Page 7 - AsianOil Week 11
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Jakarta intended to ramp up oil imports to take advantage of the price collapse.
The price review comes after the govern- ment removed the price floor for unsubsi- dised retail fuel in order to give distributors greater flexibility in responding to the vol- atility on the international oil market. The energy ministry issued Ministerial Decree No. 62/2020 on February 28 erasing the price floor, while maintaining a price ceiling for such fuels pegged to prices in Singapore.
“The government’s position is to protect the people’s purchasing power and ensure
business continuity, as we are facing a sud- den fluctuation in crude prices,” the Jakarta Post quoted Syahrial as saying on March 16.
The COVID-19 pandemic, the first diag- nosed cases of which appeared in Indone- sia earlier this month, has driven Jakarta to unveil several fiscal measures in a bid to offset some of the virus’ economic fallout. The government has pledged an $8bn stim- ulus package that includes tax exemptions for some manufacturing workers as well as corporate tax discounts to the manufactur- ing sector.
Petrovietnam may stockpile oil while prices are low
PROJECTS & COMPANIES
THE oil price crash has prompted PetroVietnam not only to review its spending but also to con- sider whether it should begin stockpiling crude.
“PetroVietnam is seeking to cut costs and expand its export market and will consider increasing the purchases of crude oil for stockpiling when the prices bottom,” the com- pany told Reuters on March 18. “The group is building appropriate plans to respond to any scenarios of the impact [of the coronavi- rus (COVID-19)] on its financial resources, labour and product output.”
The spread of coronavirus and the failure of OPEC+ to agree on production cuts has led to a collapse in international benchmark oil prices to a four-year low of around $30 per barrel.
Lower prices offer Vietnam an opportunity to slash its energy import bill, with the country paying $3.6bn for 7.6mn tonnes (154,000 bpd) of imported crude in 2019 and $5.95bn for 9.8mn tonnes of imported oil products, according to data from the General Statistics Office (GSO).
However, while Vietnam became a net importer of oil in 2018, the country still exports enough oil to feel the pinch from depressed prices.
“Oil is still an important source of revenue for the state budget,” economist Nguyen Tri Hieu told Vietnam News on March 16. He said oil prices below $40 per barrel would hurt the economy and government revenues. The news agency noted that a $1 per barrel drop in oil prices was estimated to cost the government about VND1tn ($43.1mn) in revenue.
Vietnam News reported that PetroVietnam had directed its subsidiaries last week to begin drawing up strategies based on long-term oil prices ranging between $30 and $50 per barrel.
Week 11 19•March•2020 w w w . N E W S B A S E . c o m P7
