PetroVietnam’s contribution to state budget falls on low oil prices

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PetroVietnam’s contribution to state budget falls on low oil prices.

Budget contributions from Vietnam’s national oil and gas company, PetroVietnam, fell during the first six months of this year as oil prices continue to decline.

The company contributed VND42.2 trillion ($1.87 billion) to the state budget from January to June, down 33.6 percent from a year earlier, PetroVietnam said in a statement on Tuesday.

This was mainly due to sales of crude oil falling by 31.5 percent on-year to VND60.3 trillion in the first half. PetroVietnam’s revenue from petroleum services in the first six months was VND72.4 trillion, down nearly 30 percent compared to the same period last year.

PetroVietnam’s average crude oil price in H1 stood at $40.5/barrel, falling 33.4 percent from $60.5/barrel in the first half of last year, according to the company.

The contribution from crude oil to the state budget in the first half is estimated to have fallen 45 percent on-year to VND20.3 trillion ($910 million), the company said on July 8.

PetroVietnam’s new production target in 2016 has been raised from 16.03 million tons to 17.03 million tons of crude oil following directions from the government.

This is the second consecutive year the government has called on the company to raise production in a bid to secure a greater contribution to the state budget. In July last year, the government directed PetroVietnam to produce an additional one million tons of crude oil for the year to help achieve the targeted annual economic growth rate of 6.2 percent for 2015.

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In a resolution released on July 7, the government said the country's annual gross domestic product (GDP) growth in the first half was 5.52 percent, down from 6.32 percent during the same period last year. As part of the measures to achieve GDP growth of 6.7 percent in 2016, the Ministry of Industry and Trade has been directed to adjust the country's production target for crude oil.