Development stages of PVEP
In the overall development of the Vietnam Oil and Gas Industry, PVEP is a unit with a long tradition, playing the role of the main and core unit of the Vietnam National Oil and Gas Group in the field of oil and gas exploration and exploitation. The formation and development process of PVEP is closely linked to the development history of the Vietnam Oil and Gas Industry over the past half century.
The establishment of PetroVietnam II (PV-II) and PetroVietnam I (PV-I) in 1988 opened the stage of international integration of PVEP, and at the same time began to form the field of management and operation of oil and gas projects to implement oil and gas exploration and exploitation activities and projects domestically and then expand investment abroad, reaping many outstanding achievements and making important contributions to the Vietnam Oil and Gas Industry and the country's economy. With the turning point of this event, May 20th of each year has been recognized by the Vietnam Oil and Gas Group as the Traditional Day of the Oil and Gas Exploration and Production Corporation.
In 1994, PVEP joined with BHP Operator and other Contractors to successfully assess and put Dai Hung oil field into operation. This event marked the first glorious achievement that PVEP achieved, as well as contributed significantly to increasing foreign investment attraction in oil and gas exploration and prospecting in most sedimentary basins in Vietnam.
Immediately after that, PVEP and many contractors successfully searched and explored many other objects and put them into later development stages such as discovering Rang Dong field in Lot 15-2, exploiting Hong Ngoc field, expanding exploration and exploitation of oil and gas in the basement at Su Tu Den, Su Tu Vang, Ca Ngu Vang, and Diamond fields in the years after 2000. In addition, PVEP and BP Contractor discovered Lan Tay and Lan Do gas fields, and together with KNOC Contractor discovered Rong Doi and Rong Doi Tay fields (put into operation after 2000), contributing to ensuring fuel sources in the production of electricity, fertilizer, and chemicals.
In particular, with Vietsovpetro's success in finding oil in fractured basement, oil has been exploited in fractured basement at Rang Dong and Hong Ngoc fields. The application of new techniques in exploration and appraisal of oil exploitation in fractured granite basement has made PVEP a company with experience in exploiting oil in basement.
During the period 1988 - 2001, PVEP participated as a capital contributor to the PM3-CAA Project, implemented in the overlapping area between Vietnam and Malaysia. This is a project of great significance in terms of economics, politics, regional cooperation and affirming Vietnam's sovereignty in the maritime border area with Vietnam's neighboring countries. Oil and gas exploitation in Block PM3-CAA has not only ensured the industry's production output but also provided a large and stable amount of natural gas to form the Ca Mau Gas - Power - Fertilizer Industrial Park, helping to develop the Southwest region of the country.
The implementation of oil and gas exploration and exploitation abroad during this period has also begun to be promoted, with initial results such as the signing of the 3-Party Cooperation Agreement: Petronas Carigali - PIDC - Pertamina to conduct oil and gas exploration at the SK305 project (Malaysia); Block PM304 project (Malaysia); Block 433a & 416b exploration and exploitation project in Algeria... During this period, PVEP discovered oil and gas at the Bir Serba structure - Block 433a & 416b - Algeria (in 2005), exploited the first oil flow from abroad from the Cendor field, Block PM304 - Malaysia (September 2006).
In 2007, PVEP Corporation was established on the basis of reorganizing and merging the two old companies PIDC and PVEP, focusing on completing the organizational structure to ensure the best implementation of production and business activities, investing in domestic oil and gas projects and expanding investment activities abroad.
Since then, despite experiencing many difficulties and challenges due to the impact of the global financial crisis, at the end of 2014, oil prices tended to decrease, causing PVEP's revenue to decline while equipment and service prices remained high, reducing the efficiency of project operations. Some projects have not had successful drilling results as expected, new geological documents indicate less oil and gas potential, and risks from the investment environment have not been fully measured, causing the target of increasing reserves to not reach expectations. The legal corridor for Vietnam's overseas investment activities has not really met the requirements of operating and searching for projects abroad.
At its peak, the severe Covid-19 pandemic outbreak from 2020 and lasting until early 2023 directly threatened PVEP's people and operations at home and abroad. Maintaining stability in professional fields and production and business activities under conditions of travel restrictions; implementing social distancing and strictly complying with epidemic prevention measures is a major challenge for the Corporation. In addition, there are difficulties in increasing reserves and decreasing natural output of oil and gas fields; shortcomings in investment procedures and policies for the oil and gas exploration and exploitation sector that have not been resolved in a timely manner; the energy transition trend continues to have a clear impact on the oil and gas industry worldwide.
With the motto and goal of accelerating development through breakthrough measures and internal innovation, PVEP has proposed reasonable investment portfolio restructuring plans, promoted administrative reform and appropriate human resource policies, restructured the apparatus as well as a salary and bonus mechanism based on labor efficiency to motivate and encourage creative labor, and improve business efficiency. With projects being suspended, exploration and appraisal drilling (TDTL) mainly focuses on projects that PVEP is capital-bearing or non-operating. PVEP's financial situation has gradually improved, with financial indicators basically turning positive over the years.
PVEP has actively carried out seismic surveys and acquisitions in basic investigation projects and activities in areas/regions assigned by Petrovietnam to assess oil and gas potential and contribute to protecting national sovereignty in politically sensitive areas; participated in negotiations with partners along with the Ministry of Foreign Affairs and Petrovietnam to affirm Vietnam's sovereignty over the East Sea, as well as fight against foreign acts of obstruction and pressure on oil and gas activities carried out by Petrovietnam, PVEP and oil and gas contractors; coordinated with Petrovietnam to negotiate and sign oil and gas contracts in deep, sensitive waters with foreign partners such as Exxon Mobil and Vietgazprom. Along with that, there have been dozens of new oil and gas discoveries, putting dozens of mines into exploitation. Hundreds of initiatives, inventions, and science and technology awards have been recognized from the Corporation and Group levels with a value of hundreds of millions of USD.
Proud results
With tireless efforts, after 35 years, PVEP has achieved proud results. That is, the total production output is 93 million tons of oil equivalent (total project: 326 million tons of oil equivalent); of which oil output is 66 million tons (total project: 208 million tons), gas output for sale is 27 billion m3 (total project: 118 billion m3). Total revenue reached 673 trillion VND; State budget payment reached 232 trillion VND; Profit after tax reached 161 trillion VND. In particular, the remaining recoverable reserves and potential recoverable reserves reached 176 million tons of oil equivalent.
The above achievements are also the efforts of the team of leaders, managers, executives at all levels, and professional/expert staff who are increasingly mature in both quality and quantity, professional, experienced in working in an international environment and capable of taking on all key and important positions in the management system, operating production and business activities, and managing oil and gas exploration and exploitation projects.
Fundamental changes in management and leadership thinking, combined with self-assessment and self-examination of subjective factors that have led to shortcomings and shortcomings in the past. Look frankly and objectively to draw lessons, then turn them into specific action plans. Truly restructure strongly and comprehensively, create a new mindset, and be ready to proactively accept challenges.
Researching solutions to apply science and technology, increasing professionalism in operations and specializing steps in the workflow system. Implementing effective, transparent, advanced management and administration systems with the support of modern management tools to ensure closeness, efficiency, and minimize errors in the operations process.
PVEP's important contributions over the past 35 years with the Oil and Gas industry have helped the Vietnamese economy overcome difficulties, develop, and affirm its role as a key unit of the Oil and Gas industry. With its achievements, PVEP has been awarded the title of Labor Hero and many other noble awards.
Continue the proud tradition
Turning a new page after 35 years of construction and development, PVEP is currently facing challenges from the Russia-Ukraine conflict leading to energy tensions; rising prices of fuel and input materials, and global supply chain disruptions, making work implementation challenging. Risk of economic recession and financial risks. PVEP's mines are naturally declining, operating costs are increasing. Reserve increases have not met requirements, and important development projects do not have clear implementation plans to reach the First Oil/First Gas milestone. New project development as well as finding new mines are limited and opportunities are low. Investment procedures/investment termination of projects are still facing many difficulties.
In that context, PVEP proposes solutions with priority given to managing fluctuations, promoting investment according to long-term goals/strategies of each project. Operating exploitation with the goal of continuing to maintain stable production, promptly and effectively implementing solutions to increase exploitation output; managing costs. Promoting mine development work at key projects.
PVEP General Director Tran Hong Nam shared that “the mission of a large oil and gas company like PVEP is first to ensure national energy security, ensuring that people have access to energy sources at reasonable costs”. Therefore, PVEP’s goal in the next development phase is to maintain oil and gas production to meet the development of the national economy.
Along with the responsibility of ensuring national energy security, PVEP also identifies its responsibility for environmental and climate change issues. Currently, PVEP is implementing a series of solutions to respond to environmental and climate issues. In oil and gas exploitation activities, gas emissions will be emitted and emission reduction is PVEP's top goal. In addition, PVEP's product structure will gradually shift from oil to gas and towards deeper processing, making better use of crude oil and natural gas products in accordance with the spirit of promoting the Group's value chain. In addition, PVEP is also coordinating with many companies and organizations in Japan, Korea, and Europe to research and evaluate the new technology field - Carbon capture and storage (CCS) towards collecting, storing and burying CO2 underground from policy mechanisms to technology and techniques. And PVEP will aim to implement a number of pilot projects, contributing to reducing emissions according to the Government's commitment to achieve Net Zero by 2050. These are large, long-term but also ambitious goals of PVEP in the process of adapting to the ongoing energy transition.
35 years of construction and development, regardless of the circumstances, the collective of generations of officers, engineers and employees of PVEP have always strived their best, constantly innovated and created to make the Corporation develop more and more strongly, worthy of the title of Hero of Labor in the renovation period, together with Petrovietnam to continue writing new chapters in the development of the Vietnam Oil and Gas industry, as well as worthy of the mission of being a pioneering oil and gas unit in the upstream sector in the region and in the world.
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