The sharp decrease in world oil price over the past three months isexpected to affect Vietnam’s oil export earnings as well as a wide rangeof socio-economic aspects.
As the budget revenueestimate for 2015 was calculated based on the oil price of around 100USD per barrel, the Government recently had to convene a meeting todiscuss ways to respond to this trend.
Themeeting agreed that with the low world price, it is inevitable that thecountry would have to reduce output and even suspend production at somewells where pumping cost is high.
According to theIndustry and Trade Ministry, when the price falls to 40 USD per barrel,crude oil output and export would be cut by between 1.8-2 milliontonnes. As a result, the production target of 14.74 million tonnes ofoil equivalent this year would not be met, not to mention adverseimpacts on oil exploitation and refinery projects both at home andabroad.
Nguyen Xuan Son, Chairman of PetroVietnamMember Council, said the group has developed its own scenarios for 2015.Accordingly, the group’s total revenues would drop to 434.5 trillionVND (20.2 billion USD) and remittance to the State budget would be only79.8 trillion VND (3.7 billion USD) in case the oil price is 40 USD perbarrel compared to 718 trillion VND and 159 trillion VND, respectively,if the price is 100 USD per barrel.
Minister ofPlanning and Investment Bui Quang Vinh noted that every 1 USD reductionin oil price means a loss of nearly 1 trillion VND (46.5 million USD)for the country, and if the world price falls to 40 USD per barrel,Vietnam’s earnings from oil will be slashed by nearly 70 trillion VND(3.25 billion USD).
He nevertheless said that thelosses can be made up with increases in economic growth and taxcollections. According to the ministry’s calculation, budget revenueswill be reduced by 1.5 trillion VND when the oil price stands at 60 USDper barrel, 9.5 trillion VND when the price drops to 50 USD and 11.5trillion VND when oil is at 40 USD per barrel.
Theeconomic growth is also expected to suffer from the oil price fall, andin the worst scenario with oil price at 40 USD per barrel, the growthfor this year would be only 5.2 percent instead of the targeted 6.2percent, according to Minister Vinh.
He wasquick to add that even then, there would be good things for the economysuch as less dependency on oil export and more economical spending.
However, many economic experts said the falling world oil price is notthat worrying, as the public and society has benefited greatly from it.As petrol price has reduced by more than one third, from 25,000 VND perlitre to nearly 16,000 VND, transport costs have begun to decrease,helping businesses cut costs and increase profit.
According to statistics experts, a 20 percent reduction in petrol pricecould bring about a GDP growth of between 1.8 and 2 percent.-VNA
As the budget revenueestimate for 2015 was calculated based on the oil price of around 100USD per barrel, the Government recently had to convene a meeting todiscuss ways to respond to this trend.
Themeeting agreed that with the low world price, it is inevitable that thecountry would have to reduce output and even suspend production at somewells where pumping cost is high.
According to theIndustry and Trade Ministry, when the price falls to 40 USD per barrel,crude oil output and export would be cut by between 1.8-2 milliontonnes. As a result, the production target of 14.74 million tonnes ofoil equivalent this year would not be met, not to mention adverseimpacts on oil exploitation and refinery projects both at home andabroad.
Nguyen Xuan Son, Chairman of PetroVietnamMember Council, said the group has developed its own scenarios for 2015.Accordingly, the group’s total revenues would drop to 434.5 trillionVND (20.2 billion USD) and remittance to the State budget would be only79.8 trillion VND (3.7 billion USD) in case the oil price is 40 USD perbarrel compared to 718 trillion VND and 159 trillion VND, respectively,if the price is 100 USD per barrel.
Minister ofPlanning and Investment Bui Quang Vinh noted that every 1 USD reductionin oil price means a loss of nearly 1 trillion VND (46.5 million USD)for the country, and if the world price falls to 40 USD per barrel,Vietnam’s earnings from oil will be slashed by nearly 70 trillion VND(3.25 billion USD).
He nevertheless said that thelosses can be made up with increases in economic growth and taxcollections. According to the ministry’s calculation, budget revenueswill be reduced by 1.5 trillion VND when the oil price stands at 60 USDper barrel, 9.5 trillion VND when the price drops to 50 USD and 11.5trillion VND when oil is at 40 USD per barrel.
Theeconomic growth is also expected to suffer from the oil price fall, andin the worst scenario with oil price at 40 USD per barrel, the growthfor this year would be only 5.2 percent instead of the targeted 6.2percent, according to Minister Vinh.
He wasquick to add that even then, there would be good things for the economysuch as less dependency on oil export and more economical spending.
However, many economic experts said the falling world oil price is notthat worrying, as the public and society has benefited greatly from it.As petrol price has reduced by more than one third, from 25,000 VND perlitre to nearly 16,000 VND, transport costs have begun to decrease,helping businesses cut costs and increase profit.
According to statistics experts, a 20 percent reduction in petrol pricecould bring about a GDP growth of between 1.8 and 2 percent.-VNA
