Hanoi (VNA) –  The oil andgas sector needs to adjust its production and business strategy so that itcould compete with foreign rivals locally and internationally, saidparticipants at a seminar in Hanoi on September 26.

They agreed that the sector should urgently build a human resources managementsystem in accordance with international standards and put emphasis on the gasindustry and consider it the driving force for the development of the wholesector.

At the same time, research units of the Vietnam National Oil and Gas Group(PetroVietnam) should focus on research and application of technology to reducethe cost of exploration, exploitation and to diversify processed oil products.

The oil and gas industry is one of the country’s key economic sectors, makingimportant contributions to the national economy, but it is facing exceptionallytough challenges, especially in the context of deeper internationalintegration, they said.

Vu Van Ha, deputy editor-in-chief of the Communist Review, toldseminar participants that the oil and gas industry, represented by PetroVietnam,annually contributed 25-30 percent of the State’s budget revenues.

While state-owned enterprises (excluding the oil and gas industry) contributedabout 42 percent of GDP, PetroVietnam separately accounted for 16–18 percent ofGDP, the highest level of one company in the 2008-2015 period, Ha said.

In addition, the development of the oil and gas industry contributed tonational energy security, playing an important role in Vietnam’s sea strategyand contributing to the protection of national sovereignty, he added.

Its achievements raised Vietnam position in the community of oil producingcountries and contributed to enhancing the country’s international reputation,while boosting international cooperation and investment activities in key areasincluding exploration and exploitation, oil refineries, gas services and powerservices.

Overall, the industry helped enhance the value of oil and gas resources,promoting national industrialisation and modernisation and improving thecompetitive position of Vietnam’s oil and gas industry in the world, Ha said.

However, he added, the national oil and gas industry was facing tough goals.

Under the development strategy of the oil and gas industry towards 2025, theindustry aims to annually increase oil and gas reserves to 35-40 million tonnesof oil equivalent, oil and gas exploitation will increase by 10-36 percent foreach five-year period, of which the exploitation from overseas oil field mustbe 3 to 5 times higher than the current levels, the sector’s annual revenue isexpected to grow by 10 to 15 percent.

"The future for the country’s oil and gas industry will be tougher as themajor oil fields near the shores are close to exhausting production. Thecalling for foreign investment in oil and gas exploration will also be moredifficult," Ha said.

Many large PetroVietnam projects lacked capital and access to credit whileborrowing from international organisations is getting increasingly harder, hesaid. In addition, the company’s skilled human resources supply was becominglimited. Implementation of key projects abroad also faced obstacles, greatlyaffecting the achievements of short-term and long-term goals of the wholesector, Ha added.

Truong Dinh Tuyen, former minister of trade, said that under the free tradeagreements and commitments that Vietnam had signed, import taxes on diesel andmazut would be zeroed out, also affecting the domestic oil and gas industry.

Thus, local suppliers would face stiff competition from not only foreigninvestors but also domestic importers due to the tariff elimination, Tuyensaid.

With the establishment of the ASEAN Economic Community (AEC), in addition tothe tariff reduction issue, there would be a shift in the labour force withinthe industry, leading to “brain drain” for the sector, he forecast. Forexample, some of PetroVietnam’s highly-skilled workers might move to other oiland gas groups from ASEAN countries if offered better working conditions.

The seminar was co-held by the Communist Review, a magazine of the CommunistParty of Vietnam, and the Vietnam Union of Science and Technology Associations.-VNA