Oil and gas companies recover strongly in Q1 from last year's losses

Hanoi (VNS/VNA) - Surging international crude oil price on improving demand has helped many oil and gas companies record big profits in the first quarter of this year, after losing in 2020.

In the first quarter financial result, Vietnam National Petroleum Group (Petrolimex, PLX) posted a slight fall of 0.6 percent in net revenue to nearly 38.2 trillion VND (1.6 million USD). However, it was still profitable thanks to a cut in expenses in financial activities and others, and gains in other incomes.  

Of which, the company's profit after tax was nearly 736.2 billion VND in the first quarter after reporting a loss of 2.3 trillion VND in the same period last year. 

During the period, Petrolimex's domestic output rose 4.7 percent year-on-year to 2.27 million m3. Retail sales accounted for 55 - 60 percent of its total sales but contributed around 80 percent of its profit.

SSI Securities Corporation (SSI) said that the company's production growth will continue until the first half of the second quarter, boosted by the Government's restriction on illicit petrol, especially in the south. 

Similarly, Binh Son Refining and Petrochemical Company Limited (BSR) witnessed its revenue reach 21 trillion VND in the first quarter with a profit of over 1.8 trillion VND, while it reported a loss of 2.33 trillion VND in the same period last year.

The main driving force for the recovery in profit was higher crude prices in the international market and crack spread of gasoline products. 

Crack spread is the spread created in commodity markets by purchasing oil futures and offsetting the position by selling petrol and heating oil futures. 

PetroVietnam Oil Corporation (PVOIL)'s profit after tax was 190.6 billion VND, after losing 537.7 billion VND in the same period last year. 

Notably, Thu Duc Trading & Import Export JSC (TMC) even reported net profit of more than 4 billion VND, nine times higher than that of last year. 

Another company witnessing profit rise sharply was Nam Song Hau Trading Investing Petroleum JSC (PSH). The company's revenue was up 10 percent over last year to more than 1.7 trillion VND, resulting in a profit of 44 billion VND, 2.1 times higher than that of the same period in 2020.

Even though there were still some companies recording declines in profit or even losses during the first quarter, in general, oil and gas companies' results were quite positive. 

With positive oil demand outlook, the oil price is expected to continue to rally. Therefore, there is still more room for oil and gas firms to recover. 

SSI forecasted that Brent crude price will trade at an average of 68 USD per barrel in 2021, up 62.6 percent year-on-year, and can even go up to 70 USD in 2022.

According to SSI, developed economies are gradually opening again as they have pushed the vaccination rollout. Businesses activities will also recover quickly when countries continue to ease measures to contain COVID-19.

Brent crude was traded at 74.23 USD per barrel on June 17, and on track to head toward 75 USD./.