The Investigative Police Department for Corruption, Smuggling and Economic Crimes at the Ministry of Public Security is investigating a loss-making oil and gas project worth more than US$1.8 billion of the State-run Vietnam Oil and Gas Group (PVN) in Venezuela.

An oil drilling rig on the Junin-2 oil field in Venezuela’s heavy-crude Orinoco Belt 

The department is looking into a number of legal violations in the execution of the joint venture project on the exploitation and upgrade of the Junin-2 oil field, located in Venezuela’s extra-heavy crude Orinoco Belt.

The project is implemented by PetroVietnam Exploration Production Corporation (PVEP), a subsidiary of PVN, and its Venezuelan counterpart Petróleos de Venezuela (PDVSA), or Petroleum of Venezuela in English.

In an attempt to facilitate the probe, the police department has asked PVN to provide all documents relating to the implementation of the project.

PVEP’s investment in the Junin-2 venture had initially cost US$1.825 billion over the 2010-2015 period, making it one of Vietnam’s biggest oil and gas projects abroad, according to the project’s investment certificate.

The project was expected to produce around 50,000 barrels of crude per day in the first phase and 200,000 per day in the second phase.

To carry out this project, PVEP set up a joint venture oil company called PetroMacareo, with Venezuelan state-owned oil and natural gas company PDVSA, in which the former held a 40% stake.

The project, however, made little progress, which prompted the then prime minister to instruct PVEP to suspend the investment in December 2013.

A long-standing currency control system has complicated payments to foreign firms in Venezuela and the repatriation of profits. PVN said in 2014 that Venezuela’s investment environment was not suitable for the firm, especially due to the country’s extremely high inflation rates.

PVN General Director Nguyen Vu Truong Son has submitted his letter of resignation – PHOTO: PVN

In a related development, PVN General Director Nguyen Vu Truong Son, 57, has tendered his resignation after three years of holding the post, although the reason for his resignation is unknown.

According to procedures, his resignation has to be approved by the Committee for Management of State Capital at Enterprises and the Prime Minister.

Since his involvement in the oil and gas industry in 1987, Son has risen through the ranks at PVN’s subsidiaries.

He used to serve as the deputy general director of the Vietnam-Russia oil and gas joint venture Vietsovpetro and director and deputy party secretary of Vietsovpetro’s Oil and Gas Production Division.

He was appointed general director of PVEP in July 2009 and later served as PVN’s deputy general director from February 2012, until he was promoted to general director and board member in March 2016.

SGT