Producers of oil & gas firms see drop in profits, but distributors’ earnings rise

PV Drilling, which does most of the oil field drilling for PetroVietnam, incurred the loss of VND300 billion in the first half of 2018.

The loss was blamed on the higher maintenance cost, operation below the cost price and exchange rate fluctuations.

PV Drilling’s chair Do Van Khanh said PVD's revenue is composed of unit price multiplied by the number of operation days and the number of drilling rigs. 

As drilling services are the core business of PV Drilling, once the above factors decline, this will affect the revenue and profit.

However, analysts commented that the major problem lies in the world’s quiet market. As the crude oil price is too low, oil & gas exploiters have suspend their drilling plans, which has led to low demand for drilling platform leasing. 

Meanwhile, there is a high number of drilling rigs under the building, which causes an oversupply in the market and lowers the leasing fee.

Some years ago, PV Drilling leased drilling rigs at VND150,000-200,000 per day, but the price has dropped to $55,000-60,000.

PetroVietnam Technical Services Corporation (PTSC) doesn’t take loss, but it has seen the profit fall sharply. In 2014, it made a net profit of VND1.8 trillion, but in 2017, the profit dropped to VND800 billion.

The Q2 finance report showed the post-tax profit of VND68 billion, much lower than the VND317 billion of the same period last year.

A representative of PTSC said most of the oil field development programs in Vietnam and overseas have been suspended, which has led to the workload decrease. 

Meanwhile, sea petroleum services, the core business field of PTSC, are witnessing stiff competition which leads to the sharp decrease in both number of jobs and service value.

PVC-MS has just reported the loss of VND26.5 billion in the second quarter, raising the accumulative loss in the first half of 2018 to VND46.6 billion.

By contrast, petroleum distribution companies have been thriving. GAS is an example. Collecting gas at oil fields and distributing gas in the market, the company doesn’t bear influences from the oil price fluctuations. 

The company reported post-tax profit of VND10 trillion in 2017 and net profit of VND10 trillion in the first half of this year.

As for Petrolimex, which is holding 60 percent of the petroleum distribution market share, though it bears the impact from the oil price decrease, it still can earn trillions of dong each year./.

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