HANOI (Reuters) – The Ukraine-Russia conflict poses a threat to new oil drilling activities in Vietnam, with the Southeast Asian country relying heavily on Russian energy equipment, state oil firm PetroVietnam said.
Around a third of Vietnam’s crude oil output is produced by Vietsovpetro, which is 49% owned by Russia’s Zarubezhneft and 51% by PetroVietnam.
Russia has faced a wave of international sanctions since invading Ukraine, although Zarubezhneft is not on a U.S. sanctions list.
“Vietnam’s (oil industry) heavily relies on Russian equipment and therefore may face future obstacles and difficulties if no new suppliers are secured,” PetroVietnam said in a statement this week.
The sanctions applied since the invasion, which Russia calls a “special operation, has targeted some energy imports and triggered a spike in global oil prices above $100 a barrel as supplies are squeezed.
Tran Hong Nam, the chief executive of PetroVietnam’s exploration and production arm PVEP, said in the statement issued on Wednesday that rising costs and weak demand could undermine cooperation in the energy industry
The increase in crude oil prices, however, might be short-lived as a global transition away from fossil fuels was irreversible, PetroVietnam chairman Hoang Quoc Vuong said.
Vietnam produced 1.78 million tonnes of crude oil in the first two months of this year, 24% higher than its target, PetroVietnam said.
(Reporting by Khanh Vu; Editing by Ed Davies)
