Vietnam’s national oil company PetroVietnam is considering cutting oil production this year by around 450,000 tons as a result of declining oil prices.
VNS reports that PetroVietnam Chairman Nguyen Xuan Son said that the group was considering decreasing production from oil fields where production costs were above $50 a barrel if it was technologically possible.
The average production cost at most PetroVietnam oil fields is around $30-35 a barrel, reports VNS, although at some fields it can be as low as $20-25 a barrel.
Son said that PetroVietnam could deal with oil prices as low as $40-45 a barrel, but as prices plunge, he wants to decrease production to protect the nation’s resources.
The proposed reduction is relatively modest given the group’s 2015 production target of 16.8 million tons.
Several local media reports have indicated that PetroVietnam’s announcement makes Vietnam the first country in the world to consider such a move as a result of the current fall in prices.
PetroVietnam has also considered the possibility of increasing oil reserves if prices fall to around $40-45 a barrel, selling them when the price situation improves, says VNS.
Oil is a strategic commodity for Vietnam, and last year PetroVietnam reported total revenues of VND745.5 trillion ($34.8 billion).
Late last year, Son said that besides the difficulties lower oil prices bring, they could also bring PetroVietnam new opportunities to purchase fields at cheaper prices.
“However, the group will not abandon the oil and gas projects that are being invested in due to lower oil prices in the short term” he said. Because an oil and gas project begins from exploration, then exploitation will last for many years, it is necessary to take long-term benefits into account.