The Oil and Gas Industry’s Woes: A Cry for Help

Sharing with Tiền Phong on June 27, Mr. Nguyen Xuan Thang, Director of Au Hai Phat Gas and Oil Company (Lam Dong Province), said that for the past two weeks, retail businesses have been struggling as discounts have dropped significantly, even reaching 0 VND on some days, resulting in losses of 700-1,000 VND per liter for the enterprises.

According to Mr. Thang, what frustrates retail businesses the most currently is that their suggestions regarding profit-sharing norms and control over the discounts offered by the wholesale enterprises are not being heeded by the Ministry of Industry and Trade. “For the past two weeks, the discounts have been extremely low, even reaching 0 VND, causing significant losses for the enterprises. However, just yesterday, after a price increase of 260-280 VND, the wholesalers immediately raised the discounts to offload their stocks. Why didn’t they maintain a discount of 1,000 VND per liter before? Every time there’s a price change, the wholesalers manipulate the discounts. After the price increase, they offer higher discounts, leaving the retail enterprises struggling to keep up as weekend sales are typically lower. This ‘playing both sides’ tactic has been employed by the wholesalers for years without any intervention from the Ministry of Industry and Trade,” Mr. Thang said.

“Gas and oil enterprises have endured significant losses since 2021 due to the management agency’s policies. At this point, I just want to exit this industry as soon as possible because our suggestions for the draft decree on gas and oil, as well as the challenges faced by the enterprises, have fallen on deaf ears at the Ministry of Industry and Trade, which is the governing body. Many of my colleagues in the industry have also decided to sell their gas stations, which they had dedicated their lives to building, and move on to high-tech agriculture because they can no longer bear the prolonged losses, the inability to take breaks, the requirement to stay open even when out of stock, and the constant defamation.”

Director of a gas and oil enterprise in the Southern region

The director of a major gas and oil enterprise in the North also confirmed that gas and oil enterprises are facing losses due to the continuous decline in discounts offered by the wholesalers since June 14. Despite the retail price adjustment, the significant drop in discounts has left the enterprises unable to cover their costs, especially with the need to source products from locations more than 300km away. With a discount of 0 VND and additional transportation and operational costs, the enterprises are facing substantial losses. “I’m supposed to be the owner of a gas and oil enterprise, but my annual income is less than that of a grocery store. It’s exhausting,” he said.

“The discounts have been drastically reduced, and the wholesalers and distributors have also restricted the sales volume. With the sharp decline in discounts over the past two weeks, enterprises are estimated to lose 900-1,200 VND per liter of sold gas and oil.”

Representative of a gas and oil enterprise

The director of a gas and oil retail enterprise in Hanoi shared that June 24 was the most challenging day as the discounts at many warehouses dropped drastically, resulting in significant losses for the enterprise. To ensure supply and avoid penalties from the authorities, he had to import goods with a negative discount of 30 VND per liter. Including transportation costs of 250 VND per liter and other expenses, the enterprise incurred a loss of 1,100 VND per liter after importing the goods. Notably, with such volatile global prices, the management agencies, namely the Ministry of Industry and Trade and the Ministry of Finance, should closely monitor the market, consider the enterprises’ feedback, and promptly advise on price adjustments to prevent losses due to declining discounts.

“On June 24, the global oil price suddenly dropped by 2.99% to 66.46 USD per barrel, causing uncertainty among the wholesalers, who responded by drastically cutting discounts, resulting in losses of over 1,000 VND per liter for the retail enterprises. The lesson from the previous delay in price adjustment amid abnormal global price movements seems to have been forgotten by the authorities,” the director shared.

A representative of a gas and oil enterprise in the Southern region expressed frustration over the continuous and significant reduction in discounts since the beginning of the week, leaving the enterprise struggling with losses. According to him, the gas and oil industry has never faced such challenges as in the past few years. The crisis in 2022, caused by the Ministry of Industry and Trade’s management approach, which led to supply disruptions, now risks repeating itself as the continuous decline in discounts leaves enterprises unable to cover operational costs. To cope, the enterprise has sold some of its gas stations and diversified into pesticide sales, coffee, and real estate investments to subsidize the gas and oil business. Without these additional sources of income, the enterprise would have shut down long ago.