Petro Vietnam has successfully implemented solutions to respond to fluctuations from the epidemic, geopolitics - economy, and market. This is the driving force and belief for Petro Vietnam to continue to develop stably, sustainably, and reach far.
Petro Vietnam Chairman of the Board of Directors Le Manh Hung inspected the construction area of PTSC's offshore wind power base.
Overcoming challenges, achieving impressive results
A business that wants to develop and survive, after being born and growing up, must continuously improve, innovate; restructure periodically, even recreate and re-establish. Petro Vietnam is the same, born from Oil Exploration Group 36 on November 27, 1961, up to now, nearly 63 years, during that time, Petro Vietnam has developed and grown, making great contributions to the cause of building and protecting the Fatherland.
Looking back at the period of 2016-2019, it can be said that Petro Vietnam is at the bottom of an unprecedented crisis in history, a crisis from internal difficulties, a crisis of confidence, from the market, declining exploitation output...
Along with that, many projects, especially power projects, are at a standstill, many units are continuously facing difficulties and losses, seemingly with no way out. In 2017, Petro Vietnam reported to the Prime Minister its financial picture, in which it was predicted that by 2019 it would have an imbalance in cash flow, falling into an extremely difficult situation.
To overcome those difficulties and crises, and at the same time withstand new challenges, turning “danger” into “opportunity”; from 2020 to now, many solutions have been implemented synchronously, drastically, and consistently by Petro Vietnam. In particular, the role of “Volatility Management” has brought great efficiency, making an important contribution to helping Petro Vietnam overcome difficulties spectacularly, achieving extremely impressive results.
Petro Vietnam's factories over the past year have been optimized in capacity and performance, always ready to supply with high availability.
Looking back at 2020, 2021, 2022 and looking back at 2023, this can be clearly seen.
2020, a year of natural disasters, epidemics, catastrophes, and conflicts that covered many places, was an unforgettable year in human history. The COVID-19 pandemic has disrupted lives and caused the global economy to falter.
For Petro Vietnam, it can be affirmed that 2020 is the most difficult year in its history of formation and development, facing a "double crisis" of the COVID-19 pandemic and an unprecedented decline in oil prices in the history of oil and gas trading (on April 20, 2020, for the first time in the history of world oil and gas, WTI oil price was negative 37.6 USD/barrel).
Faced with that situation, Petro Vietnam has promptly issued and effectively implemented a package of solutions to respond to the dual impact of the “COVID-19 pandemic and the sharp drop in oil prices”, and at the same time introduced a new management method called “Volatility Management” with the motto of action for the year being “Volatility Management, Value Optimization, Consumption Promotion, Efforts to Overcome Difficulties, Seize Opportunities, and Safely Reach the Finish Line”.
With accumulated experience, steadfastness, and the right action motto focusing on 5 groups of comprehensive solutions on management, finance, investment, market and policy mechanisms; At the same time, identifying opportunities, maximizing advantages, and improving and effectively using resources and strengths, Petro Vietnam has overcome the double impact, stabilized and developed.
In 2020, Petro Vietnam was one of the few oil and gas companies in the world to overcome the crisis and achieve positive profits of nearly 20 trillion VND.
By 2021, the COVID-19 pandemic situation has spread widely, severely affecting all aspects of economic and social life globally and in our country, strongly affecting the production and business activities of enterprises and Petro Vietnam is no exception to those impacts, especially the consumption of key products such as: Petroleum, natural gas, liquefied gas, electricity, fertilizer... are all very difficult.
From lessons learned, inheriting the results of effectively responding to the "double impact" in 2020; with the motto of action for 2021 being "Managing fluctuations, Maximizing value, Expanding markets, Taking advantage of opportunities, Linking investments, Restoring growth", Petro Vietnam continues to steadily overcome the storm, comprehensively completing all aspects of production and business activities, achieving the goal of recovery and growth.
2022 continues to be a difficult year for the global economy with many fluctuations and challenges. To overcome difficulties and take advantage of market opportunities, Petro Vietnam has set the motto of action "Managing fluctuations, Anticipating trends, Connecting resources, Promoting technology, Promoting investment, Sustainable development" as a goal to strive to achieve the highest level of assigned tasks/targets. As a result, in 2022, Petro Vietnam set many new growth records to date.
2023 is expected to continue to be a more difficult year than expected. In addition to the general difficulties, Petro Vietnam is also adversely affected by three factors related to the Group's specific operations, namely: Geopolitical tensions occurring in world energy centers and the complicated developments in the East Sea; Rapid energy transition, large fluctuations in supply - demand and sharp decline in prices of energy products compared to 2022 (crude oil prices decrease by 17-38%, fertilizer prices decrease by 25-30%; petrochemical refining profit margins decrease by 24-26% compared to 2022); Natural gas and electricity mobilization is lower than the Group's production capacity.
The Group and its member units will carry out their work and tasks in 2023 in a synchronous, consistent, effective and quality manner, achieving impressive results, with 9 outstanding highlights:
Through meetings with leaders of member units, the work of "Managing changes" has been effectively and synchronously implemented throughout the Group.
Firstly, with the attention and direction of the Party, the State, and directly the Prime Minister, the institutions and policies related to the Group's production and business activities have been perfected, creating a premise for a stable and sustainable development strategy: (i) The project to adjust and replace Resolution No. 41-NQ/TW dated July 23, 2015 on the Development Strategy of the Vietnam Oil and Gas Industry to 2025, with a vision to 2035, has been completed.
(ii) The 2022 Petroleum Law, effective from July 1, 2023, and Decree No. 45/2023/ND-CP issued on July 1, 2023, detailing a number of articles of the Petroleum Law, are a complete and synchronous legal framework to promote and develop petroleum activities.
(iii) The PVN restructuring project for the period up to 2025 and the production and business plan up to 2025 have been approved by the Prime Minister.
(iv) The Protocol amending the Intergovernmental Agreement on the operation of Vietsovpetro (VSP) and Russvietpetro (RVP) has been approved by the two Governments of Vietnam and the Russian Federation.
Second: Innovation in management: (i) Planning management with high goals and great pressure to attract and focus resources with 6 groups of implementation solutions to create growth momentum; (ii) Optimizing management and applying technology to improve production and business capacity and efficiency.
Most of the main production targets exceeded the 2023 plan assigned by the Government by 2-33%; 6 production targets had high growth compared to 2022 (Electricity increased by 31%; Petroleum production increased by 7.3%; Petroleum trading increased by 11.2%; Granular fertilizer increased by 2.8%; Ca Mau NPK increased by 24.1%; Polypropylene increased by 12.2%). Maximizing efficiency and optimizing costs, saving the entire Group in 2023 reached 3,072 billion VND, exceeding the plan by 37%.
Third: Overcome challenges, take advantage of opportunities to set many records in production and business activities.
- Set a new record for PVN's total revenue after 62 years of Oil and Gas Industry Tradition, reaching 943 trillion VND, 11.8 trillion VND higher than the record set in 2022.
- Record in production of gasoline, opaque grain fertilizer.
- Business records: PVOIL with 5.21 million m3 of petroleum trading; PVGas with nearly 2.5 million tons of LPG trading.
Fourth: Contribute significantly to the socio-economic stability of the country.
- The total revenue of the whole Group is equivalent to 9.2% of the country's GDP; the total contribution to the state budget of the whole Group accounts for 9.0% of the total state budget revenue in 2023.
- In all situations, PVN always plays an important role in ensuring energy security; balancing the macro economy and participating in market stabilization; providing fuel for national defense and security: meeting over 75% of the country's gasoline demand, meeting over 73% of the country's fertilizer demand, over 75% of the country's LPG market share and 20% of the domestic market share in gasoline trading.
- The entire Group spends 750 billion VND to implement Social Security in all regions of the country.
Five: Expanding scale, improving capacity and efficiency of factories to create a solid position for business model transformation.
- Expanding domestic scale, promoting international activities, creating new momentum, contributing significantly to forming a system of facilities and platforms to expand scale, increase value and influence of Petro Vietnam in the world market; especially proactively seizing opportunities in the energy transition trend to develop new products and gradually transform the business model.
- Continuous, safe, stable operations at factories, optimizing capacity and efficiency: Oil Refineries with average capacity of 105-112%; Fertilizer Plants with capacity of 114-115%; Power Plants of the Group are always ready to supply with high availability%.
Sixth: Investment management continues to change, achieving positive results.
- Investment implementation value increased by 24% compared to 2022. Completed and accelerated the progress of many key projects: Thai Binh 2 project was revived and put into operation; operated Thi Vai LNG Terminal with a capacity of 1 million tons/year; signed EPC contracts for mine development projects in the Block B Gas-Power Project Chain after many years of preparation. Completed and put into early exploitation of 04 oil and gas mines/projects.
- Recorded an important milestone with 02 new oil and gas discoveries in one year from 2018 to present.
Seven: Digital transformation contributes to enhancing value, gradually forming a synchronous digital platform.
- PVN has completed digitizing all documents and regularly updated them on AI applications and integrated the enterprise resource planning (ERP) system.
- Build datawarehouse database and connect application systems on information technology platform; build smart factories; improve customer experience; increase competitiveness and achieve practical benefits.
Eight: Innovation, adding new growth drivers
- Developing a value chain in the Petro Vietnam ecosystem actively contributes to member units working together to research solutions to maximize resources and innovate to develop new products.
Notably: BSR has successfully researched, produced and sold 3 new products: BOPP, RFCC Naphtha, MixC4 and maximized RON index to increase Mogas 95 gasoline output; PVChem develops high-value, environmentally friendly chemical and petrochemical products such as producing PP Filler Masterbatch/ Compound from PP powder.
With a total of 17 Group-level initiatives and 471 grassroots-level initiatives applied to actual production and business activities, the value has been over VND 1,246 billion.
In the face of market fluctuations, Petro Vietnam still ensures the supply of essential products to serve socio-economic development.
- Focus on evaluating and researching the trend of shifting to green energy. In which, aiming at offshore wind power to develop the energy industry of Petro Vietnam.
PTSC has concretized the policy of developing the renewable energy sector, cooperating with Sembcorp Utilities Ltd (SCU) to invest in exporting electricity to Singapore from offshore renewable energy sources in Vietnam; and actively expanding cooperation opportunities, building a supply chain in the field of offshore wind power in particular and offshore renewable energy in general in Taiwan, towards expanding to countries in the region.
Nine: Regenerating Petro Vietnam culture, enhancing brand value.
- The core values of oil and gas culture "Aspiration - Intelligence - Professionalism - Compassion" are deeply ingrained in corporate life.
- Petro Vietnam's brand value in 2023 will reach nearly 1.4 billion USD (3 times higher than in 2019) with a brand strength index of AA-. For the 4th consecutive year, PVN is in the Top 10 most valuable brands in Vietnam. For the 15th consecutive year, Petro Vietnam is in the Top 3 largest enterprises in Vietnam.
- For the fifth consecutive year, Petro Vietnam has been independently rated BB+ by the world's leading credit rating organization Fitch Ratings, accurately reflecting Petro Vietnam's strong business and financial situation with a high level of connectivity in the Group's fields of operation.
“Managing change” becomes an effective culture in corporate governance of Petro Vietnam
It can be said that the Group has been sensitive and early recognized the characteristics of the world with fluctuations, uncertainty, complexity, unpredictability, and very rapid developments.
Meanwhile, the nature of Petro Vietnam's operations is very large, so it is greatly affected by the market and the macro economy. If fluctuations are not well managed, there is no way to achieve comprehensive victory because "it is easy to gain in this place/field but also very easy to lose in another place; gain now but can also lose all achievements very quickly when the market reverses and fluctuates badly".
In fact, the impact of the COVID-19 pandemic, unprecedented geopolitical, economic, and market fluctuations, and the emergence of new trends... with rapid and unpredictable fluctuations have shown that the past 4 years have been a world full of risks and uncertainty.
As analyzed above, to achieve success, “Management of changes” plays a decisive role. This is a new method in administration and management, plays a crucial role and has become the culture in corporate governance of Petro Vietnam, comprehensively deciding the results of production and business activities. It is the driving force, at the same time a lesson, an important method for Petro Vietnam to develop stably, sustainably and far.
Over the years, Petro Vietnam's management has undergone many innovations, positive changes, improved efficiency, and a modern, multi-level, multi-field approach with high integration, aiming to ensure a synchronous and comprehensive business operation system from strategic planning, organizational model, financial system to human resource management, resources, production organization and market development, towards sustainable development.
Proactive "Managing changes" has helped the Group forecast and propose solutions for situations, always stay calm to respond, adapt, and build scenarios and the worst situations that may be encountered.
Thereby, helping the Group stand firm, respond promptly and effectively, minimize losses from negative fluctuations in the macro situation and market; at the same time, take advantage of new opportunities to achieve the highest production and business efficiency.
Petrovietnam grows from hardship.
“Volatility management” also helps Petro Vietnam affirm and further improve its important role in stabilizing the macro economy and ensuring the country’s energy security in the face of fluctuations in the energy market.
2024 is considered a year with many difficulties, however, Petro Vietnam also had advantages in the past year thanks to the expansion of its operations and business infrastructure; diplomatic relations helped expand the market; institutions and policies were gradually removed.
With a tradition of more than six decades of growth and development; in 2024, Petro Vietnam strives to set a growth target of 3-6.5% with revenue reaching over VND970 trillion; promoting investment, creating growth momentum for long-term development.
With the motto "Managing changes, Adding new motivation, Renewing old motivation, Creating new energy, Reaching new heights" , the Group's leaders require units in the whole Group to focus on a number of solution groups, promoting cultural motivation in the spirit of inheriting the development momentum of the past years with the spirit of "One team - One goal", recreating culture and enhancing culture of growth, solidarity, compliance with the law, coordination between units...
Along with that, creating institutional motivation becomes the driving force for the Group's development. To do that, it is necessary to specify in each area of corporate governance according to the motto of renewing old motivation to shift the business model.
It can be seen that "Managing change" in particular and the Group's guiding principle in general are new innovations in management, showing the right direction, decisiveness, and timeliness in the face of current events.
In the coming time, with the goal of becoming a National Industry - Energy Group , playing a pivotal role in ensuring energy security and in the cause of industrialization and modernization of the country, in the face of uncertain difficulties, the lessons learned and correct decisions of the past will continue to be effective, creating motivation for Petro Vietnam to strive and be determined to successfully complete greater tasks and successfully implement the development strategy, making many new achievements, contributing to building a prosperous and powerful country.
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