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Hung To Vi
Switched on
Colette Steckel talks to the man counting the costs of delivering gas to Vietnam - BP Vietnam's exploration and production controller, Hung To Vi
At just 39 years old, Hung To Vi is one of the most dynamic finance professionals making an impact on Vietnam's business environment. This is just as well - despite it's ranking as one of the fastest developing economies in the world, the country is in the middle of an energy supply crisis.
According to a recent World Bank report on Vietnam's power sector, aggressive expansion in capacity is needed to meet rapidly increasing demand. Electricity access among households almost doubled in the 10 years to 2005.
Vietnam is blessed with a wealth of natural resources: it ranks fourth in oil production among Asian countries, with 3.1 billion barrels of oil reserves and gas reserves of 700 billion cubic metres (bcm). The trouble lies with bringing the reserves onshore.
'The Government has thought long and hard about how to develop our natural resources and has attracted overseas investors to the oil and gas industry, bringing their expertise and investment in delivering gas from offshore,' Hung explains. Since Vietnam started welcoming foreign investment to develop its infrastructure and economy in the late 1980s, petroleum companies have been quick to make their mark on the country.
Gas discovery
Indeed, BP Vietnam this year celebrates 20 years of offshore exploration and development programmes, which began with its discovery of gas in the Nam Con Son Basin in 1992.
'When you find gas it can potentially take a very long time and significant development costs to commercialise it and bring it onshore, as we found with this project,' says Hung. The Lan Tay and Lan Do fields (or Block 06.1 of the Nam Con Son Basin) are located 370km southeast of the Vung Tau coastline. They provide an average of 3bcm of gas each year, supplying 40% of the country's power. With investment costs of US$1.3bn, it is one of the biggest foreign-invested projects in Vietnam and ranks BP as the leading petroleum company operating there.
As such, it has a significant relationship with PetroVietnam (PVN), which operates as a commercial enterprise representing government interests on all upstream exploration and downstream operations. PVN expects to invest US$15-21bn until 2020 in the country's oil and gas development strategy, and has issued over 50 product-sharing contracts or joint operating contracts with petroleum companies. Managing the relationship is a key responsibility for Hung - and a challenging one. 'Maintaining a good partnership with PVN is hugely important. The Government has a significant stake in the business and to protect its interests, partnership reporting and audits are prerequisites.'
Gas projects are long-term business commitments, with sale contracts typically fixed for 20-30 years, which brings stability but also limits the opportunity for high returns when oil prices increase. Hung notes that recent high oil prices have put pressure on operating costs at the Nam Con Son Basin.
'You are locked into a long-term contract in which revenue is relatively fixed, so any increase in operating costs eats into your margin,' he says. 'Although prices of crude oil have been dropping over the last few months, it takes years before the industry sees the down trend of the price in its operating costs. Cost management is a priority for any oil company in the current environment, and that is particularly true for BP Vietnam.'
Hung was appointed controller in December 2007. He leads a finance and control team of over 20 staff at BP's HQ in Ho Chi Ming City (HCMC) and is responsible for financial reporting, partner reporting, audit liaison and providing assurance on the financial performance of BP's integrated gas business. His foray into the working world coincided with Vietnam's emergence as a market economy, which shaped his thinking on how he might develop his career. 'I graduated from university in 1991, at a time when Vietnam was starting to open up. It felt like everything we had learned at school was no longer relevant. So many things were changing, so many Western ideas, we had to learn anew.' Hung joined the first audit company in Vietnam - the Vietnam Audit Company - where he gained on-the-job training for four years, including a six-month overseas assignment at a PwC office in Hong Kong. But as petroleum companies started projects in Vietnam, Hung decided to move into the oil and gas industry.
He joined BHP Petroleum, which operated the Dai Hung offshore oil field. BHP later withdrew from the joint venture, but Hung was kept on as a management accountant working on a gas feasibility project, which was later taken over by BP. The Nam Con Son gas project came on stream shortly afterwards, resulting in a promotion to management accountant. This involved leading a small team within the BP Vietnam finance department in HCMC. Later stints working in Hong Kong and the UK on a US$8bn BP joint venture in Russia helped to develop his understanding of complicated accounting issues and prepared him for his role as a senior finance professional in Vietnam. 'Working outside Vietnam gave me a chance to see the whole picture. I cut my accounting teeth on that joint venture in Russia. It was a complex project that exposed me to different cultures,' he says. 'Moving back to Vietnam was a natural step.'
Investor appeal
Hung returned at a time when the government started pushing ahead with ambitious plans for its energy strategy. While Vietnam continues to attract foreign investment in bringing oil and gas reserves onshore, investment opportunities are also being considered in oil and gas exploration and exploitation overseas, drawing on healthy diplomatic relationships with countries such as Venezuela and Cuba. In addition, the recently opened Dung Quat refinery, the first to be built in Vietnam, is set to lessen reliance on imported fuel and oil products - all of which bodes really well for the country's burgeoning energy demands. Hung adds that the future also looks bright for those working in the industry who are using their experience to help grow the power sector in Vietnam. 'Vietnam needs talent from within the oil and gas industry to take its energy strategy forward. Petroleum companies are very good at developing the skills of local Vietnamese and we're seeing staff trained by companies such as BP now being hired by PVN.'
Colette Steckel, deputy editor, Accounting and Business
HOW ACCA HELPED HUNG TO VI ON HIS WAY
Hung To Vi started his accountancy studies with ACCA in 1999, shortly after joining BP as a project accountant. When he achieved the highest marks worldwide in the summer 1999 exam sitting, BP fast-tracked Hung into a senior role as a management accountant. Hung graduated in 2001, and within a few months was posted to Hong Kong as an assistant to the regional commercial director, Asia Pacific and Middle East. He moved to London in 2004, working on a US$8bn joint venture in Russia, and was later made UK controller of the exploration and production technology unit. Hung returned to Vietnam in 2007, where he was appointed BP Vietnam controller. 'ACCA played a big part in my career. I value the opportunities the qualification offers,' says Hung. 'I am committed to developing my staff as finance professionals with ACCA. Outside of accounting firms, BP is one the biggest employers of ACCA graduates in Vietnam.
VIETNAM IN FIGURES
6%
GDP growth expected in 2009
10%-12%
Demand growth in energy per annum until 2010
90%
Percentage of households with access to electricity in 2005
US$15-21BN
Amount PVN expects to invest in oil and gas development until 2020