What challenges for PVTRANS

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PVTRANS just announced its business plan for 2024, with a goal of consolidated revenue of VND 8,800 billion and profit after taxes of VND 760 billion, down 7.9% and 37.8% from 2023, respectively.

Rejuvenating the fleet

PVTRANS expects to invest 35 to 40 more vessels between 2024 and 2025, increasing its total fleet load by 80% above the existing level to 2.5 million DWT. PVTRANS plans to invest more than VND 3,100 billion on new vessels this year alone. As a result, PVTRANS will have two transitional projects from last year to the next with a total investment capital of $80 million, including one VLGC or Aframax vessel with a maximum value of $58 million and one chemical petroleum tanker (10,000 - 25,000 DWT) or one freight vessel (25,000 - 75,000 DWT).

At the same time, PVTRANS is initiating a new project this year with an estimated cost of up to $52 million (equal to VND 1,281 billion) to invest in two MR vessels (45,000 - 55,000 DWT) or one Aframax vessel (80.000 - 120.000 DWT). In addition, the company plans to invest VND 262 billion in three companies: PVTRANS Logistics business, HH Thang Long Company, and Indochina Transport Share Company.

The aforementioned fact shows that PVTRANS continues to pursue its fleet rejuvenation strategy, which has previously proven effective, allowing the firm to win several contracts in the worldwide market.

According to analysts, if PVTRANS's 2024 fleet expansion investment plan is properly completed, the company's entire fleet capacity by the end of 2024 is expected to expand by 40% over 2023. This will help PVTRANS increase its medium-term competitiveness in the worldwide market.

Of the 50 tankers serving PVTRANS's activities, up to 41 are in global trade, carrying up to 70% of the cargo. Furthermore, rising crude oil prices, the Russian-Ukrainian war, the Israeli-Iranian conflict, as well as Houthi attacks on cargo ships going through the Red Sea, will all contribute to PVTRANS and its subsidiaries' freight rates.

>> Who benefits from the soaring tanker freight rates?

Challenges ahead

Mr. Nguyen Duyen Hieu, General Director of PVTRANS said the prospects of the liquid transportation sector, including crude oil and oil products, remain optimistic due to Atlantic area exports and China's sustained consumption demand. Furthermore, geopolitical tensions remain a supporting factor, since shipping durations are lengthened due to restricted ship supply.

Regarding the business plan, PVTRANS stated that it will organize adequate ship exploitation; provide safe, timely transportation of crude oil, oil products, and exhaust gases from Dung Quot Oil Refinery and Dung Paint Oil Chemicals; and continue to preserve and increase additional contracts.

However, many analysts predicted that PVTRANS would confront numerous obstacles and challenges in 2024. This is why PVTRANS adopted a lower business plan than in 2023.

The first is a lack of funding. This is also the topic raised by Mr. Pham Viet Anh, Chairman of the PVT Board of Directors, during the 2024 General Shareholders' Meeting. "The main issue with PVTRANS is capital. To become one of PetroVietnam's three main companies, PVTRANS's capital must be comparable to that of PV Drilling or Vietnam Petroleum Engineering Services”, said Pham Viet Anh.

Second, the LNG shipping sector in Vietnam is insufficiently appealing when just one LNG warehouse with a capacity of 1 million tonnes of PV GAS per year comes into operation, requiring 15 - 18 tankers to serve this storage.

Third, if the fleet expansion plan did not go as expected, PVTRANS would find it difficult to carry out its business strategy.