and exploiting oil and gas fields in the East Sea. PVN, together with the armed forces, has affirmed Vietnam's sovereignty in the East Sea.
Under the direction of the Prime Minister, the Vietnam Oil and Gas Group has proactively worked and agreed on a coordination plan with relevant ministries and branches to implement oil and gas exploration projects in sensitive areas in 2017. With the attention and close direction of the Prime Minister, the State Steering Committee on the Sea
With the smooth coordination and support of relevant ministries and branches, the oil and gas operation plan in the sensitive areas of the East Sea in 2017 was completed as approved. The results of oil and gas operations in 2017 in the sensitive areas of the East Sea continued to contribute to protecting the sovereignty, sovereign rights and jurisdiction in the exclusive economic zone and continental shelf of Vietnam.
2.3.4. Being the locomotive to promote economic development and international economic integration
By investing and developing gas - electricity - fertilizer industrial clusters, oil and gas processing projects, thermal power projects in difficult areas, in which oil and gas units are the core, the nucleus in the formation of concentrated industrial zones in: Ba Ria - Vung Tau - Dong Nai - Hiep Phuoc, Ca Mau, Dung Quat - Quang Ngai - Da Nang, Nghi Son - Thanh Hoa... PVN has been the locomotive of economic development, spreading to other economic sector enterprises, making great contributions to local economic development, especially in difficult and underdeveloped areas. Therefore, PVN is the core and mainstay of the Oil and Gas industry; the pillar, the locomotive leading the development of other economic sectors; making important contributions to the cause of building and defending the Fatherland.
PVN is a leading state economic group in international integration, foreign investment, currently operating in 14 countries around the world. Domestically, PVN cooperates with many foreign investors and foreign contractors in the oil and gas sector to conduct oil and gas exploration and exploitation and related industrial and service activities, so PVN has access to modern production and management technology.
2.3.5. Contribution to social security activities
For the average income of workers in Vietnam is 5.5 million VND/month, the average income of oil and gas workers is about 30 million VND/month. That shows that PVN has brought good income to workers, bringing a more complete life than the standard of living in Vietnam to compensate for the hard work of oil and gas workers. Besides, oil and gas workers also work and work in an advanced management environment, with equipment.
and modern machinery, with many communications and integration with the international environment, bringing passion and excitement in production labor. However, if compared with the income of international Oil and Gas Corporations, the gap is very large as shown in the table below:
Table 2.8: Comparison of income of workers from PVN and international oil and gas corporations.
Exxon Mobile's average worker income
(In the US)
Income Chevron's average labor (In the US) | Income PVN average labor (In Vietnam) Male) | Petronas Average Employee Income (In the US) | Royal Dutch Shell Average Employee Income (In the US) | |
8,600 USD/Month | 9,000 USD/Month | 1,300 USD/month | 10,000 USD/Month | 9,100 USD/Month |
(Source: www.payscale.com)for international oil and gas corporations and https://vov.vn/kinh-te/thuc-hu-muc-luong-cua-lanh-dao-tap-doan-dau-khi-viet-nam-
613001.vovfor PVN) In 2017, the number of employees at PVN was about 53,000 people, so PVN created 53,000 direct jobs, in addition, PVN also created many indirect jobs through oil and gas contractors. That shows that PVN has made a great contribution to society in creating many jobs, ensuring income and contributing to ensuring
social stability
However, in the context of falling oil prices, restructuring and the decline in oil and gas reserves will affect the jobs and lives of oil and gas workers. The decline in oil prices leads to a reduction in investment, reduced efficiency, leading to many oil and gas units facing difficulties, forcing them to cut jobs and income. With the restructuring situation, many oil and gas units are forced to merge, divest, sell to the private sector, dissolve... leading to traditional workers losing their jobs or having their income reduced. With the increase in oil and gas reserves, the decline will follow.