Oil extraction challenges diminish Vietnam’s gains from rising prices
Oil extraction challenges diminish Vietnam’s gains from rising prices
Vietnam is facing challenges in crude oil extraction due to depleting resources, offsetting potential gains amidst surging oil prices.
Employees of oil mining company Viesovpetro are seen on an oil rig. Photo courtesy of PetroVietnam |
The government forecasts that revenue from crude oil next year will drop by 20 percent to VND35.2 trillion ($1.55 billion) as production is to fall by nearly 18 percent to around 7 million tonnes.
The state-owned oil conglomerate Petrovietnam is facing difficulties in increasing extraction volume next year as existing wells have been depleting in recent years, Finance Minister Ho Duc Phoc told the National Assembly recently.
The situation prevails at a time global crude oil prices have surged to a seven-year high, having gained 59-76 percent this year.
Some of Vietnam’s wells have been exploited for 15-35 years and are now at the end of their life span with production falling 15-25 percent a year, Phoc said, noting that extraction has been falling since 2015.
An oil expert said that to extract from depleting wells, oil companies need to pump water in to push the oil up, which is not an ideal technique and does not guarantee an increase in extraction.
Petrovietnam CEO Le Manh Hung said that oil extraction depends largely on investment in new wells, but there has been no new wells brought online in recent years.
It usually takes decades to research and locate wells before extraction can begin, he added.
Vu Quang Nam, deputy chairman of the Petroleum Business Club, said that exploration costs are $10-15 million per well, but only 20 percent of such explorations prove successful.
"Even in other countries, if drilling six to 10 wells results in one extractable well, that would be a success."
Last year, Vietnam extracted 9.7 million tonnes of oil, down 11.8 percent year-on-year.
