The Vietnam National Petroleum Group (Petrolimex), which holds the largest market share of fuel distribution in the country with over 48 percent, has reported losses in 2014, mostly due to its loss-making subsidiary in Singapore.

The state-run group suffered a VND9 billion (US$414,000) post-tax loss, though it had previously posted a pre-tax profit of VND320 billion ($14.7 million), Tran Ngoc Nam, deputy general director of Petrolimex, told Tuoi Tre (Youth) newspaper on Wednesday.

Nam provided the information to Tuoi Tre one day after the fuel wholesaler held its annual general meeting, which local reporters were banned from attending.

In November last year, Petrolimex said in a report to the Ministry of Industry and Trade, its state management agency, that the firm ran a VND1.4 trillion ($64.4 million) profit in the first nine months of 2014.

But in a report submitted to the ministry one month later, Bui Ngoc Bao, the chairman of Petrolimex, said the company suffered a loss of more than VND1.3 trillion ($59.8 million) in the fourth quarter of 2014.

The complicated global geopolitical situation caused a deep and prolonged decline in global oil prices in 2014, leaving an adverse impact on the business activities of Petrolimex Singapore, a subsidiary of Petrolimex, according to the report.

The subsidiary incurred a $14.82 million loss in the first 11 months of 2014, and expected to more than double the loss rate to $31.38 million by the end of that year.

The report also showed that the loss was mainly caused by the fact that the firm had previously bought a lot of oil at high prices of $120.91 per barrel to deposit at a bonded warehouse in Van Phong in the central Vietnamese province of Quang Ngai.

But as oil prices fell sharply during the course of 2014, the firm could not sell the oil it had deposited in Vietnam, resulting in long-term unsold inventory.

In addition, other business activities incurred another $2 million loss.

"Petrolimex Singapore is facing big losses, and has no ability to pay," said the report.

In another report on the performance of Petrolimex Singapore, a Petrolimex inspection team said there were many issues to be reviewed in terms of the governance of the subsidiary.

"The company mainly bought oil using forward contracts, accounting for 70-80 percent in 2014, while it sold through spot contracts, as only about 40-50 percent of the sales were done via forward contracts,” said the report.

A spot contract for oil is a contract which buys or sells oil on the spot date, which is normally two business days after the trade date, while in forward contracts, the contract terms are agreed on but delivery and payment occur at a specific future date.

According to the consolidated financial statements of Petrolimex, audited by Deloitte, the firm enjoyed a nearly VND1.58 trillion ($72.7 million) profit in 2013.

A source close to Tuoi Tre who joined the annual general meeting on Wednesday said that Petrolimex targeted a pre-tax consolidated profit of VND2.45 trillion ($112.7 million) in 2015 from a total revenue of VND154 trillion ($7 billion).

As announced at the meeting, Petrolimex had a VND461 billion ($21.2 million) profit in the first quarter, 80.6 percent higher than the same period last year.

In particular, Petrolimex leaders announced at the meeting a plan to continue issuing more shares to reduce the ownership of the state to 65-75 percent from the current rate of 95 percent.

It is expected that a strategic partner, Japanese JX Nippon Oil and Energy, will purchase a 20 percent stake in Petrolimex, which also aims to list shares on the local stock market this year.

According to Vietnam Customs, by the end of April, the total volume of petroleum imported into the country reached 3.58 million metric tons, up 22.5 percent year on year.

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