Will Vietnam Exploit More Oil For Higher GDP Growth?

VietNamNet Bridge - The report on the GDP growth scenario of Vietnam in 2018 does not include the strengthening of oil exploitation, which had been expected.

The world oil price saw strong recovery in the first months of the year

The world oil price saw strong recovery in the first months of the year. In May, the Brent oil price, for the first time in the last four years, climbed to $80 per barrel. The price decreased later, but only slightly, now hovering around $76.44 per barrel.

Will Vietnam consider strengthening oil exploitation to take full advantage of the oil price hike to boost growth?

In mid-2015, the exploitation of more oil to ensure GDP growth was put forward at the National Assembly’s session. Vietnam’s GDP growth rate then was at a half-decade high.

At the same time last year, at the National Assembly’s third session, the government proposed to exploit one million more ton of oil to gain the targeted growth rate of 6.7 percent in 2018. 

Analysts then predicted that 6.7 percent was an unattainable goal following the low GDP growth rate of 5.1 percent in Q1.

It was estimated that every ton of exploited oil would help increase Vietnam’s GDP by 0.3 percent.

However, Tran Quoc Phuong from the Ministry of Planning and Investment (MPI) affirmed that this year’s economic growth scenario doesn’t mention the additional oil exploitation to gain the targeted growth rate.

He said the reports to the government all assumed that the oil price would be stable. This means that scenarios on economic development are built based on the development of processing, manufacturing industries, agriculture, service and tourism, not on the oil price increase.

Regarding oil and gas exploitation, he said this will depend on three factors – business plans, enterprises’ capability and market demand.

‘Growing on crude oil’ and ‘mining’ were the phrases that heated up the National Assembly’s session on May 25-26.

A debate was stirred by Hoang Quang Ham, a National Assembly Deputy from Phu Tho province, who said Vietnam would not have gained such a high GDP growth rate in 2017 if it had not had the extra 1.29 million tons of crude oil. 

Meanwhile, Tran Quang Chieu, a deputy from Nam Dinh, denied that GDP growth in 2017 relied on crude oil and mining. Vietnam planned to exploit 15.2 million tons but the real output was 13.5 million.

As for coal mining, Vietnam exploited 38.7 million tons in 2017 and plans 40.2 million tons in 2018, but the government decided to exploit 38.2 million tons only.

Nguyen Quang Dung from Quang Nam also argued that crude oil contributes to GDP growth, but this does not mean the GDP growth rate relies on crude oil.

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