The Vietnam National Oil and Gas Group, commonly known as PetroVietnam or PVN, is facing a number of challenges in its Venezuela investment, the state-run oil and gas giant said at a briefing on Friday.

New issues have arisen at the Junin 2 - Venezuela block, which is PVN’s largest outbound investment, costing an enormous US$12 billion, PVN chairman Phung Dinh Thuc told reporters.

The Junin 2 – Venezuela rig is managed by PetroVietnam Exploration Production Corporation (PVEP), a PVN subsidiary, and the Venezuelan Petroleum Corporation (CVP). PVEP exploited the very first batch of oil from the venue in late September 2012.

“The challenges include the distant geographical location of the rig, and the high inflation of up to 33 percent at the South American country,” Thuc said.

“Moreover, the disparity of the foreign exchange rates between the official and the ‘black market’ is as much as four times,” he added.

Thuc however confirmed that the project remains normal, even though a little slowed down.

“We also have to share the infrastructure system with other projects from Russia, the US, and China at the area, so progress was slowed down at times,” he added.

Thuc refused to comment on the question whether PVN will withdraw from the project, saying “no investors have withdrawn, so do we.”

$1-billion dividends

PVN also released some figures in its financial report for the first quarter of this year.

Dung Quat Refinery, the country’s only such facility, produced some 1.51 million tons of products in Q1/2013, PVN said, adding the refinery is expected to rake in VND2.1 trillion ($100.96 million) worth of profit this year.

The combined revenues of PVN’s subsidiaries in the first quarter were estimated at VND178.7 trillion, up 3 percent year on year.

PVN thus enjoyed nearly $1 billion worth of dividends from its subsidiaries, the company said.

PVN contributed VND43 trillion to the state budget, while its pre-tax profit is only VND13.3 trillion, or 27 percent of the targeted figure.

The oil and gas giant also asserted that its subsidiary PVOil is achieving good business results in Laos, as fuel prices there are determined by market force.

PVN will also restructure and optimize the fuel wholesaling system, it added.

“PVN will transfer its shares at the PETEC to PVOil, and thus will be only in charge of managing PVOil,” the company said.