Oil prices are forecast to continue to remain high in the short term. Therefore, oil and gas enterprises still benefit from business growth.

*Profits increased sharply

Vietnam Oil and Gas Group (PVN) said that the total pre-tax profit of the enterprise in 2021 reached 45 trillion VND, exceeding the yearly plan by 2.6 times, increasing by 2.2 times compared to 2020. Submitting to the budget The entire state of the group completed the whole year plan 3 months in advance, in 2021 reaching 112.5 trillion VND, exceeding 80% of the year plan, an increase of 36% compared to 2020.

General Director of PVN, Mr. Le Manh Hung affirmed that the group’s achievements have made an important contribution to national GDP growth, contributing to compensating for 2021 budget revenue as well as ensuring energy security, national sovereignty at sea.

Vietnam Oil Corporation – PV OIL (stock code: OIL) is a member unit of the Vietnam National Oil and Gas Group, which is estimated to reach 55,000 billion VND for the whole year of 2021, an increase of 8,000 billion VND. 8% over the same period in 2020. PVOIL’s consolidated pre-tax profit is estimated at 884 billion VND, exceeding 121% of the whole year 2021 plan. The entire PVOIL system’s contribution to the state budget is estimated at 8,483 billion VND, an increase of 1. 7% over the same period.

Vietnam Gas Corporation – PV GAS (stock code: GAS) is also a member unit of Vietnam Oil and Gas Group (PVN) and a pillar enterprise in the gas industry. In 2021, the company has an estimated revenue of nearly 80,000 billion VND, profit after tax of 8,380 billion VND and payment to the state budget of nearly 6,000 billion VND. Compared to the set production and business plan, PV GAS is estimated to exceed the revenue target by 14% and exceed the profit target by 19%.

In 2021, despite the impact of the COVID-19 pandemic with many worrying variations, Brent oil prices have continuously set new peaks and reached a 7-year high in early October 2021. This is a factor that positively impacts the business results of many enterprises in the oil and gas industry.

In 2021, the average Brent crude oil price reached 70.5 USD/barrel, an increase of 66.5% compared to 2020. Oil prices increased thanks to main factors such as: strong recovery in fuel demand including coal, oil, and gas in countries; Supply disruptions due to Hurricane Ida in the US and logistics congestion due to the pandemic caused coal and gas prices to increase, pushing up oil prices as an alternative fuel; Oil Exporting Countries and allied oil producing countries (OPEC+) comply with the production cut agreement signed in early 2021.

*Excess supply may not occur in the short term

According to analysts from SSI Securities Joint Stock Company (SSI), oil prices are always sensitive to news of new COVID-19 variants, so there are still risks from the pandemic to oil prices. The factor supporting oil prices is increased demand, especially from the aviation industry, and from countries recovering and reopening. In addition, any issues related to political instability also push up oil prices in the short term.

ccording to the Organization of Petroleum Exporting Countries (OPEC), the total number of active drilling rigs in 2021 has exceeded 2020 but is much lower than 2019. Because investment activities have shifted towards green fuel, investment in Fossil fuels have decreased in recent years. Therefore, oversupply may not occur in the short term, which will continue to support oil prices.
SSI’s base scenario is that the average Brent crude oil price is 70 USD/barrel, unchanged compared to the same period last year. For Vietnam’s oil and gas industry, oil prices above 60-65 USD/barrel will promote exploration and exploitation (E&P) activities in the long term. In addition, building infrastructure for liquefied natural gas (LNG) will be a top focus for Vietnam in the coming years. The government has approved several LNG energy complex projects to address gas supply shortages and rising electricity demand.

In 2022, SSI estimates oil and gas industry profit growth to reach 20.6%, but still lower than pre-COVID-19 levels (2019). The main growth drivers for the industry are Petroleum Drilling and Drilling Services Corporation (stock code: PVD), Petrolimex Petrochemical Corporation-JSC (stock code: PLC), Vietnam Petroleum Group (stock code: PLX) and Vietnam Gas Corporation-JSC (stock code: GAS).

SSI believes that in 2022, strong profit growth of PetroVietnam Drilling and Drilling Services Corporation will come from a relatively low level in 2021, while Vietnam Petroleum Corporation and PetroVietnam Gas Corporation Vietnam-JSC estimates output recovery in 2022.

Wall Street banks also forecast that oil prices will increase in the short and medium term. Specifically, Goldman Sachs Bank predicts that Brent oil price will reach 90 USD/barrel by the end of this year, up from the previously expected level of 80 USD, due to global oil demand recovering in the context of supply from oil producers. Oil production outside the Organization of the Petroleum

Exporting Countries and allied oil producing countries (OPEC+) remains limited. Sharing the same opinion, Morgan Stanley Bank (USA) raised its long-term oil price outlook by 10 USD.

However, from a long-term perspective, Vietnam Joint Stock Commercial Bank for Foreign Trade Securities Company Limited (VCBS) believes that the demand for crude oil for the transportation sector still accounts for more than 65% of total demand worldwide. , while the electric vehicle trend is growing strongly at a double-digit rate each year.

The success of the smokeless transportation industry will greatly affect global oil consumption demand. In addition, the explosion of the renewable energy industry in developing countries is also a premise for the electric vehicle trend to develop in these regions. Therefore, VCBS believes that long-term oil prices are still in a downward trend.

In fact, the oil and gas industry is quite volatile in 2021, stock movements also fluctuate according to oil prices and domestic investor sentiment rather than profit estimates. In 2021, oil and gas industry stocks increased by 28%, while the VN-Index increased by nearly 36%.

Large capitalization stocks in the industry all increased lower than the VN-Index. For example, GAS increased by 14%. Notably, PLX even decreased slightly by 1%. Despite PLX’s strong profit growth, it is clear that the stock’s price fluctuations are quite disappointing compared to the general increase of the VN-Index.

Stocks with the best increase in price belong to the small and medium capitalization group such as: BSR increased 132%; PVD increased by 78.4%; PVS increased by 54.5% and PLC increased by 41%.
T

he profit of Binh Son Refining and Petrochemical Joint Stock Company (stock code: BSR) recovered to 6 trillion VND in 2021 compared to a loss of 2.8 trillion VND in 2020, helping the stock price increase sharply. PetroVietnam Drilling and Drilling Services Joint Stock Corporation (stock code: PVD) with the drilling segment has improved, while the profits of PetroVietnam Technical Services Joint Stock Corporation (stock code: PVS) went sideways due to lack of contribution from large projects. PLC stock price increased rapidly thanks to improved asphalt segment profits, in the context that the company is expected to benefit strongly in the new public investment period in Vietnam (2021-2025).

According to SSI, oil and gas industry stocks were widely revalued thanks to a strong recovery in oil prices and abundant liquidity in the stock market./.