Annual report 2010

Transcription

Annual report 2010

VIETNAM OIL & GAS GROUP
ANNUAL REPORT 2010
ENERGY FOR NATIONAL DEVELOPMENT
TABLE OF CONTENTS
4-5
6-7
8
9
10
12-13
16
17
18-19
20-23
26-27
28-29
30-31
32-33
34-36
37
40-80
2
Messages from Chairman
Important milestones
Board of Directors
Board of Management
Organization Chart and Management Structure of Petrovietnam
Outstanding 10 envents of Petrovietnam in 2010
Major Targets of 2011
Investment plans for the year of 2011
Petrovietnam’s international cooperation during
the period of renovation and Integration
Exploration and Production Activities in 2010
Vietnam Gas Industry
Power Industry
Petroleum processing operations Science - Technology
The health safety and environment
Social security Activities
Consolidated financial statements in 2010
ANNUAL REPORT 2010
3
MESSAGES FROM CHAIRMAN
Dear Gentlemen
In 2010, the situation economically and financially in our country and all over the world have unfolded unforeseeable and
complicated happenings, which have made direct impact on the businesses of the Group. However, thanks to our great efforts,
strong determination, solidarity, hard-working spirit and creativeness of more than 44,000 staffs, Party members and workers of
Petrovietnam, all objectives and tasks planned for the year of 2010 have been fulfilled and over fulfilled successfully.
The achievements that have been recorded by Vietnam Oil & Gas Group over the past years, especially in 2010 (the closing year of
the 5 year- plan for the period of 2005-2010) are highly recognized and appreciated by the Party, State, Government and people
nationwide. This is the evidence of the great contributions by the Petroleum industry to the country, playing an important role in
the cause of construction and defense of the Socialist Republic of Vietnam. The leadership of Vietnam Oil & Gas Group take this
opportunity to express our sincere thanks to an active and resentful contributions of working people at all levels. We always bear
in mind that, the today achievements of the Group recorded, have come from different generations of our working people in the
Petroleum industry, “Those who seek for the flame of passion and creativeness”.
The year 2011, a very important mile stone for Vietnam Oil & Gas Group, that is the first year to implement the Resolution adopted
by the XI Party Congress and the Resolution adopted by the 1st Party Committee’s Congress of Petrovietnam. It is also the year
that we are trying our hardest to implement the 5 year- plan for the period of 2011-2015 and celebrate the 50th anniversary of the
Tradition Day of Petrovietnam. The leadership would seize this opportunity to call for all staff, Party members, and workers with its
respect worth traditions to strive for emulation with their passion, creativeness and high determination at work, uniting as one to
actively fulfill and over fulfill any task in order to welcome milestone events of the Nation and the Group in 2011, creating posture
and point of appui for our Group’s development in coming years.
The Board leaders and staff of Vietnam Oil & Gas Group, on this occasion, would like to express our sincere thanks to your trust and
close cooperation which are making visible contributions to our fruitful successes in the year of 2010. And we do hope to receive
the same with a closer collaboration and more hearted support in 2011 and the years to come.
Yours Faithfully,
4
DINH LA THANG
Chairman
ANNUAL REPORT 2010
5
6
IMPORTANT MILESTONES
Establishing
Vietnam Oil &
Gas Company
(Petrovietnam)
was set up
under the Oil
& Gas General
Department
with the main
responsibility
to explore
and product
oil and gas,
with foreign
companies in
Vietnam
9 / 1975
Vietnam Oil &
Gas Coporation
was stablished
from Geology
and the Oil
& Gas Union
No.36, under
the Geology
General
Department
and Oil
Committee of
the Vietnam
Chemical
General
Department
9 / 1977
Petrovietnam
was established
from the
subsidiaries
the Oil &
Gas General
Department
4 / 1990
Merging the Oil
& Gas General
Department
into Ministry of
Heavy Industry
7 / 1990
Petrovietnam
officailly
became a
state owned
coporation by
the Decision of
Prime Minister
4 / 1992
Vietnam Oil &
Gas General
Department
was separated
from the
Ministry of
Heavy Industry
5 / 1995
8 / 2006
Establishing
Vietnam Oil
& Gas Group,
including
holding
Petrovietnam
and Subsidiaries
ANNUAL REPORT 2010
7
BOARD OF DIRECTORS
Mr. Dinh La Thang
Chairman
Mr. Phung Dinh Thuc
Member
Mr. Hoang Xuan Hung
Vice Chairman
Mr. Vu Khanh Truong
Member
Mr. Nguyen Xuan Thang
Member
Mr. Nguyen Thanh Liem
Member
Mr. Phan Dinh Duc
Member
8
BOARD OF MANAGEMENT
Mr. Phung Dinh Thuc
President
Mr. Do Van Hau
Standing Vice President
Mr. Le Minh Hong
Vice President
Mr. Nguyen Tien Dung
Vice President
Mrs. Tran Thi Binh
Vice President
Mrs. Pham Thi Thu Ha
Vice President
Mr. Vu Quang Nam
Vice President
Mr. Nguyen Quoc Khanh
Vice President
Mr. Nguyen Quoc Thap
Vice President
Mr. Nguyen Xuan Son
Vice President
Mr. Nguyen Sinh Khang
Vice President
ANNUAL REPORT 2010
9
ORGANIZATION CHART AND MANAGEMENT
STRUCTURE OF PETROVIETNAM
Board of Directors
Internal Controlling Division
Board of Management
Administration
Science & Technology Division
Personnel Division
Petroleum Processing Division
Financial, Accounting and Auditing Division
Human Resources Development and Training Division
Planning Division
Development & Investment Division
Construction Division
Inspection Division
Oil and Gas Exploration Division
Commerce and Market Development Division
Oil and Gas Production Division
Safety, Health and Environment Division
Bidding Management Division
Gas Division
Petroleum Contracts Management Division
Power Division
Legal and International Relations Division
Petrovietnam Representative Office
in Ho Chi Minh City
Overseas Contracts Management Division
Petrovietnam Representative Office in America
Petrovietnam Representative Office
in the Federation of Russia and SNG
Petrovietnam Representative Office in Azerbaijan
10 VIETNAM OIL & GAS GROUP
ANNUAL REPORT 2010
11
OUTSTANDING 10 EVENTS OF PETROVIETNAM IN 2010
1
2
3
05
01
The First Party Congress
for the tenure of 20102015 successfully held.
02
The Second Congress
for Patriotic Emulation
successfully held by
Petrovietnam
and
being offered the Gold
Star Medal by the Party
and State.
04
03
The 35th Anniversary
of Vietnam Oil & Gas
Group and its transfer
into one member
limited
liability
company as from 1
July, 2010.
7
A new record of revenue
(478.4
trillion
VND,
increased by 59% in
comparison with that of
the year 2009, equal to
24% GDP), contributing
to the State budget (128.7
trillion VND, 41% increased
in comparison with that
of the year 2009, equal
to 30% income of the
State budget) and the
income from Services
recorded at 152.5 trillion
VND, increased by 58%
in comparison with that
of 2009). The production
of the 260 millionth ton
of crude oil was made
on 22 October, 2010;
the production of the 50
billionth cubic meter on 24
June, 2010; the production
of the 25 billionth kWh on
6th December, 2010; the
production of 4 millionth
ton of urea fertilizers on 29
April, 2010.
Seven oil fields have
been found, among
of which 5 new oil
fields were turned into
operation; the project
to collect associated
gas and gas lift in
Rong - Doi Moi Field
has been put into
operation 5 months
and 22 days earlier
than the schedule;
the first ton of oil from
Nhenhexky of Russia
has been produced.
Gaspromviet
Joint
Venture (Russia) and
Petroleum Production
Joint Venture of Junin 2
– Venezuela, have been
put into operation.
4
5
6
06
10
The bilateral Agreement
between the Government
of the Socialist Republic
of Vietnam and the
Government of the
Federation of Russia
on
continuing
the
cooperation in seismic
exploration
and
petroleum production
in the offshore Vietnam
within the framework of
the joint venture between
Vietnam and Russia
“Vietsopetro” and it has
been offered with the
Gold Star Medal.
The completion of
Clean Energy Project
for “Lighting up Truong
Sa archipelago.”
07
The commissioning of
Dzung Quat Oil Refinery
and
Polypropylene
Plant in Quang Ngai of
Viet Nam.
09
The successful IPO for
PV Gas and PETEC.
08
Electricity from Nhon
Trach # 2 Coal-fired
Power Plant supplied
to the national power
grid.
8
9
10
ANNUAL REPORT 2010
13
ANNUAL REPORT 2010
15
MAJOR TARGETS OF 2011
Pursuant to the Decision No. 2145/QD-TTg dated 23 November 2010 by the Prime Minister
assigned to Vietnam Oil & Gas Group for the plan of 2011, the outcomes of the year 2010 and the
current capacity of the Group, the following major targets are worked out in 2011 as bellows:
No. Targets
Unit
Outcome 2011
I
Increase in reserve
Million tons of oil equivalent
30-35
II
Petroleum production
Million tons of oil equivalent
23.20
1
Crude oil
Million tons
15.00
2
Gas
Billion m3
8.20
III
Production
1
Power
Billion Kwh
12.50
2
Fertilizer
Million tons
0.74
3
Petroleum of different kinds
Million tons
5.60
IV
Revenue
Billion VND
500,000
V
State budget Contribution
Billion VND
102,500
VI
Investment capital required for
Billion VND
126,447.47
Note: The target of total revenue, contributed to the State budget for 2011 is based on the oil price
adopted by the National Assembly of 77 USD/barrel with the exchange rate of 21,000 VND/USD.
INVESTMENT PLANS FOR THE YEAR OF 2011
TT
Investment Areas
Total
Invesment capital required
for 011(billion VND)
126.447,47
1
Oil & Gas Exploration & Production
21.029,21
2
Oil Refining, Petrochemicals & Down streams
58.388,60
3
Gas
4
Power
28.440,97
5
Services and Others related
13.623,12
4.965,56
In the year of 2011, PetroVietnam shall make arrangement of investment capital of 50.5 trillion
VND, equal to 39.55% out of 126.447,47 trillion VND.
ANNUAL REPORT 2010
17
PETROVIETNAM’S INTERNATIONAL COOPERATION
DURING THE PERIOD OF RENOVATION AND INTEGRATION
Globally, the petroleum industry has experienced hundreds
years of development history and witnessed the incorporation
of a number of multinational companies and economic groups
with large scale of capital, advanced technology and global
scale of operation. In Vietnam, the oil and gas industry has
turned into its 50th year of history; however, it is still a young
industry. Therefore, in order to achieve speedy and sustainable
development in the future, Vietnam’s Oil and Gas Industry
must accelerate and enhance deeply and widely international
cooperation and diversify its international relations to learn
experience from partners all over the world.
Keeping that in mind, under the Vietnamese Party’s leadership
and the Government’s close guidance, Vietnam’s petroleum
industry has promoted the advantages of international
relationships in order to strengthen stable and sustainable
development. The joint venture of Vietsovpetro, established
in 1981, has been the most vivid demonstration of special
international cooperation between Vietnam and the former
Soviet Union as well as Russia for the time being. Having
undergone 35 years of building up and development, Vietnam’s
petroleum industry has matured and developed from its
early scope of exploration and production offshore Vietnam
to the current construction and operation of petrochemical
plants and refineries, which establishes an inclusive and
comprehensive petroleum industry. At the same time, the
petroleum industry has been developed with international
perspective as well as extended to other sectors namely
power, fertilizers, construction, investment, finance, insurance,
oil and fuel trading, etc. to meet the requirements of speedy
development of Vietnam. Generally speaking, every petroleum
constructions and activities of anywhere have been bearing the
stamp of international cooperation; in fact, the trade mark of
“Petrovietnam” has been recognized all over the world.
Over the last years, Petrovietnam has paid special attention
and attached importance to its investment activities in the
field of exploration and production in order to unceasingly
increase the reserve and ensure the long-term target of stable
and sustainable development. Petrovietnam’s exploration
and production activities have been step by step extended
from shallow water areas to deep water areas and offshore
Vietnam; simultaneously, Petrovietnam enhances the overseas
investment for cooperation in resource exploitation in areas
of high potential and prospect. The new approach proves the
spirit of bringing into play the internal forces and developing
thoroughly the Petrovietnam’s advantages. The process of
development and penetration into the world’s petroleum
market has brought much well recognized outcomes. Up
to now, Petrovietnam has signed more than 86 petroleum
contracts with the oil and gas companies from the America,
Europe, Asia, Africa and Middle East, etc., among which 60
contracts remain in full force. Particularly, in the year of 2009,
Petrovietnam signed 14 new petroleum contracts. That was
a new record, which scored great success in attracting and
extending investment in the exploration and production
activities as well as increasing the petroleum reserve. Thanks
to the increasingly strong capacity of Petrovietnam together
with the Vietnamese Government’s effective support,
especially by means of diplomatic relations, a great number
of foreign partners have strengthened the cooperation with
Petrovietnam in participating in petroleum (exploration and
production) contracts in Russia, SNG countries, Latin America,
Middle East, Africa, and South-East Asia. In the year of 2011
and the years to come, the production of a number of oil and
gas fields in Vietnam and the exploration for new crude oil
resources overseas will increase Vietnam’s petroleum reserves.
Petrovietnam is currently focusing on investment for oil and gas
discoveries with industrial production capacity both in Vietnam
and overseas for early production, bringing much revenue to
the State budget.
In respect of gas industry, Petrovietnam and foreign partners
have invested to construct the gas pipeline system including
Rang Dong- Bach Ho, Nam Con Son-Phu My- Nhon Trach, PM3Ca Mau in order to transport the gas from offshore fields to
the major industrial zones such as Vung Tau, Ba Ria, Phu My,
Nhon Trach, Ca Mau, etc. Petrovietnam is investing in Block B Omon gas pipeline, which is followed by the connection with
the gas pipelines in the South East and South West aiming at
establishing a complete pipeline system in the South in order
to control the balance of demand and supply stemming from
the domestic households. In the long term, Petrovietnam will
involve in the pipeline system connecting various countries in
ASEAN region and build up the LNG and other gas products
import stations to ensure long term and stable gas resources for
producing fertilizers, generating electricity and other products
for the country.
Regarding oil and gas exploration and production, the National
Assembly of Vietnam has adopted the Petroleum Law in 1993,
which was then amended in 2000 and 2008. The Government
has also promulgated decrees that give specific instructions
on the implementation of Petroleum Law and other related
legal documents. The legal system and the foreign policies of
the Party and Government of Vietnam have played significant
role in attracting foreign investment for the petroleum sector,
contributing to the acceleration of petroleum exploration
and production activities, increasing oil and gas reserves and
achieving new fields discoveries. This consequently serves as
an contribution to the stable petroleum activities in the coming
years, increases the State budget and lays the foundation for
developing a wide variety of other industries and services namely
petroleum processing, trading of petroleum products, ship
building, terminals and ports construction, petroleum technical
services, electricity, finance, banking, insurance, environment
protection and human resources development, etc.
Since Vietnam’s accession to the World Trade Organization
(WTO) in 2007, it has seen a remarkable rise in the opportunities
for Vietnamese enterprises to enter the global playing field
with their products and services provided to foreign markets,
resulting in the higher competitiveness of Vietnam’s businesses
in a global scale. Complementing this, a significant number of
countries and companies worldwide have sought investment
opportunities in many sectors in Vietnam. Petrovietnam is
not an exception to this trend. Apart from its cooperation
with foreign partners in local projects, Petrovietnam has
been participating in many petroleum projects overseas
from exploration and production to processing activities in a
diverse range of countries such as Algeria, Cambodia, Malaysia,
Myanmar, Russian Federation, Peru, Tunisia and Venezuela.
Moreover, Petrovietnam’s international cooperation in other
sectors has also seen an optimistic development in the trading
of crude oil and petroleum products overseas, the construction
of hydropower plant and mine ores project in Laos and
Ammoniac project in Kalmylkia Republic of the Russian
Federation. This has contributed not only to meet the needs of
local consumption, but also towards the expansion of national
export.
Furthermore, Petrovietnam has taken an active part in many
regional and international energy organizations such as
International Gas Union (IGU), ASEAN Council on Petroleum
(ASCOPE), Gas Exhibition in Asia (GASEX) and World Petroleum
Committee (WPC). The Group has also participated in the
gas pipeline system throughout Asia and strengthening its
cooperation with countries in Africa, Middle East and Latin
America by signing the Memorandum of Understanding
(MOU) with National Oil Companies of countries that have
considerable oil and gas potential such as Angola, Egypt,
Mozambique, Sudan, Oman, UAE, Kuwait, Bolivia and Ecuador.
These instruments serve for coming concrete contracts in oil
and gas exploration and production, to diversify LNG and LPG
import resources, etc. to meet the continuously increasing
energy demand of the country.
In conclusion, the international cooperation in Vietnam
petroleum industry has been undertaken not merely at
enterprise level but also has received special attention of the
Party and the Government of Vietnam via their guidelines
of improving diplomatic relations with different countries
to help strengthen and speed up the national petroleum
sector, during the process of development, integration and
overseas investment into the increasingly competitive global
playing field. Being aware of this important task, Petrovietnam
and its subsidiaries have been proactively broadening their
cooperation with worldwide foreign partners and actively
seeking for investment opportunities overseas in every
sectors with diversified objectives. It is important to mention
that Petrovietnam, with its great efforts, is seeking to affirm
its position of Vietnam on international arena in general and
to popularize the brand name of Petrovietnam in particular,
contributing to a vivid picture of the petroleum industry of
Vietnam on the path of global integration, innovation and
national sustainable development.
ANNUAL REPORT 2010
19
EXPLORATION AND PRODUCTION ACTIVITIES
IN 2010
With the target of increasing oil and gas reserves, discovering new oil and gas fields to meet domestic and export
demands, Vietnam Oil and Gas Group (Petrovietnam) has been carrying out extensive and effective exploration and
production activities in Vietnam and overseas through various forms of petroleum contracts such as PSC, JOC, POC and
BCC. A number of important oil and gas fields were discovered, discovered fields have been developed and put into
production in shorter time, more advanced technologies to increase production, improved oil and gas recovery factor
as well as protected the environment.
DOMESTIC EXPLORATION AND PRODUCTION
ACTIVITIES
As of December 2010, 85 contracts had been signed, in which
60 are currently in force. In 2010 only there were 06 newly
signed petroleum contracts for Block 105-110/04 (Neon
Energy), Block 04-2 (Pearl Oil), Block 51 (Mitra/Kufpec/PVEP),
Block 46/07 (Mitra/PVEP), Block 01&02/10 (PVEP), Block 09-2
(PVEP).
All those effective petroleum contracts are distributed to 6
basins as follows:
Song Hong Basin: 13 contracts
Phu Khanh Basin: 05 contracts
Tu Chinh - Vung May Basin: 02 contracts
Nam Con Son Basin: 15 contracts
Cuu Long Basin: 18 contracts
Malay - Tho Chu Basin: 07 contracts
In 2010, Petrovietnam carried out the survey & acquisition
for more than 26,900 km 2D & 5,800 km2 3D seismic as in
accordance with the petroleum contracts and under the
basic inquiring programs. With regard to the exploration &
appraisal drilling activities, in 2010, Petrovietnam drilled 68
wells (including 15 exploration wells, 8 appraisal wells, 5 coal
bed methane exploration wells, 40 production & injection
wells) with accumulative 229,000 drilled metres and the total
expenditure of USD 1.458 billion. Among those exploration
wells, there are some important discoveries such as DN-1X,
LDV-1XST (Block 15-1/05, Phu Quy POC), KNT-1X (Block 092/09, Hong Long POC), HMX (Block 16-2, Phu Quy POC), DN1X (Block 05-1b&c, Idemitsu) and many other successful wells.
These discoveries have resulted in the recoverable reserve
growth of 43 million tons in 2010, contributed to the insurance
of the five years (2006-2010) target of 150 – 180 million tons of
oil equivalent reserve growth.
Overseas exploration and production activities: Following
the Decision No. 386/QD/TTg dated 09/03/2006 by the
Prime Minister regarding the orientation and the primary
objectives of Petrovietnam’s overseas investment strategy, in
2010, Petrovietnam executed 02 new petroleum contracts in
Uzbekistan (Block Kossor) and Venezuela (Block Junin 2), which
increased the number of Petrovietnam’s oversea effective
exploration & production projects to 18, covering 15 countries
and territories. Most of which are located in the high potential
region for oil and gas such as Russia, SNG countries, Middle
East, North & Middle Africa, Latin America and South East Asia.
In particular:
16 contracts under progress of investment are:
02 projects in Malaysia (Block SK305, Block PM-304),
03 projects in Russia, Algeria and Venezuela are in
development phase,
11 exploration projects in Peru, Laos,
Indonesia, Myanmar, Cambodia, Madagascar, Congo, Uzbekistan and Cuba (offshore).
Generally, in 2010 oil and gas exploration and production
activities were carried out effectively both within the country
and overseas with new important oil and gas discoveries.
Foreign investment in the oil and gas sector increased
considerably with many new petroleum contracts for the
deep-water, far offshore areas. For the overseas investment
strategy, Petrovietnam had commendable achievements
which contributed to the growth of the oil and gas reserve as
well as production rate in order to ensure the national energy
security and to gradually improve Petrovietnam’s position in
the regional areas and international area.
ANNUAL REPORT 2010
21
PETROVIETNAM FIELD DEVELOPMENT AND
PRODUCTION ACTIVITIES IN 2010
In 2010, Petrovietnam carried out its petroleum production activities both onshore and offshore Vietnam as well as in
other countries.
PETROLEUM PRODUCTION ACTIVITIES
Petrovietnam produced 24.4 million tons of oil equivalent in
2010, including 15.0 million tons of crude oil, meeting the 2010
oil production target by 100% and 9.4 billion m3, exceeding the
2010 gas production target by 117.5%. Although oil production
in projects overseas did not meet the target for the following
reasons: Delay of the first oil date (SK305 and Nhenhexki), less
actual production than expected well performance (SK305),
those domestic fields were closely managed, safely and
effectively operated so that the actual production always met
or exceeded their target production (Bach Ho and Rong fields
exceeded target by 103.26%, Rang Dong and Phuong Dong
fields: 111.32%, Ca Ngu Vang: 122.73%, Dai Hung: 142.24%, Lan
Tay: 132.56%, Rong Doi - Rong Đoi Tay: 119.75%).
In order to make such remarkable achievements overseas,
Petrovietnam made great efforts to drill 21 production
development wells, to complete the fabrication, construction,
installation of numerous facilities, pipelines, warehouses,
bases... Especially a huge amount of work was done in a record
short period of time in the harsh arctic weather conditions so
that the North Khosedaiu field, Block Nhenhexky, Russia could
be put into operation within the allotted time.
FIELD DEVELOPMENT ACTIVITIES
In 2010 Petrovietnam put into production 10 new fields/platforms:
8 fields in Vietnam:
In 2010, under Petrovietnam’s instruction, the operators safely
and effectively drilled thoundsands of meters of casing were
safely and effectively drilled, tens of production platforms, CPP,
FPSO, FSO were operated and transported to shore more than
9 bcm of gas.
In Vietnam
In 2010, the fields in production phase are: Bach Ho and Rong
Field (Block 09-1), Su Tu Den and Su Tu Vang (Block 15-1); Ca
Ngu Vang (Block 09-2); Rang Dong and Phuong Dong (Block
15-2); Song Doc (Block 46/02); Blocks PM3-CAA and 46 CN;
Ruby, Pearl and Topaz (Block 01&02); Dai Hung (Block 05-1a);
Nam Rong - Doi Moi (Blocks 09-1 and 09-3); Rong Doi and
Rong Tay (Block 11-2); Lan Tay (Block 06-1); fields in the Hanoi
trough.
In Overseas
Petrovietnam got the first oil from D30 field, Block SK-305,
Malaysia (on 26 June 2010) with the initial production rate
of 2,000 – 2,500 bopd. On 30 September, 2010, first oil was
received from North Khosedaiu field, Nhenhexky, Russia with
the initial production rate of 20,000 – 22,000 bopd. As such in
2010 Petrovietnam have been involved in overseas oil fields
including: Cendor field (Block PM 304 - Malaysia); D30 field
(Block SK305 – Malaysia); and fields in Nhenhexky (Russia).
Commercialising Nam Rồng – Đồi Mồi field production
(On 28 January 2010)
Sư Tử Đen North East well head platform (On 30 April 2010)
Pearl field (On 7 August 2010)
Topaz field (1st November 2010)
BK-15 platform, Bạch Hổ field (September 2010)
BK-14 platform, Bạch Hổ field (October 2010)
BK-9 platform, Bạch Hổ field (On 15 October 2010)
RC1, RC3 platforms, Rồng field (On 25 January 2011)
2 fields in Overseas
D30 field, Block SK305, Malaysia (On 26 June 2010)
North Khosedaiu field, Nhennhexky, Russia (September
2010)
All field development projects in Vietnam were executed by
local contractors in a high quality manner and on schedule.
These projects are the important basis for the achievement
of Petrovietnam’s production targets in the coming years.
Local contractors such as Vietsovpetro, PTSC have shown
commendable improvements and the capacity to master
advanced technologies in engineering, construction,
installation and other aspects.
The overseas development and production activities of
Petrovietnam in 2010 achieved great leaps. One of those is the
joint venture agreement for the production and upgrading
of heavy crude oil in Venezuela (Junin 2 field). This is the 6th
overseas development/production project of Petrovietnam,
which is a giant field development project with a very large
amount of reserves with the production life of next 25 years
with extension option.
ANNUAL REPORT 2010
23
ANNUAL REPORT 2010
25
VIETNAM GAS INDUSTRY
Petrovietnam has been executing a number of large-scaled projects in order to meet the high gas demand not only
for power plants but also for petrochemical, fertilizer production, transportation, industrial and domestic uses. In 2010,
9.4 bcma of dry gas were produced and supplied by Petrovietnam to the market.
I. OPERATING PIPELINE SYSTEMS
1. Cuu Long basin pipeline system
Cuu Long basin pipeline system (also called as Rang DongBach Ho gas pipeline system) was put into operation in May
1995 for the purpose of transporting associated gas from Cuu
Long basin to supply to power, fertilizer plants and industrial
customers in the South East region. With the design capacity
of 2 billion cubic meters per annum (bcma), around 1.1bcma
are supplied to customers.
of 298 km offshore pipeline and 27 km onshore pipeline, a
land fall station and a gas distribution center. The system was
constructed to transport gas from the fields located in the
overlapping area between Vietnam and Malaysia to supply for
the Ca Mau Gas - Power - Fertilizer Complex.
2. Nam Con Son pipeline system
The Block B - O Mon gas pipeline system, having the design
capacity of 6.4 bcma, is under construction in order to
transport gas from Block B, 48/95 and 52/97 to supply for
consumers in Ca Mau and O Mon area. The system consists
of 406 km of length, including 246 km offshore and 160 km
onshore pipeline. The project is expected to be completed by
4th quarter, 2014.
Nam Con Son pipeline system was put into operation in
January 2003 with the design capacity of 7 bcma. It consists of
approximately 360km offshore pipeline, 40km onshore pipeline,
Dinh Co gas receiving and processing plant and Phu My gas
distribution center. Nam Con Son pipeline system is used for
transporting and processing gas from Block 06.1 and 11.2 to
supply to power plants and other consumers in Phu My area.
3. Phu My-Nhon Trach pipeline system
Phu My-Nhon Trach pipeline system was put into operation in
2008 with the design capacity of 2 bcma and consisting of 40
km. Its function is to transport and supply gas to power plants
in Thu Duc, Nhon Tranh and Hiep Phuoc and other consumers
along the pipeline system.
4. PM3 CAA-Ca Mau gas pipeline system
PM3 CAA-Ca Mau gas pipeline system was put into operation
in May 2007 with the design capacity of 2bcma. It consists
II. PROJECTS UNDER CONSTRUCTION
1. Block B- Omon gas pipeline system
2. Nam Con Son 2 gas pipeline system
Nam Con Son 2 gas pipeline system is being constructed to
transport gas from Block 05-2/3, Thien Ung - Mang Cau field
(Block 04-3) and other potential fields in surrounding area
(with further consideration of import via pipeline) to onshore.
It is expected to put into operation in 3rd quarter, 2013.
3. Gas importation project
In order to meet growing domestic gas demand, Petrovietnam
is considering the LNG terminal project for importation of gas.
CÁC SỰ KIỆN
ANNUAL REPORT 2010
27
POWER INDUSTRY
In the implementation of the Oil & Gas Industry Development Strategy ratified by The Politburo and approved by the Government,
Petrovietnam has invested a number of power projects, with a view that by 2015 the power production of the Power plants invested
by PVN will account for 20% of total country production and will be 25-30% in 2025. That will contribute to the development of
the Viet Nam oil & gas industry and to the national energy security.
Projects in operation
Capacity
Production plan in 2011
Ca Mau 1750 MW4.3 billion kWh
Ca Mau 2750 MW4.0 billion kWh
Nhon Trach 1450 MW2.7 billion kWh
Nhon Trach 2750 MW1.5 billion kWh
Focusing not only in gas-fired power projects, Petrovietnam has also invested in coal-fired power plants. Petrovietnam is the first
enterprise being owner of coal-fired power plants with the biggest capacity in Vietnam. During 2009 – 2011 period, Petrovietnam
started the Vung Ang 1 Coal-fired Power Plant in Ha Tinh province, Long Phu 1 Coal-fired Power Plant in Soc Trang province
and Thai Binh 2 Coal-fired Power Plant in Thai Binh province with the capacity of 1200 MW/each. In addition, 02 other coal-fired
power projects (Quang Trach 1 in Quang Binh province and Song Hau 1in Hau Giang province) with the capacity of 1200 MW,
representing a total investment of nearly VND 30 trillion for each project are also under appraisal and preparation. Each plant will
provide 7.2 billion kWh/year to the national power system.
Apart from the coal-fired power projects, Petrovietnam is a co-investor in a number of domestic hydro power projects including
Hua Na, Dakring, Nam Chien, etc with the capacity ranged between tens to hundreds MW.
In addition to traditional power resources, Petrovietnam has utilized every opportunity to access and develop the renewable,
environment-friendly energy. Petrovietnam is carrying out the first steps of wind power projects in Binh Thuan province.
Petrovietnam started a project in Phu Quy island with the approximate capacity of 6 MW and expected commercial production
in the 4th quarter, 2011. Petrovietnam is also preparing Feasibility Study for another wind power project in Hoa Thang commune
with the capacity of 120 MW, those will be the basis for the development of widespread wind power projects in the future.
Petrovietnam is doing R&D and experimental production of solar cells using chemical vapor thin film technology as well.
CÁC SỰ KIỆN
ANNUAL REPORT 2010
29
PETROLEUM PROCESSING OPERATIONS
Being one of the core activities of Petrovietnam, the executiion
of the oil and gas processing projects plays the vital role in
the development of Petrovietnam as well as other related
industries, improving the effeciency of the ore mining industry,
contributing to the economic development and stepingup the industrialisation and modenisation of the country,
enhancing the competitive position of Petrovietnam in the
international arena.
Dzung Quat Refinery, the first refinery in Vietnam, and Dzung
Quat Polypropylene Plant was put into commercial operation
in 2010, which contributed to the increase in the portion of
the downstream activities in Petrovietnam’s total turnover and
profit. In 2010 the whole Group produced approximately 2.8
million tons of gasoline; 2.67 million tons of diesel oil; 806,000
tons of urea; and 61,000 tons of Polypropylene.
Apart from plants in operation, Petrovietnam is intensively
executing a number of new refinery, petrochemical and biofuel projects, as well as studying the upgrades and expansion of
the operating plants in order to primarily meet the nationwide
market demand of petroleum, petrochemical products and
petrochemical feedstock , continuing the implementation of
Petrovietnam’s development Plans and Strategies.
1. Plants in operation
DOP Production Plant: started operation in 1997, the
Plant is located in Dong Nai province with the annual
capacity of 30.000 tons of DOP.
Condensate Processing Plant: started operation in
2003, the Plant is located in Ba Ria - Vung Tau province
with the annual processing capacity of 130.000 tons
of condensate. The Plant supplies 270.000 tons of
petroleum products annually. The processing capacity
will be increased to 250.000 tons of condensate per year
from 2011-2012.
Phu My Fertilizer Plant: started operation in 2004, the
Plant is located in Ba Ria – Vung Tau province with the
annual processing capacity of 740.000 tons of Urea
from petroleum natural gas. The Plant’s capacity will be
expanded to 800.000 tons of Urea per year in 2011.
Dzung Quat Refinery: started commercial operation
in June 2010 and located in Quang Ngai province, it is
the first refinery in Vietnam with the annual processing
capacity of 6.5 million tons of crude oil.
Dung Quat Polypropylene Plant: started commercial
operation in August 2010 and located in Quang Ngai
province, the Plant process propylene from Dzung Quat
Refinery and has the annual capacity of 150.000 tons of
Polypropylene.
2. Projects under construction
Dinh Vu Polyester Fiber Plant: Located in Hai Phong City,
the Plant is expected to be put into operation in 2011
and will have the annual capacity of 170,000 tons of fiber
from imported feedstock. In parallel, the fiber spinning
factories have started their investment and construction
projects in order to improve the economic value of fiber
products, which are expected to enter into operation in
2012-2013.
Bio-fuel Plants: Located in Phu Tho, Quang Ngai and Binh
Phuoc provinces, these Plants are expected to be put
into operation in 2011-2012 with the annual capacity of
80.000 tons of ethanol for each plant.
Ca Mau Fertilizer Plant: Located in Ca Mau province,
the Plant is expected to be put into operation in early
2011 with the annual capacity of 800.000 tons of Urea,
utilizing petroleum natural gas.
Phu My NPK Plant: Located in Ba Ria - Vung Tau province
the Plant is expected to be put into operation in 2013
with the annual capacity of 400.000 tons of NPK product
using domestic feedstock.
Nghi Son Petrochemical and Refinery Complex: Located
in Thanh Hoa province, the Complex is expected to be
put into operation in 2015 with the annual processing
capacity of 10 million tons of imported crude oil.
Long Son Petrochemical Complex: Located in Ba Ria
- Vung Tau province, the Complex is expected to be
put into operation in 2017 with the annual processing
capacity of 2.7 million tons of raw materials, including
domestic ethane and imported naphtha/propane.
3. Projects under feasible study
Dzung Quat Refinery Upgrade & Expansion Project:
Located in Quang Ngai province, the construction is
expected to finish by 2018 with the additional annual
processing capacity of 2 million tons of crude oil.
The Third Refinery (Long Son Refinery): Located in Ba
Ria - Vung Tau, the Refinery is expected to be put into
operation in 2018 with the annual processing capacity of
10 million tons of crude oil.
ANNUAL REPORT 2010
31
SCIENCE - TECHNOLOGY
It is the year of 2010 when Petrovietnam’s Member Council
has approved and uniformly launched three breakthrough
solutions on Management, Human Resource Development and
Science - Technology across the Group for the realization of the
Acceleration Strategy for development of the Vietnam National
Oil and Gas Group until 2015 with the orientation to 2025.
Given the targets being the motivation and foundation for
Group’s development, the breakthrough solutions on Science
- Technology (S&T) have mainly focused on the perception
in the role and importance of S&T towards the acceleration
of the Petrovietnam’s development, the mechanism and
policies in developing scientific and technological activities,
the organization and implementation of the tasks of scientific
research and technological development. The roadmap for
S&T to 2015 and specific action plan have been also proposed
in order to launch and develop the breakthrough solutions
on S&T for the petroleum industry of Vietnam. In late 2010,
Petrovietnam has given instructions to all its subsidiaries on
the deployment of breakthrough solutions on S&T through
specific measures and actions in the subsidiaries.
In 2010 and early 2011, the Petrovietnam has given instructions
to all its subsidiaries on the Regulation on appropriation and
use of fund for the science and technology development to
mobilize additional funding sources for scientific research
activities and technological innovation for production and
business activities of Petrovietnam.
In 2010, the Vietnam Petroleum Institute (VPI), the leading
unit of Petrovietnam in scientific research, has been assigned
44 S&T projects/tasks as per request by other subsidiaries of
the Petrovietnam, of which VPI has finished 41 S&T projects/
tasks in. In the framework of cooperation with outer-industry
for scientific research, the Petrovietnam has appointed the
University of Natural Sciences for 4 research projects and
the Hanoi University of Technology for 2 research projects
respectively. By means of such Scientific Research Contracts,
the Group has completed the procedure to apply for three
National Technical Regulations (QCVN) and two Vietnam
National Standards (TCVN) in oil and gas industry granted by
the Ministry of Natural Resources and Environment (MONRE)
and the Ministry of Science and Technology (MOST).
In September 2010, apart from the 35th Anniversary of the
establishment of the Petroleum Industry of Vietnam (3/9/19753/9/2010), the Petrovietnam has successfully hosted the
International Conference of Science and Technology and
Exhibition in Hanoi with the participation of 750 scientists
and executives of Vietnam and from abroad and with the
presentation of 95 scientific reports encompassing major
areas of production and business of the Petroleum Industry of
Vietnam.
The year 2010 also witnessed the termination of the office
tenure of the Group’s Science and Technology Council 20082010 and the preparation for the next tenure of the Science
and Technology Council in the period of 2011-2013.
ANNUAL REPORT 2010
33
THE HEALTH SAFETY AND ENVIRONMENT
A nature of the oil and gas activities is that they are always
associated with high potential risks of accidents to human,
property and environment such as fire, gas leak, and
ship collisions, building collapse, oil spills, etc. Therefore,
Petrovietnam has identified its primary responsibility at all levels
of management for the insurance of human life and health,
the safety of the high value oil and gas structures as well as
the preventive measures to avoid major accidents that cause
environmental disaster. Petrovietnam committed to ensuring
that all Petrovietnam’s business operations, services and
products shall fully meet the health safety and environment
(HSE) requirements prescribed by Law. Petrovietnam will take
all appropriate measures to eliminate or minimize the risks of
injury or harm to human health, causing property damage or
environmental pollution.
guidelines procedures or rules on HSE and a mechanism for
inspecting and supervising the implementation of those.
At the subsidiary level, all subsidiaries have assigned staff to
be in charge on full time or part time basis of HSE as well as
established the Labor Insurance Committee and developed
a safety and health network. For those subsidiaries with
higher risks of fire, gas and chemical leaks, oil spills (such as
Vietsovpetro, PV Gas) etc, Special Task Forces have been
established to deal with HSE emergencies. In order to respond
promptly to natural disasters, accidents and extremely serious
internally catastrophe, Petrovietnam has appointed a Steering
Committee for Emergency and setup an Emergency Office
to remain alert to every slight indication of danger on 24/24
hours basis. All subsidiaries also setup their own Emergency
Steering Committee and rescue teams in place.
To date, Petrovietnam has built an unified and relatively
comprehensive HSE management system which is
consistently applied in the whole the organization from the
top management to the subsidiary level, including officials
from the most senior position to the operational staff. The
delegation and split of responsibilities have been made clear
among different managerial levels. At Petrovietnam’s holding
company, one Vice President has been designated to hold
responsibility for HSE management and a division for HSE was
established as a focal point for the formulation and strategic
planning of HSE. The Division has the function of concretizing
State safety laws and regulations to establish organizational
Petrovietnam always updates and complies fully with the HSE
laws and regulations, including but not limited to the Labor
Code, Fire Safety Law, Environmental Protection Law and
decrees and circulars guiding the implementation of such
laws. Besides, Petrovietnam due to special requirements on
HSE management in petroleum industry has taken initiatives in
drafting tailor-made HSE guidelines in the oil and gas activities
to submit to the Prime Minister and related Ministries for
adoption such as: Regulations on safety for oil and gas activities,
Regulations on safety for in land gas pipelines, Regulations on
environment protection in oil and gas fields exploration and
development, production, storage, transportation, processing
ANNUAL REPORT 2010
35
and other related services. In addition, Petrovietnam has
developed and issued various other guidelines, such as:
Guidelines on safety supervision in petroleum activities,
Guidelines on risk management and emergency responses
in petroleum activities, Guidelines on industrial procedures
management for safety and hygiene in petroleum activities, etc.
The implementation of the above guidelines has promoted a
great significance in HSE mission of Petrovietnam and become
the fundamentals for the HSE management of the petroleum
industry. All subsidiaries have established instructions and
guidelines on HSE management, such as: Equipment/Facility
Operation Manual and Maintenance Procedure, Internal
Rules on Occupational Safety and Hygiene, Fire Fighting and
Prevention Rules, etc.
In all petroleum projects and industry, the HSE related
matters always receive Petrovietnam’s keen attention and
due assessment at the very first phase of basic design. They
are then continuously scrutinized throughout the various
process of detailed design, procurement, construction and
commissioning to ensure the application of environmentfriendly, highly reliable and safe technologies. The machinery
and equipment, which have strict safety requirements under
projects technical specifications prior to bringing them into
operations, are all tested registered, inspected in accordance
with applicable regulations. Besides, with the aim of ensuring
the safety reliability for petroleum structures, Petrovietnam has
engaged a number of experienced and reputable international
register agencies namely Lloylds, ABS, DNV… to inspect and
issue certification for key petroleum structures including
marine oil and gas structures, gas projects, fertilizer plants,
power plants , Dung Quat Refinery...
Petrovietnam and its subsidiaries currently intensively pay
their attention to training missions on occupational safety
and hygienic, environment protection and fire prevention &
fighting. A part from in the strict compliance with the Circular
37/2005/TT-BLĐTBXH guiding the training on Occupational
Safety and Hygiene, Fire Protection Law and the Environment
Protection Law, all Petrovietnam’s subsidiaries annually send
their staff to participate in various advanced and intensive
courses inside and outside Vietnam on strategic management
of occupational safety and hygiene, fire safety and environment
protection. Some Petrovietnam subsidiaries have applied
3-phased HSE training, i.e. general HSE training for all staff,
safety training for new staff and re-training.
The inspection for observance of State, Ministerial, Sectorial
and Petrovietnam’s regulations on HSE has become a routine
practice and has been regularly performed on an annual basis
at all Petrovietnam subsidiaries. Unscheduled inspections are
conducted in subsidiaries with high risks of fire and explosion
or serious incidents. Moreover, self-inspection at all levels are
conducted regularly with improved quality by using scientific
inspection forms.
Every year, 100% of the subsidiaries exercise periodic health
checks for staff to monitor and assess the health of workers and
to test possible professional diseases. All professional disease
cases were sent to health care clinics for timely treatment.
All the PPE at work, regime of shift meals, compensation for
harmful working conditions, regime of rest and nurse caring
are performed in accordance with State and Petrovietnam’s
regulations. Petrovietnam subsidiaries have also focused on
the improvement of working conditions and environment,
workplace and storage, planting trees, ventilation, lighting
and drainage, etc. Consequently, the annual measurement of
the working environment has showed good results and most
of the work places have met the standards of hygiene, green,
clean and nice environment. This is essential to create comfort
to employees , to reduce stress and to minimize incidents and
accidents in production activities.
Petrovietnam collaborates annually with the Industrial
Labour Union to provide timely direction and guidance to
its subsidiaries to participate in the HSE events and activities
launched by the Government and Ministries, such as: National
Week on Occupational Safety and Hygiene, Fire Prevention&
Fighting and Clean & Green Beautiful Campaign, in which
Petrovietnam subsidiaries have coordinated closely with
the local authorities to actively respond to such events and
activities. Every year, Petrovietnam and its major subsidiaries,
such as PV Gas, PTSC, PVFCCo have periodically organized
conferences evaluating the performance of HSE which has
become a regular and effective activity.
In conclusion, the HSE strict performance in the past years
has recorded Petrovietnam’s commendable achievements
in implementing HSE management activities. Although the
petroleum industry involves high risks of HSE, Petrovietnam
has been successful in preventing major incidents, explosion
and environment pollution and reducing the loss time injury
rate thanks to its consistent concentration in HSE performance.
SOCIAL SECURITY ACTIVITIES
Social security activities constitute an important part in the
development strategy of Petrovietnam and the political task
of Petrovietnam. In 2010, Petrovietnam contributed up to
VND 526 billion to assist the construction of great united
houses, education/schooling facilities; the construction of
local first aid facilities and hospitals; helping Vietnamese
Heroic Mothers, flood victims, etc. Social security and
charity activities of Petrovietnam has helped improving and
enhancing the living conditions of many people nationwide.
The planning of Petrovietnam’s social security in 2011 will be
contributed up to VND 715 billion.
As to the international community, Petrovietnam’s staff always
sympathizes and shares the difficulties with the people in the
country or territory affected by the natural disasters in a timely
manner.
ANNUAL REPORT 2010
37
ANNUAL REPORT 2010
39
VIETNAM OIL AND GAS GROUP
(Incorporated in the Socialist Republic of Vietnam)
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE
YEAR
ENDED
31
DECEMBER
2010
TABLE OF CONTENTS
42-43 Statement of the Board of Management
44-45 Auditors’ report
46-49 Consolidated balance sheet
50
Consolidated Income statement
51
Consolidated cash flow statement
52-80 Notes to the consolidated financial statements
ANNUAL REPORT 2010
STATEMENT OF THE BOARD OF MANAGEMENT
The Board of Managment of Vietnam Oil and Gas Group - Holding Company (“the Company”) presents this report together with
the consolidated financial statements of the Company and its subsidiaries (collectively referred to as “the Group”) for the year
ended 31 December 2010.
THE MEMBERS’ COUNCIL AND BOARD OF MANAGEMENT
The members of the Members’ Council and Board of Management of the Company who held office during the year and at the
date of this report are as follows:
The Members’ Council
Mr. Dinh La Thang
Mr. Phung Dinh Thuc
Mr. Hoang Xuan Hung
Mr. Vu Khanh Truong
Mr. Nguyen Thanh Liem
Mr. Phan Dinh Duc
Mr. Nguyen Xuan Thang
Chairman (appointed on 9 November 2010)
Member (appointed on 9 November 2010)
Member (appointed on 29 December 2010)
Board of Management
Mr. Phung Dinh Thuc
Mr. Nguyen Quoc Thap
Mr. Nguyen Quoc Khanh
Mr. Vu Quang Nam
Mr. Do Van Hau
Ms. Tran Thi Binh
Mr. Le Minh Hong
Mr. Nguyen Tien Dung
Ms. Pham Thi Thu Ha
Mr. Nguyen Xuan Son
Mr. Nguyen Sinh Khang
Mr. Nguyen Ngoc Su
President & CEO (appointed on 15 November 2010)
Vice President (appointed on 24 November 2010)
Vice President (resigned on 14 October 2010)
BOARD OF MANAGEMENT’ STATEMENT OF RESPONSIBILITY
The Board of Management of the Company is responsible for the preparation of the Group’s consolidated financial statements
of each year, which give a true and fair view of the financial position of the Group and of its results and cash flows for the year. In
preparing these consolidated financial statements, the Board of Management is required to:
Select suitable accounting policies and then apply them consistently;
Make judgments and estimates that are reasonable and prudent;
State whether applicable accounting standards have been followed, subject to any material departures disclosed and
explained in the consolidated financial statements;
Prepare the consolidated financial statements on the going concern basis; and
Design and implement an effective internal control system for the purpose of properly preparing and presenting the
consolidated financial statements so as to minimize errors and frauds.
STATEMENT OF THE BOARD OF MANAGEMENT
(Continued)
The Board of Management is responsible for ensuring that the Group’s consolidated financial statements are prepared, which
disclose, with reasonable accuracy at any time, the financial position of the Group and that the consolidated financial statements
comply with Vietnamese Accounting Standards, Vietnamese Accounting System and prevailing relevant regulations in Vietnam.
The Board of Management is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for
the prevention and detection of frauds and other irregularities.
The Board of Management confirms that the Company has complied with the above requirements in preparing the consolidated
financial statements.
For and on behalf of the Board of Management,
Phung Dinh Thuc
Hanoi, 30 June 2011
President & CEO
ANNUAL REPORT 2010
43
AUDITORS’ REPORT
No: 24 /Deloitte-AUDHN-RE
To: The Members’ Council and Board of Management of
Vietnam Oil and Gas Group - Holding Company
We have audited the accompanying consolidated balance sheet of Vietnam Oil and Gas Group - Holding Company (“the
Company”) and its subsidiaries (collectively referred to as “the Group”) as at 31 December 2010, the related consolidated
statements of income and cash flows for the year then ended, and the notes thereto (collectively referred to as “the consolidated
financial statements”), as set out from page 46 to page 80. The accompanying consolidated financial statements are not intended
to present the financial position, results of operations and cash flows in accordance with accounting principles and practices
generally accepted in countries and jurisdictions other than Vietnam.
Respective Responsibilities of the Board of Management and Auditors
As stated in the Statement of the Board of Management on page 42 and 43, these consolidated financial statements are the
responsibility of the Company’s Board of Management. Our responsibility is to express an opinion on the consolidated financial
statements based on our audit.
Basis of Opinion
Except for the audit scope limitation discussed in the following paragraph, we have conducted our audit in accordance with
Vietnamese Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance
that the consolidated financial statements are free of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As presented in Notes 7, 12 and 13 of the Notes to the consolidated financial statements, as per the Prime Minister’s Decision on
restructuring Vietnam Shipbuilding Industry Group (Vinashin), the Group temporarily recorded the value of construction in progress
relating to projects handed over from Vinashin with the value of VND 667,522 million and recorded the same amount payable to
Vinashin under other current payables in the consolidated balance sheet. The financial statements of Dzung Quat Shipyard One
Member Company Limited which was handed over from Vinashin were included in the Group’s consolidated financial statements
with its total assets and net assets of VND 7,039,429 million and (VND 23,449 million), respectively as at 31 December 2010. Up to
31 December 2010, the Group paid Vinashin VND 3,425,065 million which was included in other receivables in the consolidated
balance sheet. At the date of this report, there have been no official documents issued by competent authority concerning the
value of construction in progress handed over from Vinashin, value of assets and liabilities due from Dzung Quat Shipyard One
Member Company Limited and the amount due from the Group to Vinashin. Accordingly, we do not express an opinion on the
effect of the receipt of the assets handed over and subsidiaries transferred from Vinashin on the Group’s consolidated financial
statements for the year ended 31 December 2010.
Opinion
In our opinion, except for any adjustments that might have been determined necessary due to the effect of the matter stated
above, the accompanying consolidated financial statements give a true and fair view of, in all material respects, the financial
position of the Group as at 31 December 2010 and the results of its operations and its cash flows for the year then ended
in accordance with Vietnamese Accounting Standards, Vietnamese Accounting System and prevailing relevant regulations in
Vietnam.
AUDITORS’ REPORT (Continued)
Without further qualifying our opinion, we would draw the readers’attention to the following matters:
As stated in Note 6 to the consolidated financial statements, as at 31 December 2010, the total outstanding credit facilities the Group had granted to some entities under the management of Vietnam Shipbuilding Industry Group (Vinashin)
amounted to VND 1,559,025 million, of which VND 1,034,687 million was overdue. The Group assessed the situation carefully
and believed that the Group would take effective measures to manage the credit quality and be able to collect principals and
interest in the coming years. Therefore, the Group did not record a provision for such credit facilities.
As stated in Note 32 to the consolidated financial statements, provision for abandonment costs for some petroleum fields
under exploration and production that the Group has an interest in, was not recorded as at 31 December 2010 in accordance
with Vietnam Petroleum Law. At the date of this report, abandonment costs for certain aforesaid petroleum fields were not
yet determined. The Board of Management has evaluated and believed that the unrecorded amount was not material to the
consolidated financial statements for the year ended 31 December 2010.
As stated in Note 34 to the consolidated financial statements, the comparative figures are the figures of 2009 presented in
the consolidated financial statements for the years ended 31 December 2009, 2008 and 2007 which had been reissued and
approved by the Members’ Council on 17 September 2010.
Dang Chi DungTran Huy Cong
Deputy General DirectorAuditor
CPA Certificate No. D.0030/KTV
CPA Certificate No. 0891/KTV
For and on behalf of
DELOITTE VIETNAM COMPANY LIMITED
30 June, 2011
Hanoi, S.R. Vietnam
ANNUAL REPORT 2010
45
Consolidated financial statements
For the year ended 31 December 2010
CONSOLIDATED BALANCE SHEET
As at 31 December 2010
ASSETS
Notes
31/12/2010
31/12/2009
VND Million
VND Million
211,984,566
169,069,559
A.
CURRENT ASSETS
I.
Cash and cash equivalents
1. Cash
2. Cash equivalents
5
94,547,936
28,465,665
66,082,271
70,792,433
25,952,450
44,839,983
II.
Short-term financial investments
1. Short-term investments
2. Provision for diminution in value of short-term investments
6
28,184,543
30,100,209
(1,915,666)
33,306,412
35,023,447
(1,717,035)
III.
Short-term receivables
1. Trade accounts receivable
2. Advances to suppliers
60,943,111
37,829,566
11,181,613
348,900
11,926,646
(343,614)
41,459,173
25,003,341
9,597,220
541,614
6,579,295
(262,297)
23,634,719
24,460,951
(826,232)
18,353,101
18,443,194
(90,093)
4,674,257
778,601
2,741,391
5,158,440
335,819
1,423,274
216,850
577,791
937,415
2,821,556
3. Receivables from construction contracts under percentage of completion method
4. Other receivables
7
5. Provision for short-term doubtful debts
IV.
Inventories
1. Inventories
8
2. Provision for devaluation of inventories
V.
Other short-term assets
1. Short-term prepayments
2. VAT deductibles
3. Taxes and amounts receivable from the State Budget
4. Other short-term assets
The notes set out on pages 52 to 80 are an integral part of these consolidated financial statements
9
CONSOLIDATED BALANCE SHEET (Continued)
Notes
ASSETS
B. NON-CURRENT ASSETS
I. Long-term receivables
1. Long-term receivables from customers
2. Other long-term receivables
3. Provision for doubtful long-term debts
II. Fixed assets
10
1. Tangible fixed assets
- Cost
- Accumulated depreciation
2. Finance lease assets
- Cost
3. Intangible fixed assets
- Cost
- Accumulated amortisation
11
4. Construction in progress
12
III. Investment property
- Cost
31/12/2010
31/12/2009
VND Million
VND Million
254,075,077
184,315,998
16,586
3,933
13,015
(362)
12,035
6,961
11,548
(6,474)
142,333,841
102,925,023
129,094,727
(26,169,704)
105,106
111,194
(6,088)
1,589,649
1,904,271
(314,622)
37,714,063
105,378,301
46,971,770
67,592,667
(20,620,897)
6,921
7,645
(724)
1,467,189
1,695,736
(228,547)
56,932,421
365,920
375,342
(9,422)
9,059
9,191
(132)
IV. Long-term financial investments
1. Investments in associates
2. Interests in joint ventures
3. Other long-term investments
4. Provision for diminution in value of long-term financial investments
14
14
15
42,736,790
5,250,053
11,225,756
26,499,479
(238,498)
34,014,339
4,680,339
12,007,162
17,610,192
(283,354)
V. Other long-term assets
1. Long-term prepayments
2. Deferred tax assets
3. Exploration expense
4. Development expense
5. Other long-term assets
16
30
17
18
67,435,429
41,560,068
256,966
17,795,958
7,686,321
136,116
43,769,142
26,897,575
74,003
13,264,311
3,438,837
94,416
1,186,511
1,133,122
466,059,643
353,385,557
VI. Goodwill
TOTAL ASSETS
ANNUAL REPORT 2010
47
Notes
RESOURCES
31/12/2010
VND Million
31/12/2009
VND Million
A.
LIABILITIES
215,114,138
155,643,649
I.
Current liabilities
1. Short-term loans and liabilities
2. Trade accounts payable
3. Advances from customers
4. Taxes and amounts payable to the State Budget
5. Payables to employees
6. Accrued expenses
7. Other current payables
8. Short-term provisions
9. Bonus and welfare funds
130,093,155
50,507,527
28,123,524
2,987,499
21,819,683
1,145,161
11,239,653
12,562,394
1,244,923
462,791
88,390,336
32,723,687
18,557,250
1,836,255
14,911,973
793,319
6,034,213
12,320,966
966,082
246,591
85,020,983
522,552
75,931,873
5,787,014
104,926
599,756
457,460
1,092,642
524,760
67,253,313
1,686
449,533
60,224,662
5,346,783
85,318
74,243
585,421
370,466
115,201
232,365,842
185,228,096
232,133,568
177,628,384
5,544,909
6,710,920
(228,799)
19,452,338
16,773,142
126,523
3,139,768
659,902
2,326,481
184,917,295
118,123,967
1,753,008
39,336
(2,539,231)
23,213,219
11,398,910
67,877
17,931,893
14,928,316
-
232,274
78,292
153,982
310,801
19,666
291,135
18,579,663
12,513,812
466,059,643
353,385,557
II.
19
20
21
22
Long-term liabilities
1. Long-term trade payables
2. Other long-term payables
3. Long-term loans and liabilities
4. Deferred tax liabilities
5. Provision for severance allowance
6. Long-term provisions
7. Unearned revenue
8. Scientific and technological development fund
9. Oil price stablization fund
B.
EQUITY
I.
Owner’s equity
1. Owner's contributed capital
2. Other owner's capital
3. Assets revaluation reserve
4. Foreign exchange reserve
5. Investment and development fund
6. Financial reserve fund
7. Other owner’s fund
8. Retained earnings
9. Construction fund
10. Enterprise reorganization support fund
II.
Other resources and funds
1. Subsidised fund
2. Funds for fixed asset acquisition
C.
MINORITY INTERESTS
TOTAL RESOURCES
23
30
24
OFF BALANCE SHEET ITEMS
1. Operating lease assets
2. Materials, goods held under trust or for processing
3. Consignment goods for sale
4. Bad debts written off
5. Foreign currencies
US Dollar
Euro
Algerian Dinar
Singaporean Dollar
Norwegian Krone
Japanese Yen
Great Britain Pound
Unit
31/12/2010
31/12/2009
VND Million
VND Million
VND Million
VND Million
1,026,818
265
171,775
1,445
505,266
249,603
USD
EUR
DZD
SGD
NOK
JPY
GBP
715,834,918
20,494,329
7,866,320
805,794
686,881
56,305
1,333
1520607154.36
12,217,103
6,095,159
387,193
18,621,671
397,081
Phung Dinh ThucNinh Van Quynh
President & CEOChief Accountant
General Manager - Finance & Accounting Division
Hanoi, 30 June 2011
ANNUAL REPORT 2010
49
CONSOLIDATED INCOME STATEMENT
Notes
ITEMS
2010
VND Million
2009
VND Million
1. Gross sales
241,459,395
139,791,984
6,628,854
3,280,549
234,830,541
136,511,435
4. Cost of sales
186,756,876
101,406,507
5. Gross profit from sales
48,073,665
35,104,928
2. Less deductions
3. Net sales
25
6. Financial income
26
13,329,512
8,135,650
7. Financial expenses
27
8,649,534
3,276,857
8. Selling expenses
3,405,111
2,547,749
9. General and administration expenses
6,368,880
4,252,983
42,979,652
33,162,989
1,708,635
810,871
681,609
331,309
1,027,026
479,562
498,114
248,293
44,504,792
33,890,844
10. Operating profit
11. Other income
12. Other expenses
13. Profit from other activities
28
14. Share of net profits of associates and joint ventures
15. Accounting profit before tax
16. Current corporate income tax expense
29
14,727,938
10,588,260
17. Deferred corporate income tax expense
30
199,032
1,914,750
29,577,822
21,387,834
26,912,126
2,665,696
19,847,562
1,540,272
18. Net profit after corporate income tax
Attributable to:
Equity holders of the Group
Minority interests
Hanoi, 30 June 2011
CONSOLIDATED CASH FLOW STATEMENT
2010
VND Million
2009
VND Million
44,504,792
33,890,844
Depreciation and amortisation
Allocations of exploration and development expenses
Provisions
(Gain) from fixed assets disposal
Unrealized foreign exchange loss
(Gain) from investing activities
Interest expense
8,094,967
10,114,900
706,140
(72,184)
1,283,087
(8,061,697)
2,495,240
4,772,874
4,458,368
(1,282,612)
(7,423)
788,404
(5,438,721)
989,661
Operating profit before movements in working capital
59,065,245
38,171,395
- (Increase) in receivables
- Increase in accounts payable
- (Increase) in inventories
- (Increase) in prepaid expenses
- Interest paid
- Corporate income tax paid
Net cash from operating activities
(16,385,240)
(2,981,032)
28,893,484
(2,175,586)
(1,708,051)
(13,294,139)
51,414,681
(11,425,936)
(9,758,150)
9,389,551
(661,141)
(1,743,054)
(9,649,701)
14,322,964
(66,239,884)
220,825
(2,754,128)
7,411,210
(36,722,466)
132,836
(17,048,851)
4,503,547
(61,361,977)
(49,134,934)
668,082
-
7,055,387
2,332
57,329,645
(31,352,648)
12,079,543
2,448
43,915,272
(11,980,241)
Net cash from financing activities
33,702,798
44,017,022
Net increase in cash
23,755,503
9,205,052
Cash and cash equivalents at the beginning of the year
70,792,433
61,587,381
Cash and cash equivalents at the end of the year
94,547,936
70,792,433
ITEMS
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments for
-
CASH FLOWS FROM INVESTING ACTIVITIES
-
Acquisition and construction of fixed assets and other long-term assets
Proceeds from sales of fixed assets
(Increase) in investments
Gains on investments received
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
The cash balances of PETEC transferred from the Ministry of Industry
and Trade and Dung Quat Shipyard transferred from Vinashin
-
Capital proceeds by the State Budget
Proceeds from subsidiaries' equitization
Proceeds from borrowings
Repayment of borrowings
Phung Dinh Thuc
Ninh Van Quynh
Hanoi, 30 June 2011
ANNUAL REPORT 2010
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
These notes are an integral part of and should be read in conjunction with the accompanying consolidated financial statements
1. GENERAL INFORMATION
Vietnam Oil and Gas Group - Holding Company and its subsidiaries (collectively referred to as “the Group”) were established based
on the reorganization of Vietnam Oil and Gas Corporation and its member companies under Decision No. 198/2006/QD-TTg
dated 29 August 2006 issued by the Prime Minister.
Vietnam Oil and Gas Group - Holding Company (referred to as “the Company”) is a State-owned company and a legal entity
established under Decision No. 199/2006/QD-TTg dated 29 August 2006 issued by the Prime Minister.
On 18 June 2010, the Prime Minister issued Decision No. 924/QD-TTg to transform Vietnam Oil and Gas Group - Holding Company
into One Member Limited Liability Company wholly owned by the State, which is effective from 01 July 2010. The charter capital
of the Company at the transformation date was VND 177,628,383,625,944.
The principal business activities of the Group are:
Research, exploration, production, transportation, processing, storage, distribution and services relating to oil and gas;
Trading of petroleum materials and equipment, petroleum products and petrochemical materials;
Survey, design, construction and repair of works and facilities for civil use and for petroleum industry;
Investment, generation and trading of electricity;
Financial, stocks, banking and insurance services;
Other business activities permitted by laws.
2. ACCOUNTING CONVENTION AND ACCOUNTING PERIOD
Accounting convention
The accompanying consolidated financial statements, expressed in Vietnamese Dong (VND), are prepared under the historical
cost convention and in accordance with Vietnamese Accounting Standards, Vietnamese Accounting System and prevailing
relevant regulations in Vietnam.
The accompanying consolidated financial statements are not intended to present the financial position, results of operations
and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other
than Vietnam. Nevertheless, the consolidated financial statements have been translated from those issued in Vietnam, from the
Vietnamese language into the English language.
Accounting period
The Group’s financial year begins on 01 January and ends on 31 December.
3. NEW ACCOUNTING GUIDANCE IN ISSUE NOT YET ADOPTED
On 06 November 2009, the Ministry of Finance issued Circular No. 210/2009/TT-BTC (“Circular 210”) guiding the application of
International Financial Reporting Standards on presentation of financial statements and disclosures of financial instruments.
The adoption of Circular 210 requires disclosures of certain financial instruments as well as the effect thereof on the financial
statements. This Circular is effective for the financial year ending on or after 31 December 2011. The Board of Management is
considering the extent of impact of the adoption on the Group’s consolidated financial statements for future accounting periods.
(Continued)
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies, which have been adopted by the Group in the preparation of these consolidated financial
statements, are as follows:
Estimates
The preparation of consolidated financial statements in conformity with Vietnamese Accounting Standards, Vietnamese
Accounting System and prevailing relevant regulations in Vietnam requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the financial year. Actual results could differ
from those estimates.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of Vietnam Oil and Gas Group - Holding Company and
those of enterprises controlled by the Group (its subsidiaries) up to 31 December each year. Control is achieved where the Group
has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the
financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group. Significant intercompany transactions and balances between group enterprises are eliminated on consolidation.
Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority
interests consist of the amount of those interests at the date of the original business combination and the minority’s share of
changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the
subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation
and is able to make an additional investment to cover the losses.
Business combinations
On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date
of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as
goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired is credited to profit
and loss in the period of acquisition.
The interest of minority shareholders is initially measured at the minority’s proportion of the net fair value of the assets, liabilities
and contingent liabilities recognised.
Goodwill
Goodwill represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is
recognised as an asset and is amortised on the straight-line basis over its estimated period of benefit of 10 years.
Goodwill arising on the acquisition of an associate is included within the carrying amount of the associate. Goodwill arising on the
acquisition of subsidiaries and jointly controlled entities is presented separately as an intangible asset in the consolidated balance
sheet.
ANNUAL REPORT 2010
53
(Continued)
On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of unamortised goodwill is included in
the determination of the profit or loss on disposal.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value
Short-term investments
Short-term investments comprise time deposits with a term exceeding three (03) months, short-term trust investments and
other short-term investments. Short-term investments are carried at cost less provision for diminution in value of short-term
investments as regulated.
Cash advance in petroleum contracts
Cash advance in petroleum contracts presents amounts receivable from or payable to joint operating companies in petroleum
contracts at the date of the consolidated balance sheet.
According to terms and conditions of production sharing contracts (PSCs) and joint operating contracts (JOCs), every month
joint operating companies request petroleum contractors involved in the contracts to make an advance payment for estimated
expenses to be incurred in the subsequent period based on the approved work program and budget.
Assets acquired or expenses incurred under the contracts are recorded in appropriate items in the Group’s consolidated financial
statements and the cash advance in petroleum contracts is offset by respective amounts
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and where applicable, direct
labor costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net
realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing,
selling and distribution.
As at the balance sheet date, the value of work in progress relating to refined petroleum products of Binh Son Refinery and
Petrochemical Co., Ltd. is determined based on the value of crude oil used in a month. Production cost for each type of refined
petroleum products is determined based on allocation of expenses actually incurred for monthly production units and average
selling price (not including additional tax charge and special consumption tax) of each type of refined petroleum product. At the
date of this report, the Group has been preparing the Ministry of Finance the proposal of product unit cost calculating method to
determine the value of work in progress as mentioned above.
The evaluation of necessary provision for inventory obsolescence follows current prevailing accounting regulations which allow
provisions to be made for obsolete, damaged, or sub-standard inventories and for those which have costs higher than net
realisable values as at the balance sheet date.
Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less accumulated depreciation.
The costs of purchased tangible fixed assets comprise their purchase prices and any directly attributable costs of bringing the
assets to their working conditions and locations for their intended use.
(Continued)
The costs of tangible fixed assets formed from construction investment by contractual mode or self-construction or selfgenerating process are the settled costs of the invested construction projects in accordance with the prevailing State’s regulations
on investment and construction management, directly-related expenses and registration fee (if any). In the event the construction
project has been completed and put into use but the settled costs thereof have not been approved, the cost of tangible fixed
assets is recognized at the estimated cost based on the actual cost incurred. The estimated cost will be adjusted according to the
settled costs approved by competent authorities.
Tangible fixed assets are depreciated using the straight-line method using the following depreciation rate (%):
Depreciation rates (%)
Buildings and structures
2 - 33
Machinery and equipment
3 - 33
Vehicles and ships
4 - 50
Management tools10 - 33
Others5 - 33
Tangible fixed assets are revalued in accordance with the State’s decisions or when state-owned enterprises are equitized. The
cost and accumulated depreciation of tangible fixed assets are adjusted based on the revaluation value approved by competent
authorities as regulated.
Loss or gain resulting from sales and disposals of tangible fixed assets is the difference between profit from sales or disposals of
assets and their residual values and is recognised in the consolidated income statement.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.
Rental income from operating leases is recognised on the straight-line basis and in accordance with the lease agreement. Rentals
payable under operating leases are charged to the income statement on the straight-line basis and in accordance with the lease
agreement. Benefits received and receivable as an incentive to enter into an operating lease are also spread in accordance with
the lease agreement.
Intangible fixed assets and amortisation
Intangible fixed assets comprise land use rights and other intangible fixed assets that are stated at cost less accumulated
amortisation and amortised using the straight-line method over their estimated useful lives.
Construction in progress
Properties in the course of construction for production, rental and administrative purposes or for other purposes are carried at
cost. The cost includes any costs that are necessary to form the asset including construction cost, equipment cost, other costs and
related borrowing costs in accordance with the Group’s accounting policy. Such costs will be included in the estimated costs of
the fixed assets (if settled costs have not been approved) when they are put into use.
ANNUAL REPORT 2010
55
(Continued)
According to the State’s regulations on investment and construction management, the settled costs of completed construction
projects are subject to approval by appropriate level of competent authorities. The final costs of these completed construction
projects may vary depending on the final approval by competent authorities.
Investment property
Investment properties, which are composed of land use rights and buildings and structures held by the Group to earn rentals or
for capital appreciation or both, are stated at cost less accumulated depreciation. Investment properties are depreciated using the
straight-line method over their estimated useful lives.
Investments in associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in joint
venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not
control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity
method of accounting. Interests in associates are carried in the consolidated balance sheet at cost as adjusted by post-acquisition
changes in the Group’s share of the net assets of the associate. Losses of an associate in excess of the Group’s interest in that
associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are
not recognised.
Interests in joint ventures
A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject
to joint control, i.e, the strategic financial and operating policy decisions relating to the activities require the unanimous consent
of the parties sharing control.
Where a group entity undertakes its activities under joint venture arrangements directly, the Group’s share of jointly controlled
assets and any liabilities incurred jointly with other ventures are recognised in the financial statements of the relevant entity and
classified according to their nature. Liabilities and expenses incurred directly in respect of interests in jointly controlled assets are
accounted for on an accrual basis. Income from the sale or use of the Group’s share of the output of jointly controlled assets, and
its share of joint venture expenses, are recognised when it is probable that the economic benefits associated with the transactions
will flow to/from the Group and their amount can be measured reliably.
Joint venture arrangements that involve the establishment of a separate entity in which each venture has an interest are referred
to as jointly controlled entities. The Group reports its interests in jointly controlled entities using the equity method of accounting.
Any goodwill arising on the acquisition of the Group’s interest in a jointly controlled entity is accounted for in accordance with the
Group’s accounting policy for goodwill arising on the acquisition of a subsidiary.
Other long-term investments
Other long-term investments comprise investments in shares, bonds, other funds and projects, investments in other entities with
less than 20% of the charter capital of the investee enterprise, equivalent to voting power proportion and long-term loans, trust
investments. These investments are carried at cost and are then measured at cost less provision for diminution in value of longterm investments. Such provision is made as regulated for each type of investment and equals a difference between net value of
the investment or the investment’s recoverable amount and initial cost recognition.
(Continued)
Exploration expenses
Petroleum exploration expenses include all direct and indirect expenses incurred related to petroleum exploration activities per
each petroleum contract or each petroleum exploration area (if self-conducted).
Once petroleum exploration period has ended without any commercial discovery declared, it is dependent upon decision on
investment in the exploration area, the Group may charge those related exploration expenses to exploration fund; reduce financial
reserve fund or allocate them to the Group’s income statement for the period up to five years since the end of the project.
Exploration expense of petroleum contracts or of areas with commercial discovery declared will be collected and transferred to
“long-term prepayments” and then allocated into expenses based on total estimated production volume of an oil field within the
term of the petroleum contracts.
Where petroleum exploration is conducted as a basic geological inspection of mineral resources and funded by non-business
expenditure sources, such expenses will be finalised and offset against the funding in accordance with prevailing financial
regulations.
Development expenses
Development expenses includes all direct and indirect expenses incurred in the year related to development activities within
the area and system of oil and gas production, processing and transporting. Development expenses incurred under petroleum
contracts are separated by each contract.
Those development expenses will be transferred to “long-term prepayments” and allocated to petroleum production costs based
on total estimated production volume of an oil field within the term of the petroleum contracts.
Long-term prepayments
Long-term prepayments comprise approved exploration and development expenses incurred under petroleum contracts with
commercial discovery declared and other types of long-term prepayments.
The long-term prepayments representing exploration and development expenses as stated above are allocated to expense based
on the proportion of amount of production in the period and total estimated production volume of an oil field within the term
of the petroleum contracts.
Periodically, the total estimated production volume of an oil field within the term of the petroleum contracts are reviewed by
the Group. In a case where there is a change in the reserve, the Group will adjust the allocation rate of exploration expenses and
development expenses for the subsequent reporting period, accordingly. The reserves’ quantity has been internally estimated
by the Group. However, there have been no official documents prepared by independent parties affirming the remainder of the
reserves of oil fields that the Group has an interest in.
Revenue recognition
Revenue from the sale of goods is recognised when all five (05) following conditions are satisfied:
(a) The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
(b) The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective
control over the goods sold;
(c) The amount of revenue can be measured reliably;
ANNUAL REPORT 2010
57
(Continued)
(d) It is probable that the economic benefits associated with the transaction will flow to the Group; and
(e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue of a transaction involving the rendering of services is recognised when the outcome of such transactions can be
measured reliably. Where a transaction involving the rendering of services is attributable to several periods, revenue is recognised
in each period by reference to the percentage of completion of the transaction at the balance sheet date of that period. The
outcome of a transaction can be measured reliably when all four (04) following conditions are satisfied:
(a)
(b) (c) (d) The amount of revenue can be measured reliably;
It is probable that the economic benefits associated with the transaction will flow to the Group;
The percentage of completion of the transaction at the balance sheet date can be measured reliably; and
The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the
stage of completion of the contract activity at the balance sheet date. The proportion normally measures that contract costs
incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative
of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that they have
been agreed with the customer.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of
contract costs incurred that are probable of recovery. Contract costs are recognised as expenses in the period in which they are
incurred. Where it is probable that the total contract cost will exceed total contract revenue, the expected loss is recorgnised as
an expense immediately as an allowance for foreseeable loss.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the applicable interest rate, which is
the rate that discounts estimated future cash receipts through the expected life of the financial assets to that asset’s net carrying
amount.
Dividend income from investments is recognised when the Group’s right to receive payment has been established.
Foreign currency translation
The individual financial statements of each entity are presented in the currency of the primary economic environment in which
the entity operates (the functional currency). For the purpose of the consolidated financial statements, the results and financial
position of each entity are expressed in VND, which is the functional currency of the Group and the presentation currency for the
Group’s consolidated financial statements.
For the purpose of presenting consolidated financial statements, the assets and liabilities of subsidiaries’ financial statements
presented in foreign currencies are translated to VND using exchange rates prevailing on the consolidated balance sheet date.
Income and expense items are translated at the average exchange rates for the year, unless exchange rates fluctuated significantly
during that year, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any,
are classified as equity and transferred to the Group’s foreign exchange difference. Such translation differences are recognised in
profit or loss in the period in which the subsidiary is disposed of.
Recording of foreign exchange difference at project management boards of Vietnam Oil and Gas Group
- Holding Company
The foreign exchange differences arose at project management boards of Vietnam Oil and Gas Group - Holding Company mainly
(Continued)
related to construction projects under development, which shall be transferred to the Group’s subsidiaries upon the completion
and be recorded in the subsidiaries’ income statement within 5 years from the date of transfer. As at 31 December 2010, exchange
gain recorded in Owner’s equity in the consolidated balance sheet was approximately VND 71 billion (31 December 2009:
exchange loss of approximately VND 2,400 billion).
In accordance with Vietnamese Accounting Standard No. 10 “Effects of changes in foreign exchange rates” and Circular No.
201/2009/TT-BTC dated 15 October 2009 issued by the Ministry of Finance, foreign exchange differences are recorded in financial
income and expenses if the enterprise has commercial operation; for enterprises that have not yet commenced their commercial
operation, foreign exchange differences are allocated to the income statement within 5 years since the date of putting in use.
Due to the nature and scale of petroleum projects, subsidiaries will receive fixed assets after the constructions are completed. The
Ministry of Finance has approved the Group’s afore-mentioned accounting treatment in Official Letter No. 6750/BTC-CDKT dated
27 May 2010 concerning accounting of foreign exchange differences. The Board of Management believed that such accounting
of foreign exchange differences is appropriate to the nature of economic transactions and gives a more appropriate view of
economic relationship between Vietnam Oil and Gas Group - Holding Company and its subsidiaries.
Recording of foreign exchange difference in other cases
Transactions arising in foreign currencies are translated at exchange rates ruling at the transaction date. Foreign exchange
differences arising from these transactions are recognised in the income statement.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the rates of exchange prevailing on the
balance sheet date and are accounted as follows:
Foreign exchange differences arising from revaluation of monetary items, short-term receivables and payables denominated
in foreign currencies at the balance sheet date are recorded in the balance sheet in the “foreign exchange reserve” item
under the Owner’s equity section.
Foreign exchange differences arising from revaluation of long-term receivables and payables are recorded in the income
statement for the year.
For newly-established subsidiaries that have not yet commenced commercial operation, exchange differences which incurred in
the year and are retranslated at the balance sheet date are allocated to the income statement for a period up to 5 years since the
date of putting construction in use.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary
investment of specific borrowings pending their expenditure on qualifying assets is deducted from the cost of those assets.
All other borrowing costs are recognised in the consolidated income statement when incurred.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group
will be required to settle that obligation. Provisions are measured at the management’s best estimate of the expenditure required
to settle the obligation at the balance sheet date.
ANNUAL REPORT 2010
59
(Continued)
Taxation
Profit tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit is calculated based on results of the year after
having made adjustments for ineligible or non-deductible items. The current tax liabilities are calculated using tax rates which
have been enacted or substantively enacted by the consolidated balance sheet date. Applicable income tax rates are 28% - 50%
depending on contracts’ terms and conditions and tax rates fixed for each oil and gas block according to regulation of the Ministry
of Finance for crude oil production activities and 10% - 25% for other activities.
Income taxes on crude oil and gas production under production sharing contracts are determined according to contract terms
and conditions. Income taxes on other activities are paid in compliance with prevailing tax laws in Vietnam.
Deferred tax is recognised on significant differences between carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all temporary differences and deferred tax assets are recognised to
the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised.
Other taxes are paid in accordance with the prevailing tax laws in Vietnam.
5. CASH AND CASH EQUIVALENTS
Cash on hand
Cash in bank
Cash in transit
Cash equivalents
31/12/2010
VND Million
31/12/2009
VND Million
113,217
28,327,225
25,223
66,082,271
100,245
25,755,559
96,646
44,839,983
94,547,936
70,792,433
Cash equivalents represent the Group’s time deposits with terms of less than or equal to three (3) months at commercial banks
and credit institutions.
6. SHORT-TERM FINANCIAL INVESTMENTS
Time deposits with a term of over 3 months
Other short-term investments
Provision for diminution in value of short-term investments
31/12/2010
VND Million
31/12/2009
VND Million
7,663,589
22,436,620
(1,915,666)
28,184,543
10,241,306
24,782,141
(1,717,035)
33,306,412
Other short-term investments present investments in listed stocks, capital share, government bonds and other investments that
are expected to provide the Group with future benefit through dividend income or trading gains and loans which will mature
within one year.
(Continued)
As at 31 December 2010, the total outstanding credit facilities the Group had granted to some entities under the management
of Vietnam Shipbuilding Industry Group (Vinashin) amounted to VND 1,559,025 million, of which VND 1,034,678 million was
overdue. The Group assessed the situation carefully and believed that the Group would take effective measures to manage the
credit quality and to collect principals and interest in full in the coming years. Therefore, the Group did not record a provision for
such credit facilities.
7. OTHER RECEIVABLES
Receivables from Vietnam Shipbuilding Industry Group (*)
Interest income on bank deposits and trusted funds
Receivables from transfering shares and valuable papers
Advance for non-business organizations' activities
Receivable from trust loans through Ocean Bank
Cash advance for petroleum contracts
Receivables relating to temporary import for re-exported goods
Financial aid for comprehensive clean energy and light project
Receivable from Vietnam National Shipping Lines
Receivables from partners for capital contribution to PVTex
Receivables from Block B – O Mon Pipeline Operating Company
Receivables from operations of petroleum blocks
Receivables relating to liabilities settled
Receivable from S.S.G Group Joint Stock Company
Receivables from State Budget for the road construction in Dung Quat
Receivables from the State Bank of Vietnam relating to interest support program
Receivables from deposits, guarantee fees
Receivables from joint ventures interest
Receivables from compensation
Receivables from scientific research contracts
Receivables from joint operating companies for taxes
Loss relief for diesel trading activities
Petroleum purchased for national reserve
Others
31/12/2010
31/12/2009
VND Million
VND Million
3,103,962
1,230,194
827,924
413,494
644,153
583,762
399,723
351,474
322,200
318,520
295,068
293,179
253,856
198,270
151,703
147,420
105,428
96,356
80,964
79,368
68,703
1,960,925
11,926,646
1,140,534
379,366
344,317
310,225
237,059
238,600
39,784
151,703
54,106
1,010,530
33,643
113,354
66,914
515,425
160,467
1,783,268
6,579,295
(*) Include therein receivable arising from the payment of VND3,000 billion made by Vietnam Oil and Gas Group - Holding
Company to Vietnam Shipbuilding Industry Group (Vinashin) relating to Vinashin’s entities transferred from 01 July 2010 as per
decision by the Prime Minister. In fact, Vietnam Oil and Gas Group - Holding Company paid Vinashin VND 3,425,065 billion, of
which VND 425,065 billion represented the repayment of principal and interest thereon to Natixis Bank on behalf of Dzung Quat
Shipyard One Member Company Limited, a company transferred from Vinashin, was eliminated on consolidation.
ANNUAL REPORT 2010
61
(Continued)
8.INVENTORIES
31/12/2010
VND Million
Raw materials
Work in progress
Merchandise
Goods in transit
Finished goods
Tools and supplies
Goods on consignment
Provision for devaluation of inventories
Net realisable value
31/12/2009
VND Million
8,115,206
6,703,797
5,021,565
2,427,792
2,048,247
81,608
62,736
6,340,507
4,255,993
4,538,674
2,751,933
459,584
36,860
59,643
24,460,951
18,443,194
(826,232)
(90,093)
23,634,719
18,353,101
9. OTHER SHORT-TERM ASSETS
Short-term deposits, mortgages, collaterals
Advance to employees
Others
31/12/2010
VND Million
31/12/2009
VND Million
670,161
298,382
(31,128)
2,590,408
211,661
19,487
937,415
2,821,556
(Continued)
10.TANGIBLE FIXED ASSETS
As at 31 December 2010, the cost of tangible fixed assets of VND 20,243,360 million (31 December 2009: VND 11,146,719 million)
was used to secure long-term loans which are presented in Note 23 of the Notes to the consolidated financial statements.
As at 31 December 2010, the cost of the Group’s tangible fixed assets which were fully depreciated but are still in use was VND
7,855,016 million (31 December 2009: VND 6,739,151 million).
Buildings & Machinery & Vehicles Management
structures Equipment
& ships
tools
Others
Total
VND Million VND Million VND Million VND Million VND Million VND Million
COST
33,269,277 22,461,559
As at 01 January 2010
8,183,905 39,411,378
Additions
Disposals
(110,175)
(82,700)
" Transferred from the Ministry of Industry and
Trade and Vietnam Shipbuilding Industry Group " 150,198 2,992,584
Reclassification
(22,408,327) 7,778,567
Revaluation
63,749 (217,153)
Effect of foreign currency exchange differences
11,337
166,022
Other movements
126,068
(72,815)
8,975,119
2,561,685
(285,070)
704,186
297,317
(22,781)
2,182,526
2,737,621
(498)
67,592,667
53,191,906
(501,224)
172,700
33,343
962
1,512
631,969
7,130
158,740
(2,501)
1,962
9,353
41,055
14,437,677
4,313,832
350,560
62,854
3,363,667
4,158,889
531,393
757,429
19,286,032 72,437,442 12,092,220
1,153,406
24,125,627 129,094,727
ACCUMULATED DEPRECIATION
9,424,364
1,348,262
Charge for the year
(51,609)
Eliminated on disposals
" Transferred from the Ministry of Industry and
Trade and Vietnam Shipbuilding Industry Group " 108,896
(7,776,352)
Reclassification
Revaluation
(446,466)
Effect of foreign currency exchange differences
805
Other movements
(42,682)
7,325,386
3,537,203
(32,661)
2,999,556
985,460
(270,543)
355,410
196,923
(21,873)
516,181 20,620,897
1,803,313
7,871,161
(522)
(377,208)
163,737
932,834
(53,941)
18,441
(110,277)
62,911
9,474
(17,167)
392
74,127
5,004
32,759
(8,053)
643
3,790
1,168
341,716
6,801,285
(1,748,036) (2,273,663)
18,188
38,469
23,374
(51,668)
2,565,218 11,780,722
3,844,210
564,603
7,414,951 26,169,704
NET BOOK VALUE
16,720,814 60,656,720
23,844,913 15,136,173
8,248,010
5,975,563
588,803
348,776
16,710,676 102,925,023
1,666,345 46,971,770
ANNUAL REPORT 2010
63
(Continued)
11.INTANGIBLE FIXED ASSETS
VND Million
Patent rights
VND Million
Computer
software
VND Million
Others
VND Million
Total
VND Million
1,318,854
209,696
(23,845)
(210,233)
(132,270)
159,117
306,817
-
121,691
84,791
(4,251)
(82)
22,145
96,074
5,959
(156)
(50,036)
1,695,736
607,263
(28,252)
(210,315)
(160,161)
1,162,202
465,934
224,294
51,841
1,904,271
AMORTISATION
Charge for the year
Eliminated on disposals
Revaluation
Other movements
11,651
18,605
(1,954)
6,248
139,327
28,863
-
52,774
41,272
(1,614)
(473)
(430)
24,795
3,613
(59)
(7,996)
228,547
92,353
(3,627)
(473)
(2,178)
34,550
168,190
91,529
20,353
314,622
NET BOOK VALUE
1,127,652
1,307,203
297,744
19,790
132,765
68,917
31,488
71,279
1,589,649
1,467,189
Land use rights
COST
Additions
Disposals
Revaluation
Other movements
(Continued)
12.CONSTRUCTION IN PROGRESS
2010
VND Million
2009
VND Million
Opening balance
Additions
Transfer to tangible fixed assets
56,932,421
30,586,117
(49,804,475)
57,359,912
19,951,281
(20,378,772)
Closing balance
37,714,063
56,932,421
Details of the Group’s constructions in progress as at 31 December 2010 were as follows:
Name of construction works
Nhon Trach 2 Power Plant
Dinh Vu Polyester Textile Fiber Manufacturing Mill
TAD New Drilling Project
Ca Mau Complex of Gas, Power and Fertilizer
Vung Ang Thermal Power Plant 1
FSO5 Floating Oil Storage
Nghi Son Oil Refinery-Petrochemical Complex
Long Phu Hau River Electricity Center
Bio-ethanol Production Plant
Hua Na Hydroelectric Project
Construction works at Dzung Quat Oil Refinery Plant
Projects transferred from Vinashin (*)
Office building at No. 43, Mac Dinh Chi, Ho Chi Minh City
Dzung Quat Shipbuilding Factory
CT 10-11 Van Phu Project
31/12/2010
VND Million
31/12/2009
VND Million
8,698,857
4,196,394
3,528,847
3,475,333
2,907,801
2,604,316
1,449,165
798,586
776,388
769,638
671,465
667,522
442,195
396,556
392,005
1,886,944
768,285
307,800
702,372
42,705
2,388,594
665,559
290,916
67,240
268,994
43,657,458
-
ANNUAL REPORT 2010
65
(Continued)
12.CONSTRUCTION IN PROGRESS (Continued)
Name of construction works
Semi-submersible Rigs
Thai Binh Thermal Power Plant
Dakrinh Hydroelectric Project
Ca Mau Office and Residence Building
Dragon Tower Office Building
Oil Tankers Building Project
Phu My Hung Petroleum Finance and Trade Centre
PVI Office Tower Project at Yen Hoa, Cau Giay, Hanoi
Vung Tau Low Section Base Enlargement Project
White Lion/White Rhino - White Tiger Gas Pipeline Project
PVOil General Storehouse at Vung Ang
Steel Pipe Manufacturing Factory in Tien Giang
Nha Be Petroleum Storehouse Expansion Project
Storehouse Project in Cai Rang district, Can Tho province
Luang Prabang Hydroelectric Project
Office Tower at No. 2, Nguyen Huu Canh, Vung Tau City
Apartment Project at Nam An Khanh, Hanoi
Vietnam Petroleum University Project
Lam Kinh Hotel Project, Thanh Hoa
Resettlement Areas in Ca Mau
Block B - O Mon Gas Pipeline Project
Petro Hotel, Vung Tau
Nhon Trach 1 Power Plant
Vietnam Petroleum Institute Office
Carbon Dioxide Capture Project
Petro Hotel, Hanoi
Nghe An Petroleum Building
2 Shipbuilding 3500HP Project
Phu My Service and Fertiliser Port
Phu My Port Complex - Office Building
Others
31/12/2010
31/12/2009
VND Million
VND Million
366,813
335,255
312,702
308,894
285,102
284,985
225,947
214,892
208,726
206,984
193,694
151,105
128,869
122,446
100,975
97,134
92,641
87,844
82,674
80,001
74,780
-
89,997
91,230
183,263
157,698
853,282
115,899
98,580
126,419
116,820
95,820
85,244
-
176,199
411,338
-
342,299
220,934
180,484
153,368
129,712
100,084
1,976,532
1,770,398
37,714,063
56,932,421
133,682
252,805
((*) As per the Prime Minister’s decision on restructuring Vietnam Shipbuilding Industry Group (Vinashin) and Official Letter
concerning guidance on financial resolution over transfer and handover of entities and projects under the management of
Vinashin, the Group was temporarily recording construction in progress handed over from Vinashin and payable to Vinashin with
the same amount of VND 667,522 million. At the date of this report, there have been no official written documents issued by
relevant authorities concerning the value of construction in progress handed over from Vinashin.
(Continued)
13 INVESTMENTS IN SUBSIDIARIES
Details of the Group’s subsidiaries as at 31 December 2010 were as follows:
Name of Subsidiaries
Place of
Proportion Proportion
incorporation of ownershipof voting Principal activity
& operation interest
power held
PetroVietnam Oil Corporation - One Member Company Limited
PetroVietnam Gas Corporation - One Member Company Limited
PetroVietnam Power Corporation
PetroVietnam Exploration Production Corporation Ltd.
PETEC Trading and Investment Corporation (**)
Binh Son Refinery and Petrochemical Co., Ltd.
Dung Quat Shipyard One Member Company Limited (***)
PetroVietnam Finance Joint Stock Corporation
PetroVietnam Petrochemical and Textile Fiber JSC
Ha Giang Petroleum Tourism and Trading JSC
PetroVietnam Energy Technology Corporation
PetroVietnam Fertilizer and Chemicals Corporation
PetroVietnam Technical Services Corporation
PetroVietnam Insurance Joint Stock Corporation
PetroVietnam Transportation Joint Stock Corporation
PetroVietnam Security Joint Stock Company
PetroVietnam Drilling and Well Services Joint Stock Company
PetroVietnam Maintenance and Repair Joint Stock Company
Sapa Petroleum Tourism Joint Stock Company
PetroVietnam Power Project Consultant Joint Stock Company
PetroVietnam Construction Joint Stock Corporation (*)
Drilling Mud Joint Stock Corporation (*)
Petrovietnam Phuoc An Port Investment and Operation JSC
PetroVietnam General Service Joint Stock Corporation (*)
Nhon Trach Specialized Shipbuilding One Member Company Limited (***)
Lai Vu Shipyard One Member Company Limited (***)
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
78.00%
73.01%
68.34%
65.64%
61.37%
59.93%
59.17%
58.40%
57.96%
53.57%
53.17%
50.44%
49.70%
41.21%
38.31%
35.77%
35.24%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
78.00%
81.00%
68.48%
51.00%
61.37%
62.65%
61.17%
58.40%
51.00%
54.47%
80.00%
74.74%
54.00%
41.21%
41.42%
70.00%
35.24%
Oil processing and trading
Gas processing and distribution
Power production and trading
Exploration, production
Trading, investment
Oil refinery, petrochemical
Shipbuilding
Financial service
Petrochemical and textile fiber
Trading
Inspection, projects management
Fertilizer and chemicals
Services and construction
Insurance service
Transportation
Security service
Drilling and well services
Maintenance and repair of works
Tourism services
Power project consultant
Construction
Drilling mud
Ship and port services
Trading and services
Shipbuilding
Shipbuilding
(*) Although the Group holds less than 50% of the voting power of PetroVietnam Contruction Joint Stock Corporation (PVC),
PetroVietnam General Service Joint Stock Corporation (Petrosetco) and Drilling Mud Joint Stock Corporation (DMC), the Group
has the majority voting right at Board of Management’s meetings of theses companies; hence, the Group has the right to govern
financial and operating policies over these companies for a long time. Therefore, these companies’ financial statements are
included in the Group’s consolidated financial statements.
(**) As per Decision No. 0881/QD-BCT dated 12 February 2010 by the Ministry of Industry and Trade, PETEC Trading and Investment
Corporation (PETEC) under the management of the Ministry of Industry and Trade will be transferred to Vietnam Oil and Gas Group. As per
Decision No. 555/QD-DKVN dated 05 March 2010 by the Board of Directors of Vietnam Oil and Gas Group, the Group received PETEC as
its subsidiary from 31 March 2010.
During the year, Vietnam Oil and Gas Group - Holding Company completed initial public offerings of PETEC and will hold 51% charter
capital of PETEC in accordance with equitization plan as approved in Decision No.3080/QD-DKVN dated 25 November 2010.
ANNUAL REPORT 2010
67
(Continued)
(***) Pursuant to the Prime Minister’s Decision No. 926/QD-TTg dated 18 June 2010 concerning restructuring Vietnam Shipbuilding
Industry Group (Vinashin), the financial statements of Dzung Quat Shipyard One Member Company Limited, a company handed over
from Vinashin, were included in the Group’s consolidated financial statements. As at 31 December 2010, total assets and net assets of
Dzung Quat Shipyard One Member Company Limited were VND 7,039,429 million and (VND 23,449 million), respectively.
At the date of this report, Vietnam Oil and Gas Group - Holding Company was in progress of transferring Nhon Trach Specialized
Shipyard One Member Company Limited to PetroVietnam Technical Service Corporation (PTSC) and transferring Lai Vu Shipyard
One Member Company Limited to Ocean Commercial Joint Stock Bank (Ocean Bank).
At the date of this report, there have been no official documents issued by relevant authorities concerning the values of assets and
liabilities payable due from Dzung Quat Shipyard One Member Company Limited and amount that the Group shall have to pay to
Vinashin. These values are subject to change, depending on the official approval thereon from relevant authorities.
14. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Detail of the Group’s share of net assets of associates and joint ventures as at 31 December 2010 was as follows:
31/12/2010
VND Million
31/12/2009
VND Million
16,190,632
285,177
16,806,077
(118,576)
16,475,809
16,687,501
Cost of investments
Share of net profits of joint-ventures, associates and others
Details of the Group’s associates as at 31 December 2010 were as follows:
Name of Associates
Binh Thuan Trading JSC
My Phuc Petroleum Investment JSC
Hoa Cam Industrial Zone Investment JSC
Thuan An General Trading JSC
COMECO
Song Hong Energy JSC
Green Indochina Development JSC
Nghi Son Refinery and Petrochemical Co., Ltd.
Metroco Song Hong JSC
Nam Chien Hydroelectric JSC
Ocean Commercial Joint Stock Bank
Petechim Trading JSC
Petro Capital and Infrastructure Investment JSC
Petrovietnam SSG Real Estate JSC
Petrovietnam Insurance Service JSC
Petrovietnam Biofuels JSC
Petrovietnam Finance Land JSC
Petrovietnam Trade Union Finance Invesment Corporation
Vinabenny Energy JSC
Petrovietnam Low Pressure Gas Distribution JSC
Proportion Proportion Principal
Place of
incorporation of ownership of voting activity
interest power held
& operation
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
35.39%
26.35%
9.56%
22.21%
27.85%
43.90%
35.42%
25.10%
17.96%
38.90%
20.00%
29.00%
26.50%
27.65%
13.15%
29.00%
12.57%
35.00%
16.76%
42.67%
35.39%
49.00%
45.50%
22.21%
27.85%
43.90%
34.00%
25.10%
20.00%
40.00%
20.00%
29.00%
44.45%
46.00%
22.22%
39.00%
30.50%
35.00%
20.83%
48.12%
Trading
Investment, construction, services
Industrial zone
Trading
Petroleum trading
Hydroelectricity
Services of mine, telecommunication
Oil refinery, petrochemical
Construction investment
Hydroelectricity
Banking service
Trading
Real estate
Real estate
Insurance services
Biofuels
Real estate
Financial investment
Construction
LPG distribution
(Continued)
Name of Associates
Place of
Proportion Proportion
incorporation of ownershipof voting Principal activity
& operation interest
power held
PVI Investment and Development JSC
Vietubes Co., Ltd.
Viet Laos Hydroelectric JSC
Highland Investment JSC
Vinaconex-PVC Construction Investment JSC
Vang River Hydroelectric JSC
Petro Investment and Services Development JSC
PetroVietnam Gas City Invesment and Development JSC
Mekong Transport JSC
Heerim-PVC International Design JSC
Song Tranh Hydroelectric No.3 JSC
Machino Auto-Parts Co., Ltd.
Fair Field Vietnam Co., Ltd.
Worley Parsons Petrovietnam Engineering JSC
PetroVietnam Finance Investment and Consultancy JSC
Binh Dinh Trading JSC
Thu Duc Trading and Import Export JSC
PetroVietnam Paint JSC
PVC-FECON Pretension Concrete JSC
Kinh Bac Petroleum Construction and Investment JSC
Ham Rong Rubber Tourism JSC
F GAS Petroleum Joint Stock Company
DREAM HOUSE Education Services Ltd.
Asia Pacific Energy JSC
PetroVietnam Manpower Supply & Services JSC
PetroVietnam Technology Development Investment Material Corporation
PetroVietnam Non-destructive Inspection Technology Solution Corporation
PetroVietnam Construction Inspection Survey Joint Stock Company
PetroVietnam Electrical Construction Consultancy Corporation
PetroVietnam Control and Instrumentation JSC
EIC Marine Energy Technology Invesment & Development Corporation
Sai Gon Phu Yen Petroleum JSC
Quang Tri Trading and Service JSC
Petroleum Song Hong Building Material and Construction Installation JSC
Thai Binh Petroleum Tourism and Investment JSC
Petroleum Interior Decoration JSC
Sao Mai - Ben Dinh Petroleum Investment JSC
Lao Cai International Hotel Ltd.
PetroVietnam Mechanical and Electrical Joint Stock Company
Duyen Hai PetroVietnam Investment and Construction JSC (*)
PetroVietnam Media JSC (*)
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
26.69%
12.35%
21.59%
8.58%
8.24%
33.10%
29.00%
35.51%
20.21%
18.13%
20.00%
4.45%
25.00%
34.79%
36.45%
31.54%
44.83%
10.25%
11.95%
7.74%
17.65%
8.81%
17.27%
35.00%
21.45%
19.04%
19.04%
19.04%
19.04%
19.04%
19.04%
26.18%
45.00%
5.74%
16.15%
14.82%
21.08%
12.61%
20.71%
33.05%
44.01%
45.81%
29.98%
22.00%
30.00%
20.00%
33.07%
29.00%
35.51%
33.30%
44.00%
20.00%
29.00%
25.00%
42.50%
48.22%
31.54%
44.83%
40.00%
35.00%
23.45%
35.00%
25.00%
49.00%
35.00%
29.63%
29.00%
29.00%
29.00%
29.00%
29.00%
29.00%
39.00%
45.00%
38.89%
39.20%
35.97%
42.05%
25.00%
36.00%
71.00%
74.39%
Services
Hydroelectricity trading
Trading, services, afforestation
Construction
Hydroelectricity
Construction of urban areas
LPG distribution
Transportation
Design
Hydroelectric
Auto-parts manufacturing
Seismic processing
Design
Trading
Trading
Industrial paint production
Pretension concrete production
Construction
Tourism services
LPG distribution
Educational services
Energy
Human resouces
Building materials supplying
Technological solution
Geological study & inspection
Investment consultancy
Control and automation
Trading
Petroleum trading
Trading
Building materials supplying
Hospitality
Decoration
Investment services
Hospitality
Mechatronic
Construction
Media
ANNUAL REPORT 2010
69
(Continued)
(*) Although, the Group holds above 50% of voting power of Duyen Hai PetroVietnam Investment and Construction JSC and
PetroVietnam Media JSC, however, the Group has only significant influence over them as the Group has not obtained the majority
voting right at the Board of Management’s meetings of these companies.
Details of the Group’s joint ventures as at 31 December 2010 were as follows:
Principal
Place of
Proportion
activity
incorporationof ownership
& operation
interest
Vietsovpetro Joint Venture (**)
Vietnam
50.00%
Crude oil production
Rusvietpetro Joint Venture Company
Russia
49.00%
Gazpromviet Co., Ltd.
Russia
49.00%
Petromacareo Joint Venture Company
Venezuela
40.00%
Offshore Floating Terminal (Ruby) Vietnam Co., Ltd.
Malaysia
35.96%
Ship services
Petrovietnam Oil Stockpile Co., Ltd
Vietnam
34.93%
Storage construction investment
Malaysia Vietnam Offshore Terminal Co., Ltd.
Malaysia
29.37%
Ship services
Orient Petrochemical and Bio-fuels Joint Stock Company
Vietnam
29.00%
Bio-fuels
PetroVietnam Drilling Production Testers International Ltd.
Vietnam
27.32%
Services
PetroVietnam Drilling Tubular Management Co., Ltd
Vietnam
27.32%
Tubular services
BJ-PV Drilling Services Joint Venture Company
Vietnam
26.25%
Services
Ecological Tourism and Preservation Services Joint Venture Company
Vietnam
24.72%
Tourism services
Singapore
19.78%
Petroleum services
Rong Doi MV12 Pte. Ltd.
Vietnam
19.16%
Drilling mud
M.I Vietnam Company Ltd.
PetroTower Joint Venture Company
Vietnam
15.56%
Building services
LG-VINA Chemical Joint Venture Company
Vietnam
15.00%
Petroleum production, selling DOP
No. 27 Thai Thinh project - No. 52 Hanoi Housing Investment & Development JSC Vietnam
6.64%
Real estate
Name of Joint ventures
(**) On 5 September 2007, the Government issued Decree No. 142/2007/ND-CP concerning the promulgation of Financial
Management Regulations applicable to Vietnam Oil and Gas Group - Holding Company. Accordingly, 50% of profit distributed
from Vietsovpetro Joint Venture (VSP) is recorded as an amount payable to the State Budget and the remaining 50% were credited
to Owner’s equity as additional capital injection from State Budget. Therefore, the investment in this jointly controlled entity is
always stated at cost and share of net profit (loss) is not recorded in the Group’s consolidated income statement.
In 2010, the Vietnamese Government and the Government of Russian Federation signed an agreement on further cooperation
in geological exploration and petroleum production on Vietnam’s continental shelf within Vietsovpetro joint venture framework.
This agreement takes effect from 01 January 2011 and becomes invalid on 31 December 2030. Interest ownership proportion
of Vietnam Oil and Gas Group in the joint venture (Vietsovpetro) is 51%. The reflection of this interest in joint venture for the
following years is subject to change, depending on the revised Charter and financial management regulations of Vietnam Oil and
Gas Group – Holding Company.
(Continued)
15 OTHER LONG-TERM INVESTMENTS
Long-term loans (*)
Investments in other entities
Investment in shares
Bonds
Long-term deposits
Investments in other funds and projects
Long-term trust investments
Others
31/12/2010
VND Million
31/12/2009
VND Million
23,009,314
1,759,520
807,872
408,000
245,067
146,215
72,685
50,806
15,391,074
405,641
777,833
105,726
326,049
456,987
124,130
22,752
26,499,479
17,610,192
(*) Long-term loans represent the Group’s loan to Rusvietpetro (incorporated in Russian Federation) and other entities outside the
Group. The loan provided to Rusvietpetro has a term of 5 years, of which 1.5 year is grace period and with interest equaling annual
SIBOR and principal of USD 399 million as at 31 December 2010 (2009: USD 139 million). Other long-term loans mainly represent
loans provided to local economic entities with a term of over 01 year by PetroVietnam Finance Joint Stock Corporation.
16.LONG-TERM PREPAYMENTS
Exploration & development expenses of oil, gas fields under production
Goodwill incurred in revaluation for initial public offering
Foreign exchange losses in the construction stage
Fees for the credit agreements
Land, ground and office renting expenses
Maintenance and repair expenses
Gas cylinders
Tool and supplies
Others
31/12/2010
VND Million
31/12/2009
VND Million
32,348,216
3,496,998
2,822,896
689,025
540,863
420,625
384,906
281,215
575,324
25,310,990
494,007
166,530
216,974
353,942
250,704
104,428
41,560,068
26,897,575
31/12/2010
VND Million
31/12/2009
VND Million
10,246,211
6,930,289
619,458
6,493,232
6,151,661
619,418
17,795,958
13,264,311
17.EXPLORATION EXPENSE
Domestic exploration expenses
Oversea exploration expenses
Project expenses (*)
(*) Project expenses which represent general and administration expenses and expenses relating to the tasks of petroleum
searching and prospect evaluation incurred by PetroVietnam Exploration and Production Corporation Limited have not yet been
ANNUAL REPORT 2010
71
(Continued)
approved by competent authority for write-off. At the date of this report, the Group has performing necessary procedures for
write-off of such expenses.
18.DEVELOPMENT EXPENSE
Domestic development expenses
Oversea development expenses
31/12/2010
VND Million
31/12/2009
VND Million
6,257,234
1,429,087
3,157,784
281,053
7,686,321
3,438,837
31/12/2010
VND Million
31/12/2009
VND Million
41,678,975
8,828,552
28,591,675
4,132,012
50,507,527
32,723,687
19.SHORT-TERM LOANS AND LIABILITIES
Short-term loans
Current portion of long-term loans (See Note 23)
Short-term loans represent loans denominated in EUR, USD and VND, which were obtained from commercial banks and other
credit institutions.
20. TAXES AND AMOUNTS PAYABLE TO THE STATE BUDGET
31/12/2010
VND Million
Profit payable to the State Budget (*)
Corporate income tax
Additional tax charge (**)
Natural resource tax
Other taxes
31/12/2009
VND Million
11,946,895
5,476,696
1,085,430
911,422
2,399,240
8,265,331
4,042,897
1,029,797
1,573,948
21,819,683
14,911,973
(*) The profit payable to the State Budget represents share of profit oil distributed from Vietsovpetro and profit oil earned under
Production Sharing Contracts and Joint Operating Companies (PSCs, JOCs).
(**) Additional tax charge will be determined in accordance with Decision No. 1942/QD-TTg dated 25 November 2009 issued by
the Prime Minister on the collection for regulatory purpose in respect of refinery and petrochemical products locally consumed.
Accordingly, refinery and petrochemical products (gasoline, petroleum, LPG) produced and processed by the Group for local
consumption are subject to additional tax charge. Additional tax charge is determined by having actual consumption multiplied
by (x) price determined for regulated collection purpose, multiplied by (x) the regulated rate.
(Continued)
21. ACCRUED EXPENSES
Accrued expenses of petroleum contracts (*)
Major repair costs
Borrowing costs
Provision for abandonment costs of Big Bear field
Accrued foreign petroleum income tax and contractor tax
Other accruals
31/12/2010
'VND Million
31/12/2009
'VND Million
4,691,085
3,292,994
1,349,802
1,044,782
72,857
788,133
2,890,735
1,132,279
558,908
981,381
80,180
390,730
11,239,653
6,034,213
(*) Accrued expenses of petroleum contracts represent the costs payable related to exploration, development and production
activities by operators of petroleum blocks in which the Group has an interest.
22. OTHER CURRENT PAYABLES
Payable to trust investor
Fund for abandonment cost
Payables relating to investment cooperation contract
Settlements of securities transaction by the investors
Tax payable for petroleum contractors
Transferred from Vinashin (See Note 12)
Payables relating to completed contructions
Payables to Dragon Tower project management board
Payables relating to compensation
Payables relating to dividend, joint venture interest
Payables relating to land use right, assets tranfer
Cash advance for petroleum contracts
Payables relating to salary and bonus
Payables to the State Bank of Vietnam relating to interest support program
Goods borrowed payable
Payables relating to shares purchase
Payables to banks for loan interest
Payable to tenderers
Others
31/12/2010
VND Million
31/12/2009
VND Million
3,454,659
2,195,914
840,000
788,368
770,493
667,522
488,277
354,612
328,756
316,229
296,955
209,538
97,046
92,697
74,402
62,236
61,565
12,278
1,450,847
5,346,361
1,353,173
1,600,000
15,174
757,991
563,227
131,787
194,085
39,010
339,701
124,769
84,116
469,548
147,353
65,270
105,159
984,242
12,562,394
12,320,966
ANNUAL REPORT 2010
73
(Continued)
23. LONG-TERM LOANS AND LIABILITIES
US Dollar
Vietnam Dong
Euro
Japanese Yen
31/12/2010
VND Million
31/12/2009
VND Million
64,052,814
6,356,524
4,101,603
1,420,932
53,708,076
5,067,663
1,448,923
75,931,873
60,224,662
Long-term loans represent the loans in USD, VND, EUR and JPY from banks and other credit institutions. These loans are either
unsecured or guaranteed by the Ministry of Finance of S.R. Vietnam or secured by fixed assets.
Interest rates per annum are as follows:
2010 2009 US Dollar
1,85 - 7,7%
1,85 - 5,9%
Vietnam Dong
6,9 - 18,6 %
6,0 - 13,47%
Euro
5,33 - 5,5%
Japanese Yen
5,01 - 5,1%
5,01 - 5,1%
Long term loans are repayable as follows:
On demand or within one year
In the second year
From the third to fifth year inclusive
After five years
Less: Amount due for settlement within one year
(shown under short-term loans and liabilities)
Amount due for settlement after 12 months
Bond issuance (*)
31/12/2010
VND Million
31/12/2009
VND Million
8,828,552
10,483,707
29,646,337
29,598,637
78,557,233
4,132,012
6,343,942
24,947,802
23,641,359
59,065,115
(8,828,552)
(4,132,012)
69,728,681
54,933,103
6,203,192
5,291,559
75,931,873
60,224,662
(*) As a representative for the Group, its subsidiary, PetroVietnam Finance Joint Stock Corporation (“the Corporation”), has issued
the Corporation’s bonds as follows:
In 2007, the Corporation issued VND 1,500 billion of the Corporation’s bonds with the term of 5 years and at the fixed coupon rate
of 8.6% p.a.
In 2008, the Corporation issued VND 466.1 billion and USD 55 million of the Corporation’s bonds with the term of 3 years and at
the annual interest rates for the first year of 17.5% p.a. for bonds in VND and 6.2% p.a. for bonds in USD. The applicable interest
rates for the subsequent years are the average 12-month saving rate with interest paid at maturity date (applicable to VND or USD
(Continued)
deposits) announced by 4 banks (including Vietcombank, BIDV, Vietinbank, and Agribank) plus 0.3% p.a.
In 2009, the Corporation issued VND 811.5 billion and USD 89 million of the Corporation’s bonds with term of 3 years. The annual
interest rate is determined equivalent to 12-month saving interest rate plus 2.75% p.a. for bonds in VND, or plus 0.5% p.a. for bonds
in USD. The interest rates for the first year are fixed at 9.9% - 10.4% p.a. for bonds in VND and at 4.5% p.a. for bonds in USD.
In 2010, the Corporation issued VND 1,000 billion of the Corporation’s bonds with a term of 2 years to Vietnam Joint Stock
Commercial Bank for Industry and Trade at fixed interest rate of 12.5% for the first year.
24.EQUITY
Capital from the State Budget
Profit after tax
Proceeds from subsidiaries' equitization
Funds allocation
Bonus and welfare funds
Funds disbursements
Assets revaluation reserve
Foreign exchange difference
Received PETEC from the Ministry of Industry and
Trade and Dung Quat Shipyard from Vinashin
Reclassification
Others
Owner's
contributed capital
Funds
Retained
earnings
VND Million
VND Million
118,123,967
49,172,236
17,931,893
185,228,096
-
7,055,387
2,326,481
39,292,602
(330,820)
10,298,000
2,310,432
26,912,126
(39,292,602)
(1,004,093)
-
7,055,387
26,912,126
2,326,481
(1,004,093)
(330,820)
10,298,000
2,310,432
519,101
58,992,918
(7,602)
650,725
(58,748,589)
(428,763)
(1,181,860)
(244,329)
18,634
(12,034)
(417,732)
177,628,384
51,597,690
3,139,768
232,365,842
Total
VND Million VND Million
ANNUAL REPORT 2010
75
(Continued)
25. NET SALES
Sales and distribution
Gas processing
Crude oil, gas and condensate
Power
Construction and engineering
Petroleum-based products
Fertilizer
Drilling services
Financial services
Ship and port services
Gas and condensate
Others
2010
VND Million
2009
VND Million
109,912,896
33,454,596
31,666,472
14,785,319
12,540,152
6,922,557
6,202,891
4,691,826
4,506,731
4,165,769
1,175,436
4,805,896
40,314,635
28,268,224
27,807,469
8,411,919
6,558,747
4,067,719
6,586,262
1,972,387
3,330,340
5,542,234
841,483
2,810,016
234,830,541
136,511,435
Net sales of each business activities are stated on the basis that total sales minus sales made to the entites within the Group and
sale deductions.
26. FINANCIAL INCOME
Bank and loan interest income
Foreign exchange gains
Dividends and profit distributed
Others
2010
VND Million
2009
VND Million
6,032,175
4,209,923
1,939,586
1,147,828
13,329,512
3,565,737
2,024,943
1,624,691
920,279
8,135,650
2010
VND Million
5,214,077
2,495,240
408,178
268,206
263,833
2009
VND Million
8,649,534
3,276,857
27. FINANCIAL EXPENSES
Foreign exchange losses
Interest expense
Loss from securities trading
Provision for diminution in value of investments
Others
2,776,999
989,661
349,315
(1,024,354)
185,236
(Continued)
28. PROFIT FROM OTHER ACTIVITIES
Compensation received
Proceeds from selling Certified Emission Reduction
Proceeds from disposals of assets, materials and goods
Revaluation of assets
Others
2010
VND Million
2009
VND Million
258,265
245,843
160,764
137,145
225,009
147,211
65,164
267,187
1,027,026
479,562
2010
VND Million
2009
VND Million
10,496,469
4,231,469
7,855,285
2,732,975
14,727,938
10,588,260
29. CURRENT CORPORATE INCOME TAX EXPENSE
Corporate income tax on exploration and production
Corporate income tax on other activities
Corporate income tax related to cruel oil and gas production under production sharing contracts was determined in accordance
with contracts’ terms and conditions and using tax rates fixed for each oil block as regulated by the Ministry of Finance.
30. DEFERRED CORPORATE INCOME TAX EXPENSE
Deferred tax liabilities:
Exploration
and production
VND Million
Other activities
VND Million
Total
VND Million
3,418,139
67,641
3,485,780
Charge for the year
1,831,663
29,340
1,861,003
5,249,802
96,981
5,346,783
347,261
92,970
440,231
5,597,063
189,951
5,787,014
Charge for the year
ANNUAL REPORT 2010
77
(Continued)
Deferred tax assets:
Other activities
VND Million
Total
VND Million
127,750
127,750
Charge for the year
(53,747)
(53,747)
74,003
74,003
Charge for the year
Adjustment upon equitization finalization
Others
241,199
(57,188)
(1,048)
241,199
(57,188)
(1,048)
256,966
256,966
Total deferred tax expenses were charged to the consolidated income statement of the year as follows:
31.COMMITMENTS
Operating lease commitments
At the balance sheet date, the Group had outstanding commitments under non-cancelable operating leases, which fall due as
follows:
Within one year
From the two to fifth year inclusive
After five years
31/12/2010
VND Million
31/12/2009
VND Million
1,983,941
3,775,511
776,481
927,153
998,880
363,118
6,535,933
2,289,151
Purchasing commitments
The Group commits that it will purchase gas from gas owners of blocks 06.1, 11.2, PM3 CAA and 46 Cai Nuoc for a term of
approximately 20 years with a minimum annual gas quantity of 6.922 billion cubic meters (as defined in the Gas Sale and Purchase
Agreement (“GSPA”)).
Selling commitments
The Group commits to sell a minimum annual natural gas quantity of 1.85 billion cubic meters of Nam Con Son gas to Vietnam
Electricity Group valid until the end of stabilization period as defined in the Gas Sale Agreement (“GSA”).
(Continued)
The Group also commits to sell Nam Con Son gas to Phu My 3 BOT (PM3) and Mekong Energy Company (PM 2.2). These companies
will undertake to consume an annual fixed gas quantity of 1.7 billion cubic meters valid until 2023.
Moreover, the Group commits to sell an annual fixed gas quantity of 1.5 billion cubic meters of PM3 CAA and 46 Cai Nuoc block
to Ca Mau Power Company valid until 2023.
Capital commitments
The Group has commitments relating to investments in capital construction, machinery and equipment in 2011 amounting to
VND 62,437 billion, USD 252 million and EUR 76 million.
The Group has capital contribution commitments relating to oil and gas exploration projects in Vietnam and foreign countries in
2011 with the total amount of VND 46,419 billion.
32. CONTINGENT LIABILITIES
As at 31 December 2010, the Group had outstanding contingent liabilities and other commitment obligations toward banks and
other guaranteed parties, which arose during the normal course of business operation. It is anticipated that no material liabilities
will arise. Vietnam Oil and Gas Group - Holding Company also provided certain long-term loan guarantees for its subsidiaries with
the total outstanding principal of VND 10,508 billion as at 31 December 2010 (31 December 2009: VND 6,161 billion).
Under the Petroleum Law in Vietnam, oil and gas contractors have to remove the oil and gas production facilities and restore
the original environment when finishing exploration activities. The annual restoration fund is required to be made starting from
the year the field has commercial petroleum production. The annual abandonment cost is determined based on total amount
to be provided, production volumes and proved reserves. The petroleum contractors have to ensure that the restoration fund
is sufficient to cover necessary abandonment costs one year before a petroleum contract expires. As at 31 December 2010,
provision for abandonment costs for some petroleum fields has not yet been provided in accordance with Vietnam Petroleum
Law. At the date of this report, abandonment costs for certain aforesaid petroleum fields were not yet determined. The Board of
Management has evaluated and believed that the unrecorded amount was not material to the consolidated financial statements
for the year ended 31 December 2010
33.SUBSEQUENT EVENTS
On 29 January 2011, the Prime Minister issued Decision No.190/QD-TTg approving Charter on organization and operation of
Vietnam Oil and Gas Group. Accordingly, the Group is further delegated to explore and produce oil and gas on the whole territory,
maritime territory and exclusive economic zone (EEZ) of Vietnam and sign petroleum contracts with organizations and individuals
for implementation of petroleum activities in Vietnam in compliance with Vietnam Petroleum Law and other regulations required
by law. The Group has obligations to perform exploitation in a reasonable and efficient manner, concerning oil and gas, to protect
natural resources and environment and to perform other obligations relating to the exploitation of national natural resources as
required by law.
On 22 April 2011, the Group signed an export credit loan contract with the syndication of five international banks with Hongkong
and Shanghai Banking Corporation Limited (HSBC) acting as mandated lead arranger, including: China Development Bank (CDB),
The Bank of Tokyo-Mitsubishi UFJ Limited (BTMU), Credit Suisse AG (Credit Swiss) and Intesa SanPaolo S.p.A, Singapore Branch
(Intesa) to finance bidding packages relating to Vung Ang Thermal Power Plant 1 Project. The loans totaled USD904 million with
a term of 10-15 years with the inclusion of 3-year grace period and were guaranteed by the Ministry of Finance. The export credit
loan contracts were insured by the two export credit agencies: the Euler Hermer Kreditversicherungs AG (Hermes) from Germany
and China Export and Credit Insurance Corporation (Sinosure) from China
ANNUAL REPORT 2010
79
(Continued)
34. COMPARATIVE FIGURES
Comparative figures are the figures of 2009 presented in the consolidated financial statements for the years ended 31 December
2009, 2008 and 2007 which were re-issued and approved by the Members’ Council on 17 September 2010. The effect of
adjustments is as follows:
31/12/2009
Previously reported
VND Million
Consolidated balance sheet
Goodwill
Deferred tax liabilities
Other owner's capital
Retained earnings
Consolidated income statement
General and administration expenses
Deferred tax expense
Adjustment
VND Million
31/12/2009
Restated
VND Million
1,791,662
96,981
16,968
23,108,524
(658,540)
5,249,802
1,736,040
(5,176,631)
1,133,122
5,346,783
1,753,008
17,931,893
4,326,154
83,086
(73,171)
1,831,663
4,252,983
1,914,749
Subsequent to the issuance of the Group’s previously issued 2009 consolidated financial statements, the Board of Management
has been able to determine previously unrecorded deferred tax liabilities and deferred tax expenses related to capitalized
exploration and development expenditure for oil and gas fields having commercial production. Deferred tax expense arises from
taxable temporarily differences between carrying amount of exploration and development expenditures and recoverable cost for
income tax purpose. As a result, the previously consolidated financial statements have been restated from the amounts previously
reported to comply with Vietnamese Accounting Standards. In addition, the Group also determined and eliminated the Group’s
portion of the share premium in the subsidiaries which impacts the share premium amount and the goodwill recorded in the
consolidated balance sheet.
_______________________________
Hanoi, 30 June 2011

Annual report 2010

Transcription

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