In the early morning of March 14th, according to Vietnamese time, Brent oil prices rose by about 3% to their highest level in 4 months due to a surprising drop in US crude oil inventories, a larger-than-expected drop in US gasoline inventories, and the possibility of supply disruption due to the Russia-Ukraine conflict. The US Energy Information Administration (EIA) stated that energy companies unexpectedly withdrew 1.5 million barrels of crude oil from reserves in the week ending March 8th.
The impact of global oil prices almost immediately affected trading in the oil and gas stock group on the Vietnamese stock exchange. PVD, PVS, GAS, BSR, PVT, PVB, PVC, all increased significantly with active trading despite market volatility. The most notable were PVT which hit the daily limit increase, and PVD which impressed with a 9-year high breakout.
In addition to the “oil explosion,” the oil and gas group has continuously announced important information related to the Gas-Electricity Chain Project – Block B. Most recently, under the guidance of Deputy Prime Minister Tran Hong Ha, the Ministry of Industry and Trade has required investors in this project chain to urgently carry out the following tasks:
(1) PVN, EVN together with foreign partners and investors of the O Mon Oil and Gas Field to agree and sign Commercial Agreements (GSPA, GSA, PPA) to make the final investment decision (FID) in March 2024, accelerating the implementation progress of the Block B gas field project (upstream source) to ensure the First Gas target by the end of 2026.
(2) The investor of the B – O Mon Gas Pipeline Project (midstream source) actively promotes the project and ensures synchronization with the progress of the upstream source project.
(3) PVN, EVNGENCO2, and O Mon II Power Company quickly complete investment preparation procedures for the Block B Gas-Using Projects at the O Mon Power Center for construction investment implementation, ensuring synchronization with the progress of the upstream and midstream source projects.
According to SSI Research, in 2024, with the difficult forecast of a sharp increase in oil prices, the Block B – O Mon project will still be the main driver of the petroleum industry with a fairly essential feature to compensate for domestic gas fields that are gradually depleting in the future. The Vietnamese government still maintains the goal of extracting the first gas stream by the end of 2026. The analysis department believes that project updates will continue to support the stock prices of the petroleum industry, especially upstream companies.
Prior to that, important news that affected the global oil industry, including Vietnam, was Saudi Aramco postponing oil mining expansion. Accordingly, the Middle Eastern “giant” canceled EPCI contracts worth over $10 billion for the purpose of expanding the company’s giant Safaniyah oil field, following a request from the Ministry of Energy to cancel the maximum sustainable capacity (MSC) increase plan from 12 million barrels per day to 13 million barrels per day in 2027.
Evaluating this move, in a recent report by SSI Research, stock experts noted that the current growth cycle of the drilling industry is mainly driven by the strong increase in oil production capacity in the Middle East, so any changes in this strategy can lead to changes in the current growth cycle of the drilling industry.
Meanwhile, Vietcap believes that this investment is still necessary in the long term and can be reconsidered by Saudi Aramco. While waiting for new developments, Vietcap still maintains a positive outlook for global upstream spending due to the leadership of the Middle East and Saudi Aramco, and an optimistic assessment for two upstream oil companies PTSC (PVS) and PV Drilling (PVD). According to S&P Global, spending on global exploration and production activities will grow at a compound annual growth rate (CAGR) of 4% in the period of 2023-2027.
