HANOI -- Pressure is mounting on Vietnam Oil and Gas Group, the country's state-owned oil company, after a government report revealed massive losses on its overseas projects.
A report by the Ministry of Industry and Trade found that PetroVietnam, as the company is known, has frozen or is unable to recoup its investments in 11 of its 13 overseas projects, local media reported.
Losses from the projects are estimated at nearly $900 million.
It is unclear how much blame the government will assign to management for the financial missteps. PetroVietnam CEO Nguyen Vu Truong Son announced his resignation, and the Ministry of Public Security has launched its own investigation.
Son became CEO of PetroVietnam Exploration Production, an oil development unit, in 2009 and was named CEO of the parent company in 2016.
The failures in overseas exploration and mining projects mostly happened between 2009 and 2012, according to the industry ministry's report, soSon was held responsible.
The company's Venezuelan project, which is expected to log one of the company's biggest losses, began in 2010. The $12.6 billion joint venture had been expected to produce 200,000 barrels of crude oil a day. But Venezuela's unstable economy and runaway inflation have eroded the project's profitability. PetroVietnam is estimated to have lost nearly $500 million on that project alone.
The report found that projects in Peru, Malaysia, Myanmar and Iran had been suspended, as they did not deliver the expected results. Most of the projects had failed, it concluded.
The security ministry is investigating whether some of the lost funds ended up in the pockets of PetroVietnam officials, according to a diplomatic source. "People are worried because it is not yet known how far the investigation will go," the source said.
In 2017, Dinh La Thang, PetroVietnam's ex-chairman and a former transport minister, was arrested for costing the company about $36 million in losses during his time as head of the oil company. Thang was sentenced to 31 years in prison in January 2018, ostensibly for his role in the company's ballooning losses, although some say he was actually jailed for corruption.
Thang was close to former Prime Minister Nguyen Tan Dung, archrival to current Communist Party chief and President Nguyen Phu Trong. Some experts say Thang's arrest was part of a power struggle that took place when Trong became president last October.
Political power in Vietnam is increasingly in Trong's hands. State-owned companies avoid making important decisions for fear of being accused of making bad business decisions. With the government becoming more risk-averse, "all kinds of administrative procedures are slightly behind schedule," said a representative with a Japanese trading company.
Speculation is rife that Trong will remain in power after his current term ends in early 2021, prompting caution among government officials and business leaders.