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NIKKEI ASIAN
REVIEW
PetroVietnam shaken as scale of overseas losses comes to light
Public Security Ministry is looking into who is responsible for $900m in
losses
TOMOYA ONISHI,
Nikkei staff writer
HANOI --
Pressure is mounting on Vietnam Oil and Gas Group, the country's
state-owned oil company, after a government report revealed massive
losses on its overseas projects.
A report by the
Ministry of Industry and Trade found that PetroVietnam, as the company
is known, has frozen or is unable to recoup its investments in 11 of its
13 overseas projects, local media reported.
Losses from the
projects are estimated at nearly $900 million.
It is unclear
how much blame the government will assign to management for the
financial missteps. PetroVietnam CEO Nguyen Vu Truong Son announced his
resignation, and the Ministry of Public Security has launched its own
investigation.
Son became CEO
of PetroVietnam Exploration Production, an oil development unit, in 2009
and was named CEO of the parent company in 2016.
The failures in
overseas exploration and mining projects mostly happened between 2009
and 2012, according to the industry ministry's report, soSon was held
responsible.
The company's
Venezuelan project, which is expected to log one of the company's
biggest losses, began in 2010. The $12.6 billion joint venture had been
expected to produce 200,000 barrels of crude oil a day. But Venezuela's
unstable economy and runaway inflation have eroded the project's
profitability. PetroVietnam is estimated to
have lost nearly $500 million on that project alone.
The report found that projects in Peru, Malaysia, Myanmar and Iran had
been suspended, as they did not deliver the expected results. Most of
the projects had failed, it concluded.
The security
ministry is investigating whether some of the lost funds ended up in the
pockets of PetroVietnam officials, according to a diplomatic source.
"People are worried because it is not yet known how far the
investigation will go," the source said.
In 2017, Dinh La
Thang, PetroVietnam's ex-chairman and a former transport minister, was
arrested for costing the company about $36 million in losses during his
time as head of the oil company. Thang was sentenced to 31 years in
prison in January 2018, ostensibly for his role in the company's
ballooning losses, although some say he was actually jailed for
corruption.
Thang was close
to former Prime Minister Nguyen Tan Dung, archrival to current Communist
Party chief and President Nguyen Phu Trong. Some experts say Thang's
arrest was part of a power struggle that took place when Trong became
president last October.
Political power in Vietnam is increasingly in
Trong's hands. State-owned companies avoid making important decisions
for fear of being accused of making bad business decisions. With the
government becoming more risk-averse, "all kinds of administrative
procedures are slightly behind schedule," said a representative
with a Japanese trading company.
Speculation is
rife that Trong will remain in power after his current term ends in
early 2021, prompting caution among government officials and business
leaders. |