PetroVietnam defends big deal

Hanoi NA deputy Pham Thi Loan asked Minister of Finance Vu Van Ninh last week why many deputies like her were anxious about an $8 billion project jointly implemented by the state-owned giant and Venezuela’s Corporación Venezolana del Petróleo S.A.

PetroVietnam will invest $3.2 billion in the project, the 25 year deal of which was inked in early July this year, to explore and exploit Venezuela’s Orinoco oil belt.

After four years of negotiations, the deal cemented the cooperation programme on oil exploration and exploitation between the two countries’ governments, with an oil exploration joint venture dubbed PetroMacareo established by PetroVietnam Exploration and Production Corporation and the Corporación Venezolana del Petróleo S.A. PetroMacareo will manage the project, which has reserves of 33 billion barrels, with production predicted at 200,000 barrels per day. PetroMacareo was expected to produce crude oil after three years, with an output capacity of 10 million tonnes of crude oil annually after five years.

“However, the problem is that where PetroVietnam can source $3.2 billion for this project, while the country is suffering from foreign currency shortages,” Loan said.

She wondered whether PetroVietnam’s investment was in line with the NA’s Resolution 49/2010/QH12 dated June 19, 2010 on projects of national importance to be submitted to the NA for ratification. Projects with total offshore investment capital of VND20 trillion ($1 billion) or more, including a state capital amount of VND7 trillion ($350 million) or more, must seek NA approval.

Ninh told deputies that the project had already been submitted to the NA Standing Committee for approval.

“The capital is from PetroVietnam’s budget, state loans and the state reinvestment fund for the group,” Ninh said, adding  the Vietnamese government encouraged businesses to invest outside Vietnam and cooperate with foreign countries in oil and gas exploitation, processing and production.

However, Loan asked Ninh: “Has the project been approved by the NA?”. Ninh provided no further information.

Prime Minister Nguyen Tan Dung said this project had already been approved by the government and the party’s general secretary. The country’s president had also discussed the project with Venezuela’s president.

“We have to find assorted energy sources to ensure the national energy security. Thus, PetroVietnam’s overseas investment is a right move,” Dung said.

“The government will make greatest efforts to make this project effective, under the party’s policies and the state’s laws,” Dung said.

However, he also said that the government had required PetroVietnam and local authorised bodies to revise the group’s operational and capital use effectiveness, in order to prevent possible loss.