The Vietnam National Oil and Gas Group, better known as PetroVietnam, has announced to stop its oil exploitation operations in Venezuela due to political instability and high inflation in this South American country.

Though the exploitation (on a trial basis) at Junin 2 oilfield was good enough, due to political instability and high inflation in Venezuela, PetroVietnam had to stop the project from last year, PetroVietnam Exploration Production Corporation (PVEP), a subsidiary of PetroVietnam, said in a press release.

According to PVEP, inflation in Venezuela in recent years has hovered around 30-60 percent per year, plus the exchange rate between the local currency and the dollar on the free market rose 10-fold over the official rate.

As over 50 percent of services run by PetroVietnam must be paid in dollars bought from the free market in the country, this inflated the cost.

As a result, the government has directed Petro Vietnam to stop the trial exploitation at the Junin 2 oilfield in 2013.

However, on the basis of research conducted to evaluate the entire project, and negotiations with the host country on terms of contract, PetroVietnam will continue the project there when all the concerning problem is clarified, in particular to avoid the risk of the exchange rate fluctuation and inflation.

Apart from Junin 2 project, PVEP is currently involved in over 50 projects on exploration and exploitation of oil and gas at home and abroad. Of these, there are 40 projects in Vietnam and 15 other projects overseas, of which three projects abroad, including two in Malaysia, and one project Peru, have begun to bring back profit to the group.

Additionally, an oil exploitation project in Algieri also being deployed, and is expected to start to generate income by the end of this year.

The project, with a reserve of 1.4 billion barrels of oil, will help PVEP earn more than 600 million barrels of oil as it contributed 40 percent stake in the joint venture there.

Meanwhile, PetroVietnam is currently implementing 17 projects beyond Vietnams’ borders, including 4 projects in Eastern Europe, 6 in Southeast Asia, 4 projects in Africa and the Middle East, and 3 in South America. Of these, eight projects have generated incomes for PetroVietnam.

With the implementation of 17 projects abroad, PetroVienam has owned 170 million tons of oil equivalents. In return, the amount PetroVietnam spent on gas projects was $ 3.7 billion.

The group has earned $2.06 billion dollars and repatriated $470 million to Vietnam. With an after-tax profit of around $457 million, the return on investments was about 17 percent, PetroVietnam said.

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