PetroVietnam signs agreement with 3 foreign banks

Representatives of PetroVietnam and three foreign banks sign the ISDA agreements in Hanoi on Thursday - Photo: Thanh Huong

HANOI – PetroVietnam on Thursday signed three agreements with BNP Paribas, Sumitomo Mitsui Banking and Standard Chartered Bank in Hanoi to set up principles for future derivatives transactions as a way to hedge against risks of forex rates and commodities prices among others.

The national oil and gas group said the contracts signed were a protocol of ISDA Master Agreement 2002 compiled by the International Swaps and Derivatives Association, Inc.

Nguyen Tien Dung, deputy general director of PetroVietnam, said the signing would help the group limit negative impacts from forex changes, prevent risks in terms of interest rate, exchange rate, and commodity prices and diversify the group’s financial activities.

The use of derivatives tools would enable PetroVietnam to meet the huge need of large capital for its projects, as well as save costs and time in financial management.

ISDA is the largest international commercial financial institution worldwide in terms of the number of members. Signing an ISDA Master agreement is a must for all sides before conducting any derivatives transaction for standardization of legal procedures. All parties in an ISDA agreement do not need to study many procedures to save cost and time whenever there is a derivatives transaction among them.

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PetroVietnam signs ISDA contracts with foreign banks

The Vietnam National Oil and Gas Group (PVN) signed in Hanoi on Thursday three standardized ISDA contracts with foreign banks as the basis for derivative transactions in the future.

The banks include PVN and BNP Paribas, Sumitomo Mitsui Banking Corp (SMBC) and Standard Chartered Bank. This was the first time that PVN had inked such contracts including the ISDA Master Agreement 2002 of the International Swaps and Derivatives Association.

The signing is expected to be a prerequisite for the signing of PVN’s future practical derivative transactions to mitigate risks for the group’s financial activities.

Speaking at the signing ceremony, PVN Deputy General Director Nguyen Tien Dung said that in implementing its development investment strategy in the next period, PVN has been mobilizing capital from various sources for oil and gas energy projects. So far, the group’s foreign loans have hit US$3 billion.

He also said that PVN and its partners would hold negotiations to sign practical derivative contracts.

SMBC took part in provision of loans of $270 million to the Nhon Trach 1 Power Plant, $300 million to the Dung Quat Oil Refinery and $96 million to Vung Ang Power Plant.

Standard Chartered Bank was a joint lender of $250 million to the Dung Quat Oil Refinery.

PVN plans to negotiate with other foreign banks like Citibank and Lions to sign more ISDA to create necessary competitiveness in selecting providers of derivative services.

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PVN signs ISDA contracts with foreign banks

The Vietnam National Oil and Gas Group (PVN) signed in Hanoi on Sept. 9
three standardised ISDA contracts with foreign banks as the basis for
derivative transactions in the future.

The banks include PVN and BNP Paribas, Sumitomo Mitsui Banking
Corporation (SMBC) and Standard Chartered Bank. This was the first time
that PVN had inked such contracts including the ISDA Master Agreement
2002 of the International Swaps and Derivatives Association.

The
signing is expected to be a prerequisite for the signing of PVN’s future
practical derivative transactions to mitigate risks for the group’s
financial activities.

Speaking at the signing ceremony, PVN
Deputy General Director Nguyen Tien Dung said that in implementing its
development investment strategy in the next period, PVN has been
mobilising capital from various sources for oil and gas energy projects.
So far, the group’s foreign loans have hit 3 billion USD.

He also said that PVN and its partners would hold negotiations to sign practical derivative contracts.

SMBC
took part in provision of loans of 270 million USD to the Nhon Trach 1
power plant project, 300 million USD to the Dung Quat oil refinery and
96 million USD to Vung Ang power plant.

Standard Chartered Bank was a joint lender of 250 million USD to the Dung Quat oil refinery.

PVN
plans to negotiate with other foreign banks like Citibank and Lions to
sign more ISDA to create necessary competitiveness in selecting
providers of derivative services./.

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