Transcript of "Oil And Gas Developments In Vietnam"
Oil & Gas Development in VietnamGE Oil & Gas Annual MeetingFlorence, February 2010
Table of Contents Section 1 – Introduction Section 2 – Key Highlights Section 3 – Business Overview Section 4 – Business Strategies Section 5 – Conclusion 2 2
Meeting AgendaPetroVietnam is the flagship energy company of Vietnam operating in exploration &production, with ancillary business lines in refining, fertilizer, petrochemicals,infrastructure, power, petroleum services and financial servicesIn the course of today’s conference, we intend to provide: An introduction and overview of PetroVietnam Group and its historical performance A review of PetroVietnam’s core business Insights into PetroVietnam’s growth potential Details on PetroVietnam’s planned projects 3 3
1 The Flagship Energy Company of Vietnam • Petroleum Law grants the right to PetroVietnam to explore, develop and own reserves and produce petroleum products on behalf of government • 2009A domestic proved reserves of 4.4 Bn boe (63.62% oil) Exclusive Rights • 2009A Domestic Production: 474 mboe/d (71.86% of oil) to Vietnam’s Oil • Reserves replacement rate: 138% in 2007, 142% in 2008 and 147% in 2009 & Gas Resources • Majority of oil reserves consist of high quality sweet crude, which typically enjoys premium pricing • Wholly owned by the government • PetroVietnam enjoys support in the form of: – 50% of government profit share from E&P activities Strong support of – Project funding from the Vietnam Development Bank Vietnam – Loan and payment guarantees from Ministry of Finance Government – Guaranteed supply of US dollars by Ministry of Finance to meet part of PetroVietnam’s needs – Tax exemptions or reduced tax rates on exploration and refining activities – Back-in rights to participate in petroleum contracts in Vietnam • Largest company in Vietnam Major Contributor – 2009A revenue of US$8.1Bn, 9% against Vietnam GDP to Vietnamese – As of 2008 year end, total assets of US$16.6Bn Economy Notes 1. Relevant experience includes experience in either a government outfit or in any activity that PetroVietnam operates in 5 5 2. Excluding that of the two government nominees
2 Growth through Vertical Integration and Scale 2013 Exploration & Production • Grow international reserves and production base • Increase total whole block proved reserves by 30-35mm tons (225-263 mmboe) per year to reach 5.6-5.8Bn boe by 2013 Today (1) • Increase total whole block production to 25-30mm tpa (514-616 mboe/d), implying a CAGR of 3.8% to 7.6% Exploration & Production • Participation in 55 contracts in Vietnam and 23 contracts internationally Refining & Petrochemicals • Domestic and international proved reserves of 4.4Bn and 98mm • 3 refineries with combined capacity of 26.5mmtpa boe respectively, with 2009A reserves replacement ratio of 147 % (545mbbls/d) (2) • 2009A domestic production of 474 mboe/d • 2 fertilizer plants with combined capacity of 1,540k tpa • Comprehensive technical capabilities to execute E&P projects • Condensate plant: 270k tpa independently • Petrochemicals: Southern Petrochemical complex (3 mmtpa (2)), DOP (30k tpa), Polypropylene (150k tpa) and Polyester (170k tpa) Refining & Petrochemicals • 3 Bio-ethanol plants: 300MM liters/yr • Dung Quat refinery: 6.5mmtpa (134mbbls/d) under completion 2001 Infrastructure & Trading • Phu My Fertilizer plant: 740k tpa • 580 domestic and 20 international service stations Exploration & Production • Condensate plant: 270k tpa • Expected market share to increase to 76% for• Exclusive focus on domestic operations • DOP plant: 30k tpa petroleum products and 96% for fertilizers• Total domestic production of 379 Infrastructure & Trading • Total gas pipeline capacity of 20.0 Bcm (3) mboe/d • Market share: total petroleum products (34%), fertilizer (46%) Power• Full dependence on foreign contractors • 74 service stations in Vietnam • Diversified power assets portfolio including gas, coal for E&P project execution • Total gas pipeline capacity of 13.0 Bcm and hydro power • 7 power plants with total installed capacity of 4,205MW, Refining & Petrochemicals Power representing 30-35% of total domestic installed capacity• DOP petrochemical: 30k tpa • 3 gas power plants with total installed capacity of 1,950MW• No refining / fertilizer activities Petroleum & Financial Services Petroleum & Financial Services • Expansion petroleum services to support growth of E&P Petroleum & Financial Services • Full range of drilling, technical & other petroleum services activities• Limited drilling, technical & other • Leading market position in oil & gas insurance • Continuous growth in financial services to support services • Banking services mainly through PVFC group financing and insurance needs Exploration & Production Other Business Lines Notes 1. All numbers are as of 2009 except for the production and reserve 2. By 2015 6 6 3. Two pipelines are still in feasibility study stage and, hence, their capacity cannot be projected and not added in here
3 Resilient Macro / Market Fundamentals • Vietnamese economy has demonstrated resilience during global economic downturn compared with other South-East Asian countries and is expected to enjoy strong growth over the next two years Resilient to • Vietnam’s real GDP growth in 2009 was 5.32%, higher than other major South-East Global Economic Asian countries including Indonesia (4.4%), Malaysia (-2.8%), Singapore (-2.1%) and Downturn Thailand (-3.5%), according to Global Insights (2) • Vietnam’s real GDP is expected to grow 4.7% and 6.2% in 2009 and 2010 respectively, significantly higher than the forecast real GDP growth (1) of other major South-East Asian countries, according to Global Insights (2) Improving • Trade liberalization, eg. WTO Efficiency & • Gradual economic reform since “Doi Moi” (openness) policy have improved economic Sufficient Foreign efficiency Exchange • Sizable cushion of foreign exchange reserves of ~US$16Bn Reserves • Energy consumption in Vietnam has grown significantly since 2005, tracking rapid economic growth Growing Energy • According to BMI Research (3), Vietnam’s primary energy consumption is expected to Consumption grow from 143mmboe in 2008 to 199mmboe in 2012E, a CAGR of 8.6% • Oil and gas is a key energy source for the country, accounting for over 60% of primary energy production, according to BMI Research (3) Notes 1. Real GDP growth forecasts in 2010 are Indonesia (5.3%), Malaysia (5.3%), Philippines (3.5%) and Thailand (5.0%) 2. Global Insights Q4 2009 7 7 3. BMI Research Q4 2009
Key Potential Credit Concerns and Mitigants Potential Concerns Mitigants • Regulatory risk is limited and manageable in view of the following: − PetroVietnam is not required to pay any dividends to the Government of Vietnam − PetroVietnam’s large contribution to the state budget through PSC profit oil sharing and taxes Government − Petroleum Law states that PetroVietnam has the right to explore, develop and own reserves and Intervention produce petroleum products on behalf of government − Petroleum Law and Investment Law state that Government must compensate losses caused as a result of the changes in law − No change in PSC terms since 2000 − Liberalization of gasoline prices shows Government’s intention towards less market intervention • Rigorous investment screening mechanisms and flexibility on timing of capital expenditure Commodity Price Risk • Increased vertical integration will increase PetroVietnam’s ability to capture margins across value chain and provide diversified revenue base • Appropriate hedging program will be analyzed and employed to minimize risks Exchange Rate Risk • Ministry of Finance guarantees to supply US dollars at market exchange rate to meet part of PetroVietnam’s needs • Core business generates strong operating cash flow to support expansion • Philosophy of ‘spending within its means’ as evidenced by strong financial profile despite commodity price collapse; management will continue conservative financial policies and track capital spending rigorously Execution Risk • Support from the Government, long-term relationships with lending banks and risk- and cost-sharing through partnerships with leading industry partners provide PetroVietnam with steady access to funding necessary for the execution of new projects • Implementation of lessons learnt from previous projects such as Dung Quat refinery project • Partnership with industry partners provides expertise 8 8
Corporate History 1960-1975 1976-1980 1989-2000 Exploration Early Stage E&P Partnerships “Open Door” Policy • 1960: Petroleum exploration • Vietnam General Department of • “Open door” policy attracts aggressive oil and gas activities in Vietnam first start in Oil and Gas signs five Petroleum exploration, PetroVietnam signs over 40 contracts Hanoi Trough Contracts with three foreign oil with over 50 companies, including Chevron, BP, • 1970: Natural gas first discovered companies, including AGIP, for RD/Shell, Total and ONGC in Thai Binh province exploration and production in the • Vietnam attracts over US$3Bn from foreign South Continental Shelf investment for petroleum in the upstream sector 1960 1970 1980 1990 2000 2009 1975 1981-1988 2000-present Establishment of JV Arrangements with Russia Vertical Integration PetroVietnam • Vietsovpetro, petroleum JV between • Growth and internationalization of E&P Vietnamese and USSR government, activities established in 1981 • PetroVietnam expands into mid and • Exploration in Bach Ho field lead to downstream activities, new policies for discovery of crude oil upstream attract foreign direct investment • PetroVietnam was assigned to build (i) three refineries: Dung Quat, Nghi Son and Long Son; (ii) five thermal Power Plants and (iii) three Bio-fuel Plants. 10 10
Corporate Structure Exploration & Production Refining & PetrochemicalsPetroVietnam Exploration and Production Binh Son Oil PVFCCO (PVEP) Refinery (BSR) 100.0% 100.0% 61.37% Infrastructure & Trading Power Dinh Vu JSC PetroVietnam Oil Corporation PV Power Corp Vietsovpetro JV (VSP) Nghi Son Refinery (PV Tex) (PV Oil) (PV Power) 50.0% 25.1% 56.0% 100.0% 100.0% PetroVietnam Gas Corporation Energy Inspection Company Rusvietpetro JV Long Son Petrochemical Complex JV (PV Gas) (EIC) 49.0% 18.0% 100.0% 29.0% PetroVietnam (1) (2) Project Management Scientific Research PetroVietnam Coal Binh Du BOC Boards Institutions Corporation Construction Other Services Petroleum Services Transportation Financial ServicesPetroVietnam Construction Phuong Dong Petrosetco PTSC PV Transportation PVFC PVI (PVC) Tourism (PTC) 72.9% 51.0% 51.0% 51.0% 57.9% 78.0% 52.0% PV Machine & PV Drilling Phuoc An Port PV Tech Pro Ocean Bank Equipment 100.0% 50.0% 50.4% 15.0% 20.0% DMC 51.0% Notes 1. Headquartered in Hanoi with representative offices in Ho Chi Minh, Laos, Russia, USA and UAE 11 11 2. % represents the PetroVietnam ownership
Exploration & Production – Domestic PetroVietnam Domestic E&P Map Key Facts • Currently, 55 contracts are effective 1 Song Hong Basin • 2009A Vietnam total reserves: 2 Phu Khanh Basin − Proved: 4.4Bn boe (63% oil) 3 Cuu Long Basin − 2007A-2009A annual reserve replacement ratio of 138%, 1 142% and 147% respectively 4 Nam Con Son Basin • 2009A domestic production: 5 Malay – Tho Chu Basin − Total production: 474 mboe/d (71.86% of oil) • 2009E production: − Total production: 16.49 mm ton of oil and 8 bcm of gas • Key Developments: − 9 discoveries since 2008 − 14 development projects to come into production in near term 2 − Existing portfolio supports strong production growth in the medium to long term 3 5 Key Partners 4 12 12
Exploration & Production – International PetroVietnam Global E&P Map Key Facts Block Junin 2 Block E1, E2 Danan Oil Field Nhenhetxki, Nagumanov • Focus areas: Venezuela Tunisia Iran Russia − Latin America – North Africa Amara, Iraq Ramsag, Mongolia − FSU – South-East Asia • First international footprint in 2002 through acquisition of Block 433a, Algeria Block PM304 Malaysia • First international production in 2006 from Bomana, Block 304, Malaysia Cameroon Block SK305 Malaysia • Presently, active with 21 contracts in 15Block 16, 17, 18, Block countries31, 32, 42, 43 RanduguntingCuba Indonesia, • 2008A international proved reserves: Z47, 162, 98mmboe Peru Blocks Champasak & • 2008A international production: 2.1mboe/d Marine XI, Block 433a & 416b Saravan,Block Maunga, Congo Algeria Savanakhen, Laos Madagascar • Strong potential for growth – 5 development projects to come on- stream in the next two years from Malaysia, Russia, Algeria and Venezuela Key Partners 13 13
Midstream Overview Gas Pipeline Gas Pipeline Overview Gas Pipelines Bcm / year 2008A 2009E 2010E 2011E 2012E 2013E Under operation Rang Dong – Bach Ho 2.0 2.0 2.0 2.0 2.0 2.0 Phu My-Hiep Phuoc 2.0 2.0 2.0 2.0 2.0 2.0 Nam Con Son 7.0 7.0 7.0 7.0 7.0 7.0 PM3-CAA 2.0 2.0 2.0 2.0 2.0 2.0 In preparation stage Block B & 52– O Mon - - - - 7.0 7.0 West - East Pipeline Still in feasibility study stage Nam Con Son 2 Still in feasibility study stage To Update Gas Supply • Currently supply ~8 Bcm/year of gas through existing pipeline network • Target to supply ~14 Bcm/year of gas by 2015 Existing Pipeline Pipeline Under Construction Planned Pipeline 14 14
Refining, Fertilizer and Petrochemicals Overview Dinh Vu Polyester Plant Phu Tho Bioethanol Plant (175k tpa), 2011 (100mm Liter / yr) 2010-2011 Nghi sơn Refinery Dung Quat Refinery (10 mmtpa, or 205mbbls/d) (6.5 mmtpa, or 134mbbls/d) 2014 2009 Polypropylene Project (150k tpa), 2010 Southern Petrochemical Complex (3MM tpa), 2015 Dung Quat Bioethanol Plant Long Sơn Refinery (100mm Liter / yr) (10 mmtpa, or 205mbbls/d) 2010-2011 2015 Binh Phnoc Bioethanol Plant Refinery (1) (100mm Liter / yr), 2012 Fertilizer (1) Cà Mau Fertilizer (800k tpa), 2012 Condensate Plant Petrochemical (1) (270k tpa), 2004 Phu My Fertilizer (740k tpa), 2004 DOP Plant (30k tpa), 1997 Selected Market Share Data Petroleum Products Fertilizer Polyester% % % 96% 76% 69% 46% 34% 9% Today 2015 Today 2012 Today 2014 PetroVietnam Others Note 15 15 1. The year refers to that of completion; and ‘tpa’ means tonnes per annum
Power Overview Power Generation Portfolio Power Asset Overview Capacity by Fuel Type 2008A 2013E Hydro Coal 7% 29% Gas 100% Thai Binh Hua Na Gas 64% Total Capacity: 1,500MW Total Capacity: 4,205MW Power Plants Vung Ang MW Quang Trach 2008A 2009E 2010E 2011E 2012E 2013E Gas Power Plant Ca Mau 1 750 750 750 750 750 750 Ca Mau 2 750 750 750 750 750 750 Nhon Trach 1 450 450 450 450 450 Nhon Trach 2 750 750 750 Dakdrinh Coal Power Plant Vung Ang 1,200 1,200 Hydro Power Plant Hua Na 180 180 Dakdrinh 125 Total 1,500 1,950 1,950 2,700 4,080 4,205 • Current market share of ~12% with the target to reach 30-35% by 2015 • 4 more coal-fired power plants to come on stream Nhon Trach 2 post 2013 Nhon Trach 1 − Thai Binh 2 (1,200 MW) − Quang Trach 1 (1,200 MW) − Long Phu 1 (1,200 MW) − Song Hau 1 (1,200 MW) Song Hau Ho Chi Minh Ca Mau 1 Long Phu Existing Power Plant Planned Power Plant Ca Mau 2 17 17
Services Overview – Oil & Gas Services Drilling Technical Services PetroVietnam provides drilling services through PV Drilling and PetroVietnam provides a full range of petroleum technical services Vietsovpetro (VSP) through various entities, including: PV Drilling operates 3 rigs – Mechanical and construction, installation and platform (PTSC, – PV Drilling I and II are operated with >99% utilization ratio and 1 VSP) jack-up rig just came into operation in 2009 – Supply base services (PTSC, VSP) – 1 new semi-submersible is expected from 2010 to 2012 – Supply boats (PTSC, VSP, PetroVietnam parent company) PV Drilling’s 2008A net sales of US$229MM and net profit of PTSC’s 2008A net sales of US$532MM and net profit of US$57MM US$33MM VSP also operates 3 rigs Transportation Others PetroVietnam Transportation Corporation (PV Transportation) PV Engineering provides transportation services for crude oil, gas, refined products – Provides consultancy and engineering design services for major and chemicals projects, including feasibility studies, process evaluation as well as construction, installation, survey and inspection services – Customers include PetroVietnam, Shell, Exxon Mobil, BP, LG, Petrosetco Caltex, Petronas, Chevron and Woodside – Provides catering and accommodation services to large Fleet consists of 12 oil tankers, 3 Gas / LPG / chemicals carriers petroleum companies in Vietnam such as VSP, BP Pipeline and with total capacity of 7,100 cubic meters and 18 supply boats Ballashamp PV Transportations 2008A net sales of US$68MM and net profit of PV Construction US$5MM – Provides design, construction and installation services in petroleum industry, conducts industrial and civil constructions projects, and invests in real estate including office and residential buildings DMC – Supplies drilling mud for drilling activities 18 18
Services Overview – Financial Services Banking Services Insurance Services PetroVietnam Finance Company (PVFC) is the primary finance Founded in 1996, PetroVietnam Insurance Company (PVI) is a arm for PetroVietnam and its subsidiaries, engaging in lending and joint stock company providing insurance services for major deposit taking activities, investment management, financial petroleum projects undertaken by PetroVietnam advisory and real estate − As of December 2008, operates 24 regional offices throughout − Listed on the Ho Chi Minh Exchange in October 2007 Vietnam and has 1,098 employees − As of March 2008, operates 9 branches and 15 agents − In 2008, net premium earned of US$51 MM and net profit of − 2008A total assets of US$2.8Bn, net interest income of US$11 MM US$36MM and net income of US$3MM Products offered include energy insurance, marine insurance, PetroVietnam also holds a 20% stake in Ocean Bank, which health and personal accident insurance, property insurance, provides commercial banking services to corporate and individual liability insurance, construction insurance, motor vehicle insurance customers 23% market share in Vietnam insurance industry and dominant market share in oil & gas insurance Lending and Funding Mix Gross Premiums WrittenPVFC (As of December 2008) US$ MM = 27.5% Total Loans & Advances: Total Funding: Growth 137 VND17 Tn (US$1,056 MM) VND26 Tn (US$1,597 Bn) Grants, 108 trusted funds, Bonds others 14% 19% Deposits 1% Borrowings & entrusted Economic org. funds and individuals, 81% 85% 2007 2008Source Company Financials Source Company Financials 19 19
Key Plans and Strategies Increase reserves by 30-35 mm tons of oil equivalent (225-263 mmboe) per year to reach 6.1 – 6.3Bn boe by 2015 Increase production to 25-30 mm tons of oil equivalent (514-616 mboe/d) by 2015 Develop refining capacity to satisfy 35% of domestic demand by 2010 and 76% by 2015 Further develop the domestic gas market and invest in new gas infrastructure Oil & gas and financial services revenue to contribute 30% of group gross revenue by 2015 Strengthen R&D capabilities and enhance the caliber of human resources through training and development 21 21
Conclusion 1 The Flagship Energy Company of Vietnam 5 2 Growth through Experienced Vertical Integration and Management Team Scale 4 3 Sound Financial Performance and Strong Macro / Market Prudent Financial Fundamentals Management 23 23
A particular slide catching your eye?
Clipping is a handy way to collect important slides you want to go back to later.