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PV Gas seeks approval for 30% strategic stake sale

Released at: 22:13, 27/01/2018

PV Gas seeks approval for 30% strategic stake sale

Photo from pvgas.com.vn

Sale to be made to strategic partner by 2020.

by Quang Huy

Leading State-owned energy firm the PetroVietnam Gas Corporation (PV Gas) is seeking government approval of a divestment plan in which a 30 per cent share will be sold to a strategic partner by 2020.

Chairman Le Nhu Linh told media on January 23 that approval is expected for the sale to an existing PV Gas partner. Apart from augmenting State coffers, he said, PV Gas is also looking for technological input to enhance the efficiency of its core business and increase transparency.

PV Gas has worked for many years with foreign partners like Shell and Total. Since 2012, it has also had a comprehensive business relationship with Tokyo Gas. All three have expressed an interest in partnering PV Gas, according to Mr. Linh.

The State currently owns 95 per cent of PV Gas but plans to reduce this to 65 per cent by 2020. Existing foreign ownership is just 3.31 per cent.

PV Gas has been studying the recent share auctions of Vinamilk and the Saigon Beer Alcohol Beverage Corp. (Sabeco) to help with its own divestment, according to the Chairman. It also revealed at a recent meeting that it has set aside $3.5 billion for investment projects, including gas fields, pipelines, storage facilities, and imported capital equipment. 

It currently draws gas from four fields: Cuu Long, Nam Con Son, PM3, and Thai Binh, for an aggregate output in recent years of more than 9 billion cu m, more than 1 million tons of liquid petroleum gas (LPG), and over 70,000 ton of condensate.

Depletion of the gas fields is an increasing concern, with demand for electricity projected to grow at between 8 and 10 per cent to 2020, making higher imports a necessity.

PV Gas has accelerated gas-related infrastructure since last year to handle imports, which will become dominant in the next five to ten years. More than 80 per cent of its production goes to local power plants and over 30 per cent of its LPG is exported to Cambodia. 

Consolidated revenue last year was VND64.8 trillion ($2.85 billion) and net profit VND9.8 trillion ($431.2 million), year-on-year increases of 9 per cent and 37 per cent, respectively. The positive performance was helped by a rising crude oil price, which was 10 per cent higher than the projected price of $50 a barrel.

Assuming an average oil price of $50 a barrel in 2018, PV Gas projects VND55.7 trillion ($2.45 billion) in revenue with VND6.4 trillion ($281.6 million) in net profit, respective increases of 8 per cent and 23 per cent against last year’s targets.

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