PREVENTION OF PRICE RISK IN PETROLEUM BUSINESS AT PETROLIMEX

MINISTRY OF EDUCATION & TRAINING VIETNAM COMMERCE UNIVERSITY - PREVENTION OF PRICE-RISK IN PETROLEUM BUSINESS AT PETROLIMEX Major: Business Administration Code: 9.34.01.01 SUMMARY OF DOCTORAL DISSERTATION IN ECONOMICS Hanoi, 2021 The doctoral dissertation is conducted at the Vietnam University of Commerce Supervisor: Assoc Prof Dr Nguyen Thi Bich Loan Reviewer : Prof Dr Hoang Van Cuong Reviewer : Dr Luong Minh Huan Reviewer : Assoc Prof Dr Dinh Van Thanh The thesis will be defended in front of the doctoral thesis grading committee meeting at: University of Commerce At …….hour, date……month…….year 2021 The thesis can be found at: - The Vietnam National Library - Information Center - Vietnam Commerce University HEADING The urgency of the subject Petroleum is an important commodity for production, consumption, security and defense and is an irreplaceable input for many industries Until now, gasoline and oil are still the main source of energy serving the economic development needs of each country Every year, Vietnam consumes about 20 million tons of petrol and oil, although it is a country with petroleum exploitation, export and processing activities, before October 2018 Vietnam still had to import nearly 70% of its gasoline volume oil from the world market to meet domestic demand Currently, Vietnam 's petroleum and petroleum processing resources have basically met over 80% of domestic consumption demand However, domestic gasoline and oil prices are always dependent on world market prices In petroleum trading activities, there are three types of market risks: price, exchange rate and interest rate In which, price risk has the greatest impact on business performance of enterprises World gasoline prices are always fluctuating erratically, difficult to predict This has had a significant impact on the performance of petrol and oil trading enterprises With the nonstop price fluctuation of the world market, it can be seen that except for some periods when gasoline and oil prices are relatively stable, most gasoline and oil prices fluctuate very complicatedly,with the most unpredictable period is from 1973 and especially in recent times A rare event on April 20th 2020 that shocked the history of financial market where the price of WTI oil futures contract for April delivery dropped -37.64 USD 5/2020 / barrel, causing panic among many from veteran brokers to retail investors Since then, it shows the importance of hedging against price fluctuations becomes more important not only for the perspective of consumers but also for producers and businesses Today in our country, there are means to prevent price risks in trading of petroleum: using price stabilization fund; Buy goods reserves when world oil prices tend to fluctuate and diversification of supply response to the supply of applicants with the lowest prices The use of hedging tools in business for petrol and oil companies is very limited The business method of our country's gasoline and oil enterprises is mainly to buy directly from supply organizations at world prices, not at fixed prices for future delivery There are very few enterprises that started to use a few derivative transactions to hedge the risk of price fluctuations, but they all failed Currently, many countries in the world consider hedging as the main tool, commonly used in hedging price fluctuations , the parts can not be separated separate from the risk management in business activities of the enterprise In the past time, the implementation of the use of price hedging tools, especially hedging tools in the price hedging strategy of petroleum companies in our country is still very limited very few, only a few deals but all suffered losses such as Jetstar Pacific, Vietnam Airlines , Petrolimex Singapore Although, Decree 83/ND-CP on petrol and oil trading in Article 9: "Rights and obligations of petrol and oil import-export traders" point clearly states: "derivatives may be applied accordance with international practices” The experience of the world shows a control system of risks, including tool use defense value (Hedging) - derivative transactions are wellorganized and effective operation will help businesses withstand and overcome through price fluctuations Hedging tools are used widely and popular as tools mainly hedging of price and profitseeking Enterprise gasoline, oil of Vietnam seemed too unfamiliar with hedging instruments in transactions to prevent against risks to business operations before the unpredictable changes in the prices of petroleum world market Therefore, the study of hedging price risks in the petroleum business at Petrolimex is of urgent significance both in theory and practice for the Group Stemming from that fact, the PhD student chose the topic: "Prevention of price risks in the petroleum business of Petrolimex Group" Petroleum Corporation (Petrolimex) now accounts for 47% market share of Vietnam's petroleum business professions Within the scope of the thesis, the study only focus on the prevention of price risks in the field of petrol and oil distribution business 2- Objectives of the study To establishe a theoretical framework for hedging price risks in business for petrol and oil enterprises The theoretical framework is the basis for analyzing and evaluating the current situation of price hedging at Petrolimex Group From there, the study proposes feasible and scientific solutions to prevent price risks in petroleum business for Petrolimex Group Object and scope of research 3.1 Research subjects The object of the thesis is to study the theoretical and practical issues of hedging price risks in petrol and oil trading at Petrolimex Group 3.2 Research scope The study focuses on the petroleum trading activities at Petrolimex and its limitation in the use of hedging as the tool The time of study is based on the period where the corporation was formed from the equitization and restructuring Petroleum Corporation Vietnam according to Decision No 828 / QD-TTg dated 31/05/2011 of the Prime Minister 4- Research question To achieve the research purpose, the questions posed for the thesis need to be answered: (1) What is price risk? What is the process and tools for hedging price risks in business for petroleum enterprises? “ What factors affect gasoline price fluctuations that affect the hedging of price risks in the petroleum business? " (2) Research the experience in the prevention of price risks in the business of the company, can it be applicable for petrol businesses in Vietnam? (3) What is the current situation of price hedging in petroleum business at Petrolimex Group? (4) “ What are the current views on the tools to prevent risks on petrol and oil prices in our country? What solutions and recommendations should be made to prevent price risks in the petroleum business at Petrolimex Group to implement effectively? " 5-New contributions of the thesis In theory: Supplementing, completing, developing and establishing a theoretical framework and factors affecting gasoline and oil price fluctuations that affect the prevention of price risks in business for petrol and oil enterprises On practice: Accumulate and assess the scientific basis on the status of risk prevention in the business of oil prices in the recent past Petrolimex Group Explaining the current conflicting views in our country about the petrol price stabilization fund tool; Hedging tool and orientation to hedging price risks in petroleum business Proposing a system of solutions to hedging price risks for Petrolimex Group in the coming time Thesis structure In addition to the introduction, conclusion, list of research works of the author related to the published topic, list of references and appendices, the thesis consists of 04 chapters Chapter Overview of research situation and methods Chapter Theoretical basis for hedging price risks in business for petroleum enterprises Chapter Situation of hedging against price risks in petroleum business at Petrolimex Group Chapter Solutions to prevent price risks in petroleum business at Petrolimex group CHAPTER SITUATION OVERVIEW AND RESEARCH METHODS 1.1 OVERVIEW OF RESEARCH RELATED TO THE TOPIC 1.1.1 Research at home and abroad The studies on hedging price risk in the petroleum business are typical, classified by the author into the following groups: - Research for mining, processing, supply and trading organizations Clubley's (1998) study of oil industry price hedging Cuthbertson and Nitzsche (2001) study on swaps, a hedge instrument originally used in hedging interest rate risk on fuel trading Quantitative study by Jin and Jorion (2004) from the US oil and fuel market If past studies in the period of 1970s to 1980s have not shown a direct relationship between the application of hedging tools effective in increasing corporate stock value, When considering fluctuations in the price of gasoline and oil, the work of Jin and Jorion (2004) has shown the use of price hedging tools in oil and gasoline businesses in the United States ensure profits for businesses that are less affected by abnormal fluctuations in petrol and oil prices Research by Li Xuepei in 2015 "Using price hedge tools in risk reduction at Rio Tinto Group" Research by Hoang Thi Dao, Nguyen Duc Minh on “Derivatives and their applicability to Vietnamese enterprises operating in the oil and gas sector” 2018 Research on “Derivatives help companies World oil and gas companies minimize risks from fluctuations in crude oil prices, gas prices and related products' prices in 2018 by Nguyen Thanh Luan, Nguyen Thi Hau - Vietnam Petroleum Institute, Phan Thi Thu Lan - Japan International University Research, by author Hoang Thi Dao; Doan Tien Quyet; Pham Mai Chi; Nguyen Thi Linh-2019, Vietnam Petroleum Institute on: “Risk response solutions of oil and gas companies in the world - Studies for organizations using gasoline and oil (transportation, aviation ) Research on “Gasoline price risk management through the use of futures”, R.Kao (1999 ) Research on "Petroleum price defense in the aviation industry: At Southwest Airlines" Research on “Airline jet fuel hedging”, Morrell (2005) Research "Impact of petroleum price hedging on corporate profits: A study at Kenya Airways" by Kimeu published in 2010 Study "Oil price defense: Lessons from Gotslandbolaget shipping group" by Zhugri and Ali in 2011 Research "Price defense: Lessons from an airline business" by Mathias Gerner and Ehud Ron published in 2013 - Theoretical research works Research by Natenberg (1994), in-depth analysis and detailed explanation of the nature and application of hedging tool in hedging price risk, especially in the energy and fuel business sectors The study of Loong (2000) is also applied by many businesses, that is, the implementation of forward contracts, these contracts will play a complementary role with futures contracts and bring more advantages than just using them pure use of futures contracts Research by Nitzsche (2001), Culp (2002) and Cuthberton Research by Hull (2003) Research by Kaminski (2004) Mattus Research (2005) There are many different studies on the use of hedging tools used by petroleum fuel businesses For example, according to Lien and Tse (2006), enterprises use hedging tool to hedge the risk of future gasoline prices, which is related to the foreign exchange rate relative to the price of the goods being exchanged Research by Morell and Swan (2006) Adams & Gerner (2012) Research on “ Gasoline price risk management using derivatives financial instruments ” (2012) Research by Canes (2016) The topic "Hedging against petroleum price risks and its application in Vietnam" - 2008, participated in the scientific research competition of the University of Economics Ho Chi Minh City by the author's collective The topic: "Price management policy in the field of economics" petroleum business in a transition country: a case study of Vietnam", 2013- Chairman Do Trong Hung Research on hedging risks on gasoline prices by Dr Mai Thu Hien, Foreign Trade University with the topic: "Application of derivatives in risk management of gasoline prices in Vietnam today" 2013 Research Research by Ho Tuan Vu: "Application of derivatives in petroleum business in Vietnam" 2014 Topic : "The impact of gasoline price fluctuations on the Vietnamese economy" - 2015, Chairman Nguyen Thanh Long Topic: "Improving the state management mechanism on prices for gasoline and oil in Vietnam" in 2018 by Chairman Nguyen Anh Tuan Doctoral thesis: “The world market of derivatives and development solutions in Vietnam” -2009 by PhD student Bao Trung, University of Economics Ho Chi Minh City Doctoral thesis in Economics: "Development of non-financial commodity derivatives trading in Vietnam" Nguyen Phuoc Kinh Kha - Banking University of Ho Chi Minh City -2015 Regarding the price stabilization fund in hedging the risk of petroleum prices affecting the business activities of petroleum enterprises, consumers and the inflation of the economy, there are a number of articles by the authors with comments conflicting about the Fund for Petroleum Price Stabilization 1.1.2 The gaps of research Based on the context, object and scope of the research have been identified, so the study was an overview introduction above, there are limits and limitations: First, no studies were found that building a theoretical framework for hedging price risks in the petroleum business for businesses in the context of a market that is not yet fully competitive ; Second, there has not been enough research on tools to prevent price risks for petroleum enterprises ; Third, the legal documents on the commodity derivatives market issued by Vietnamese authorities have revealed many shortcomings, but few studies have mentioned the issue this ; Fourth , the studies only focus on one of the contents of the hedging tool The proposed solutions are often general in nature, lacking specific solutions ; Fifth , there has been no research to conduct a direct survey on the process and risk prevention; The use of price stabilization fund tools and causes of limitations and the need to support the use of hedging tools at petroleum enterprises ; Sixth, there has not been any research that has provided specific solutions to prevent price risks at a specific petroleum trading unit or organization and supporting solutions (macro) in hedging against oil and gas risks price On the basis of the limitations, limitations and gaps of the above studies, these are the basic contents that will be continued in the author's thesis research 1.2 RESEARCH METHODS 1.2.1 Research process The research process of the thesis is summarized in steps 1.2.2 Research Methods In order to achieve the research objectives and content, the research methods used in the implementation of the thesis are qualitative and quantitative methods, combined with other methods 1.2.2.1- Qualitative research methods The author uses the main methods of inference, in-depth interviews with experts and secondary data collection methods 1.2.2.2- Quantitative research methods Methods of primary information collection - Survey, investigation ; Select samples and interview subjects ; Data collection process ; Processing and synthesizing information ; Methods of data analysis u ; Technical order of data distribution and estimation ; Analysis of the linear structural model In the research process, the author used objective theoretical method This is the method used by the author to argue, individual views are combined with other research views to make general judgments about a specific issue in the study of price hedging in the future petroleum business The thesis has applied the results of a number of published scientific studies related to the thesis, to serve as a scientific and practical basis in the author's research process CHAPTER Rationale for PRICE RISK PREVENTION IN THE PRICE BUSINESS FOR PETROL ENTERPRISE 2.1 PRICE RISK AND PREVENTIONPRICE RISK IN BUSINESS FOR PETROLEUM ENTERPRISE 2.1.1 Business risks for businesses To date, there is no unified definition of risk Different schools, different authors give different definitions of risk These definitions are very rich and diverse, but focused again can be divided into two major schools : School of Traditional and T beam Modernism Causes of risk : Business activities of the enterprise are very diverse In business there are 08 causes major cause common risks, common that businesses often encounter Characteristics of risk: Risk has 03 basic characteristics: unexpected, damaging and unexpected An event is defined as a risk when all three of these characteristics are present Risk classification From the perspective of economic scope , risks are divided into the following categories : Business risks ; Financial risks ; Operational risk ; Credit risk use From the perspective of commercial transactions , potentially risky transactions when buying (selling), trading derivatives include: Market risk, Liquidity risk, Risk concentration, Risk Operational risk, Credit risk The forms that people often apply to deal with risks: One is, Avoid risks ; Second, Preventing and limiting risks ; Thirdly, Self-recovery of risks ; Fourth, Transfer of risk In business activities in the market economy, enterprises must dare to take risks, accept and know to "live with" risks, know how to prevent and limit the harmful effects of risks in a grounded manner and scientific basis 2.1.2 Prevention of price risks for petroleum trading enterprises 2.1.2.1 Price risks for petroleum businesses Commodity price risk is caused by fluctuations in the price of goods which will cause loss to the Buyer or the Seller of the goods In essence, price volatility risk is a type of risk that shares many characteristics with other common financial risks However, it also has a unique feature, specifically the risk of commodity price fluctuations appears only when there is a fluctuation of market price Petroleum are essential products for all economies, in which world petroleum prices are always fluctuating erratically and are difficult to predict This has created a price risk for petroleum businesses, which has a significant impact on the performance of businesses So what is price hedging? “ Hedging price risk is a process of comprehensively evaluating the factors affecting the fluctuation of commodity prices on business performance of enterprises to identify potential risks may adversely affect the performance of the business On that basis, appropriate response and prevention solutions will be given to minimize the risk of price fluctuations” From there, we can also understand price hedging as a process organized according to a certain process and carried out continuously to identify, control and prevent possible price risks influence the achievement of business objectives 2.1.2.2 Necessity to prevent price risk for petroleum trading enterprises Hedging against the risk of oil price fluctuations will bring benefits to businesses : Firstly, stabilize the cash flow in/out of the business ; Second, it helps to closely distribute financial resources ; Third, protect the budget of the business ; Fourthly, to maintain corporate profits, enterprises to develop stably and achieve basic targets set forth ; Fifth, help determine the selling price of output ; Sixth, defending against force majeure risks ; Seventh, to limit risks, create competitive advantages for businesses, competitive advantages determine the brand of each business 2.2 PROCEDURES FOR PREVENTION OF PRICE RISK IN BUSINESS FOR PETROL ENTERPRISE 2.2.1 Identifying risk factors of price fluctuations affecting petroleum businesses Petrol price fluctuates quite complicatedly and is influenced by many factors, identifying risk factors for petrol price is also a challenge, an unpredictable risk due to frequent fluctuations The factors that affect the fluctuation of gasoline prices affect the hedging of petroleum price risks, which are : (1) Total demand of the world economy; (2) The price elasticity of demand for petrol; (3) Financialization of the petroleum market; (4) The volatility of the USD; (5) Geopolitical events; (6) OPEC policy on oil extraction; (7) Technological and environmental factors; and (8) expectations of investors in the petroleum market Looking back at the world oil price movement over the past 50 years (2015-2020) shows that oil prices have always fluctuated, including remarkable oil price crises in the history of the world oil industry 2.2.2 Analysis and assessment of price risks for petroleum trading enterprises To analyze and assess the risk of price fluctuations in petroleum trading activities, it is necessary to divide into groups: Sales group (group holding goods) and Group purchasing (group needing goods) In the petroleum market, even if the price increases or decreases, it will cause damage to both the Buyer and the Seller The damage is more or less, depending on the high or low volatility of market prices, if not for the group of sellers, then also for the group of buyers in the supply chain of goods Depending on the business position of your business (Sell or Buy) that determines the risk when the price decreases or increases is the risk of your business So to determine the level of price risk in business is measured by what criteria? The criterion to determine the level of risk (loss) due to price fluctuations in commodity trading is the “Difference Price” The spread is the difference between the price in the futures market and the "Fit First" and "Fit Later" prices 2.2.3 Control and handle price risks for businesses in petroleum business Risk control on fuel prices for businesses petroleum business are activities related to the prevention, prevent, reduce the severity of losses due to fluctuations in petroleum prices caused Handle gasoline price risks for the enterprise business is to use the gasoline engine to prevent the losses caused by fluctuations in petroleum prices caused Handle gasoline price risks for enterprises petroleum business are capable of using tools: Buy commodities reserves when world prices fluctuate (increase or decrease); Diversify sources of supply; Setting up a price stabilization fund; Use hedging tools 2.3 PRICE RISK PREVENTION TOOLS IN BUSINESS FOR PETROL ENTERPRISE 2.3.1 Buy goods to reserve when world prices fluctuate In business activities of enterprises, buying goods to reserve when prices fluctuate is one of the tools (methods) to hedge against price fluctuations However, to ensure efficiency, it is very important to analyze, evaluate and forecast price movements In fact, in business activities, when petroleum companies notice that the price of oil starts to trend up, then they focus on buying for better efficiency, not just buying to see the price drop Reserve 2.3.2 Diversity cun g to gasoline Diversifying supplies to petrol is a method to select the suppliers to the best quality and competitive purchase price When multiple suppliers to the goods, now have the right to choose the supplier to optimize their quality, price and conditions of purchase and sale of goods 2.3.3 Set up a financial reserve fund (Petroleum Price Stabilization Fund) to hedge against price risks Set up a financial reserve fund (Price stabilization fund), reserve a certain amount of money so that when there is a risk in price, use that fund to compensate Set up a Price Stabilization Fund and only use the Price Stabilization Fund for the purpose of stabilizing the market and stabilizing domestic petrol and oil prices in accordance with law The use of the Price Stabilization Fund provides non-refundable partial support or full support for the arising price difference of the base price that is 3% or more higher than the current retail price when key traders have to price stabilization task under the direction of the Ministry of Industry and Trade - Finance 2.3.4 Hedging - derivatives trading 2.3.4.1 Hedging business nature Hedging is based on the principle of an agreement to fix a fixed transaction price for a shipment at a time within a certain period of time, delivering the goods in the future This transaction is characterized by paying a fixed price and collecting a floating price on a monthly basis for a specified time The advantage is to protect the interests of the business when prices rise; Does not affect the physical contract signed with the supplier; Simple and easy to operate The disadvantages are many disadvantages when the price is low Hedging instruments are traded on both centralized (Exchange-traded) and over-thecounter (OTC) markets A amniotic with petroleum products there are two groups involved in derivative transactions (price -Hedging defense): One is, P attempt to defend price (Hedging ) - for the extraction unit, supply ; Second, Hedging for petroleum users and consumers Tool defense value (Hedging) , usually expressed in the form of contracts, with full three characteristics Economic content, mechanism of hedging - derivatives transactions are generally quite complicated 2.3.4.2 The role of price hedging tool (hedging) – for petroleum trading enterprises First, hedging and redistributing risks among investors ; Second, Effective information determines price movements ; Third, Operational advantages and efficiency 2.3.4.3 Warning on the use of hedging tools for petroleum trading enterprises With its flexible and less regulated nature, the semi-formal derivatives market becomes a very effective tool for tax evasion, market regulation, distortion or manipulation of accounting regulations accounting and reporting requirements They can also be used for criminal or fraudulent activities and market manipulation The use of tools hedge price and the operation of the market traded derivatives also contain potential risks are very large, even when the risks can make business bankruptcy or financial crisis if the operation of enterprises, financial institutions and the market is not efficient 2.3.4.4 Hedging instruments used to hedge the price of trading for petroleum enterprises Hedging is used by petroleum businesses to prevent price fluctuations, including the following main groups: - The first group is the futures contracts through the commodity exchange - The second group is the forward contract, the commodity price swap contract - The third group is the option contract 3.4.5 The main forms of price hedging (hedging) can be used by Vietnamese petroleum enterprises Due to the diversity of forms of fuel buying and selling transactions on the world petroleum market, there are many methods of hedging against petroleum price risks Firstly, Direct hedging , applied in petroleum purchases but there is a change in the method of determining the purchase price of petrol and oil, switching from trading at a floating price to trading at a fixed price estimate Second , Indirect hedging , is implemented based on the purchase and sale of petrol and oil at a floating price by the petroleum buyer hedging the price risk for his transaction EXPERIENCE FOR PREVENTION OF PRICE RISKS OF PETROLEUM ENTERPRISES IN SOME COUNTRIES – LESSONS LEARNED Experience in preventing price risks of petroleum companies in some countries 1.1 Petroleum price stabilization fund of some countries in the world Q Commissioner BOG gasoline prices in some countries around the world Thailand, Peru, Chile, Colombia, Ecuador shows mostly for subsidies, subsidies Not for the purpose of hedging the risk of price fluctuations in business for petroleum companies 1.2 Hedging against price risks of some world petroleum companies Petroleum enterprises in the world have built and applied the corporate risk management model in general and price risk in particular according to practices based on COSO ERM-2004 standards and ISO 31000 guidelines: 2009 and apply risk management software to assist in data collection and reporting Hedging against price risks has been widely applied by most petroleum businesses in the world to ensure the benefits for traders Oil price hedging lesson of Metallgesellschaft AG (MG) announced at the end of 1993 – loss related to using Hedging tool - biggest derivative transaction is a classic lesson for any petroleum company any, as a result of an unsuccessful hedging strategy Hedging instruments are mainly traded in the US, UK and Singapore which are the largest petroleum derivatives trading centers in the world Lesson learned Firstly, To promote the development of effective use of derivatives: (i) Government ; (ii) Management and administration agencies (iii) Human resource training policy should be promoted and improved in quality, updated with international standards Second, petroleum enterprises need to increase awareness and continuously update about derivatives Thirdly , C evil general business and enterprise activities in the petroleum sector in particular when market participants need to prepare a full range of resources: Equity capital ; Human resources ; Management skills ; Professional analysis and projection Fourth, Strengthening the physical facilities of petroleum enterprises Fifth, In order to promote petroleum businesses to use hedging tools - derivatives trading, it is necessary to develop a low-cost trading market Petroleum businesses need to strengthen international linkages in participating in the derivatives market CHAPTER THE STATUS OF PREVENTING PRICE RISK IN BUSINESS PETROLIMEX GROUP 3.1 PETROLIMEX GROUP OVERVIEW 3.1.1 The formation and development of Petrolimex Group Vietnam National Petroleum Corporation has international transaction name is Vietnam National Petroleum Group, abbreviated as Petrolimex Petrolimex is a specially ranked stateowned enterprise with a nationwide scale, ensuring the majority of the country's petroleum market share Being a key state-owned enterprise, specially ranked, nationwide, ensuring 47% market share of gasoline and oil nationwide Petrolimex's main business is Petroleum trading: 3.1.2 Petrolimex's business results (2015-2020) Looking back at Petrolimex's business results from 2015 to 2020, the total volume of petrol and oil sold in the first years tends to increase According to data from the Group's annual consolidated financial statements, business results over the years have been effective Petrolimex is a petroleum trading enterprise that has always been a pioneer in the market in developing and providing high quality and environmentally friendly products Among the key petroleum trading companies with State capital, Petrolimex is determined by the State to continue to hold the dominant capital in the coming time 3.2 RETAIL PRICE MECHANISM OF PETROL IN THE HOME MARKET In the current condition of our country's petroleum market, there is no real competitive market, although it is competitive, it is still weak Therefore, the State still regulates the retail price of gasoline “Base price = {CIF price + Import tax + Special consumption tax} x Foreign exchange rate + Value added tax + Standard business expenses + Price stabilization fund + Standard profit + Environmental protection tax + Taxes, fees and other deductions according to the provisions of current law With the above mechanism, based on the fluctuations of the world gasoline price, the Ministry of Finance calculates the base price (ceiling price) according to "the factors that form the base price to serve as a basis for operating the retail gasoline price on the market" In order to ensure that petroleum trading companies have a reasonable profit, the Ministry of Finance stipulates that “the maximum pre-tax profit is 300 VND/liter, kg and will be adjusted in accordance with the actual business of the company key traders in each period” 3 THE STATUS OF PREVENTING PRICE RISK IN THE PETROLIMEX BUSINESS IN PETROLIMEX 3.3.1.Legal basis and operating conditions for hedging tools in commodity trading Looking back at the legal basis and operating conditions for Hedging tools, the reasons for the use of Hedging tools are still limited and inadequate: (i) Regarding Vietnam's derivatives market, on the legal corridor management, participants in the commodity derivatives market, on products traded on the market; (ii) Hedging instruments - focusing mainly in the field of currency trading; (iii) There is not yet an official economic information channel with complete legality, necessary for petroleum trading enterprises to use derivative transactions; (iv) The system of guiding documents is lacking and does not change appropriately 3.3.2 Actual situation of hedging price risks in petroleum business at Petrolimex 3 Purchase of reserve gasoline Petrolimex Group only buys petrol when the price tends to increase Therefore Petrolimex kh i implement this tool to minimize price risks are analyzed, evaluated in detail trends in prices (up, down) before deciding whether or not to buy stocks 3 Petroleum Price Stabilization Fund We set up the Petroleum Price Stabilization Fund as a financial tool to stabilize prices and stabilize domestic gasoline prices when world gasoline prices rise Fund BOG to create financial resources to implement price stabilization petroleum, contribute to stabilizing the price level in general, to control inflation and only serves the goal to stabilize prices the domestic market when the price of petroleum the world is inflated, not used for any other purpose On the side of petrol and oil businesses, they all share the same opinion that gasoline prices are always fluctuating on a daily basis, the current policy of petrol price regulation through the Petroleum Price Stabilization Fund is currently creating a passivity for businesses business in planning production and business, has no effect in hedging price risk Due to the use of the petrol and oil price stabilization fund, the increase and decrease in domestic gasoline prices is not commensurate with the world price However, through the actual operation of the petrol price stabilization fund, the Government and the authorities still affirmed the role of BOG in stabilizing petrol prices, contributing to controlling inflation and stabilizing the macro economy The State side wants to keep it, and the oil company wants to give it up 3.3 2.3 Petrolimex diversify supply applications (power purchase) petrol With the diversification of supply sources, having the advantage of buying large sources of goods, many customers should have competitive purchasing prices, which has reduced input costs, contributing to effective business activities This shows that Petrolimex's profit in petroleum business over the years tends to increase N ource supplies fuel for trading companies and oil hub - Petrolimex, were bought from two sources : Source of petroleum is imported and power purchased from domestic (oil refinery in Dung Quat oil refinery in Nghi Son) These suppliers must ensure quality requirements, with competitive prices and reasonable terms of sale Annually, the main business enterprise - Petrolimex, builds a plan to buy petrol and oil from sources: imported petrol and domestic sources Import sources submit to the Ministry of Industry and Trade for consideration and approval One is, Buy from imported petroleum source Every year, the leading petroleum business - Petrolimex develops a bidding plan to select a petrol and oil supplier for its petroleum business nationwide to submit to the Ministry of Industry and Trade for approval To ensure the source of goods purchased from imports, the imported petroleum output is divided into parts by enterprises (contract packages) In essence, the bidding for petrol and oil supply is the selection of the contractor who offers the lowest business price difference - Premium (term) for each bidding package, this Premium (term) is fixed for one year and does not change when fuel prices increase or decrease With this determination of fuel price, it can be confirmed that the fuel import method of Petrolimex Group - Petrolimex is to buy petrol and oil on the world market, directly from suppliers and at the purchase price float Do not use Hedging tool in the transaction of buying and selling imported petroleum Second, Buy from domestic petroleum supply From the domestic supply of petroleum from domestic refineries, the Group signs longterm contracts to purchase goods from Binh Son Refinery and Petrochemicals and Nghi Son Refinery Product Distribution Branch With this way of determining and buying petrol and oil prices, it can be confirmed that the method of buying petrol and oil from domestic sources of Petrolimex is to buy petrol and oil on the domestic market directly from suppliers and at a floating purchase price Is the average gasoline/oil price of 15 calendar days after the date of delivery (the date of signing the delivery note) published by Platt's magazine for the Singapore market for each type of commodity Thus, the trading of petrol and oil from domestic sources Petrolimex also does not use Hedging tool in business However, this business method reveals many limitations and potential risks for petroleum businesses 3 2.4 Petrolimex Singapore implements Hedging tool For the first time (Petrolimex Singapore), a subsidiary of Petrolimex Group, implemented a hedging tool in 2014 with heavy losses From the operation of Petrolimex Singapore on the use of Hedging tool, there are many issues that need to be considered in terms of governance Specifically, the company has not issued specific regulations, regulations and processes on buying, selling and signing contracts to use Hedging tools Some signed contracts are not really tight in some terms, conditions, and records of some shipments are incomplete The company mainly buys futures (accounting for 70%-80% in 2014) while spot selling a lot Only about 40%-50% of the futures purchases are sold by the terms The loss is mainly in forward contracts to bring goods to Van Phong bonded petroleum warehouse From the lessons of Petrolimex Singapore's failure to prevent oil price risks, it can be seen that Petrolimex's oil price forecasting is still weak, leading to the decision to buy a large amount of petroleum at high prices much higher than the actual market price at the time of contract execution In addition, the management and transaction control skills of business leaders as well as the capacity of consultants are limited Therefore, the application of hedging tools to hedging against petroleum price risks requires highly qualified experts, experience in implementation, realistic forecasting as well as good control of the situation to be able to provide make the right decision, reasonable and bring economic efficiency Currently, all major petroleum importers nationwide have expressed their interest in hedging - derivatives transactions to prevent risks of price fluctuations But there is a contrary fact that almost very few petroleum businesses use A few businesses that use it all fail For Vietnam, a transition economy, hedging tools are still very new and unfamiliar The use of hedging tool to hedge against oil price risks in Vietnam is currently very limited and rare The use faces many inadequacies from the objective reasons of the economy and the subjective reasons from the participants 3.4 SURVEY RESULTS Identification, analysis, assessment and control of price risks From the results of synthesizing survey data, collecting information on the hedging of price risks surveyed at Petrolimex; and 02 Petrolimex Singapore and Laos One Member Company Limited : Price risk identification The survey results show that the price risk identification of Petrolimex Group is still of a formal nature ; Price risk analysis and assessment The results of information collection and survey show that the Group has almost no analysis and assessment of risks on price fluctuations The Group has not paid much attention to other modern quantitative methods of analysis, evaluation and measurement Meanwhile, experts say that measuring price risk is very important Because from there, businesses can identify the price risks that cause great losses in the business and rank the price risks according to the priority they need to deal with However, without timely analysis, assessment and measurement of price risk, the level of loss, enterprises cannot make decisions on controlling price risk ; Price risk control and handling Use a tool to control the hedging of price survey results show that almost all attention is to use the tool to diversify supply to goods The use of hedging tools - derivatives transactions are almost not used by the corporation for different reasons 3.4.2 Using tools (Heding) - derivatives transactions in hedging risks in petroleum business Regarding the difficulty in using Hedging tool, the survey results show that 100% of the opinions about legal barriers are the most difficult Ranked second is the lack of qualified human resources; Third, the cost of using derivatives is high compared to the financial capacity of the enterprise; Thứ tu afraid responsibility for risks occurring to individuals and units in the use of hedging instruments; Finally , the accounting system 3.4.3 Price stabilization fund survey results Basically, the opinions are unanimous that, due to the nature of the petroleum market in our country today, it is necessary to establish a price stabilization fund , not contrary to the WTO and 18 FTAs that have been signed, with such a name suitable BOG has the effect of contributing to controlling inflation and stabilizing the macro -economy There is no effect for petroleum enterprises in hedging price risks in business There are a number of issues that need to be further considered and perfected in terms of the source of formation, use and management of the price stabilization fund so that the use of this tool is more effec tive in hedging when there is a fluctuation in price gasoline prices Survey results on the needs of enterprises that need support from the State to promote derivatives trading activities ( in order of priority ) From the survey results on the needs that petroleum business enterprises need support from the State, the priority order can be ranked as follows: Firstly , the State promulgates the Law/Decree/transactions in financial instruments Derivatives regulation uniformly regulates the organization of the operations of the derivatives market and the activities of derivatives trading instruments Second, there should be synchronous solutions on risk management policies, customer policies and diversification of derivative financial products Third , support vocational training in derivative products Fourth, create conditions for financial intermediaries to participate in derivatives trading activities with enterprises Finally , the State adds accounting and tax policies when businesses use derivatives Reasons why petroleum businesses limit the use of hedging tools to prevent price risks To clarify n guyễn's limited use of derivative instruments in commodities trading, in addition to the secondary data collected by the author designed the questionnaire to collect information of 38 companies trading petroleum to clarify the cause Summary of investigation results on reasons for limiting the use of hedging tools derivatives trading The author builds a model to study factors on the causes and effects of limiting the use of hedging tools in hedging against oil price risks 3.5 GENERAL ASSESSMENT ON PREVENTION OF PRICE RISK IN THE PETROLEUM BUSINESS AND CAUSES 3.5.1 Advantages In 2009, the Group established a department to hedge against price fluctuations in the petroleum business, including research on using hedging tools to hedge price risks But due to the lack of legal documents on investment in derivatives So after months of operation, this department must be dissolved Currently, although there is a research department on risk management under the Board of Directors, there is no department dedicated to studying and implementing price risk in the petroleum business However, the Group always has staff to monitor and analyze the world petroleum price movements and take timely solutions whenever there is a fluctuation in the world petroleum price In 04 tools in hedging price risk, mainly used: Buying gasoline when prices are trending up and diversifying the supply of goods at home and abroad With these two tools, the Group has contributed to improving the business performance of the Group over the years, always ensuring the set profit Just used Hedging for the first time at Singapor One Member Limited Liability Company but failed As for the Petrol Price Stabilization Fund, which is operated by the competent authority in each period of petrol and oil price management, it has no effect on the Group in hedging against price risks 3.5.2 Limit The Group has not been very active in analyzing, evaluating and forecasting petrol and oil price fluctuations to prevent the risk of price fluctuations The professionalism of the Group Managing price risk is not high , the staff professional , as well as the group's leaders in professional hedging weak The Group has not paid attention to real investment to issue specific regulations, regulations and processes on buying, selling and signing contracts using Hedging tools The management and transaction control skills of business leaders as well as the capacity of consultants are still limited There are no experts with high expertise, experience in implementation, realistic forecasting as well as good control of the situation to be able to make the right and reasonable decisions and bring about economic efficiency The Group does not have an incentive mechanism for employees to participate in derivatives trading There is no plan to build software /information technology platform in derivatives trading Not focusing on preparing enough resources : Business capital; Human; Management skills; Analysis and forecasting operations when participating in the derivatives market 3.5.3 Reasons for limiting the use of the Hedging tool The derivatives market has been established in Vietnam, but it is still very small and unpopular ; Vietnam does not have a complete legal framework for trading in commodity derivatives ; There is no real competition in Vietnam's petroleum market ; Besides, there is a very important reason that hedging tool has not been used to prevent the risk of gasoline price fluctuations in Vietnam is because the State also interferes in the business of petroleum trading enterprises domestic sale of petrol and oil is still decided by the State ; Knowledge of C cell ng Hedging instruments price risk prevention is relatively new in Vietnam ; High derivatives performance fees ; There is still confusion between hedging and speculation ; Information on derivative products is difficult to access ; Dependent mentality The State has a tool to stabilize petrol prices, when gasoline prices fluctuate, this tool is available to stabilize prices CHAPTER SOLUTIONS FOR PREVENTION OF PRICE RISK IN BUSINESS PETROLIMEX CORPORATION PETROLIMEX 4.1 POINTS AND ORIENTATIONS FOR PREVENTION OF PRICE RISK IN THE PETROLEUM BUSINESS 4.1.1 N The views hedging on the price of petrol 4.1.1 About the Petroleum Price Stabilization Fund In recent times, public opinion has been mixed about the need for the Petroleum Price Stabilization Fund However, the survey collects information Q Commissioner stabilize gasoline prices still need eq t, contributing to help control inflation, stabilize the macro economy, maintain steady growth and social security On the side of petroleum enterprises, the price stabilization fund does not promote the effectiveness of hedging against price risks in petroleum business activities for enterprises However, in the process of operating, using and managing the petroleum BOG fund, the authorities should avoid the phenomenon of letting negative funds affect the efficiency of petroleum business activities of enterprises 4.1 About Hedging tool for Vietnam derivatives trading market Regarding the development of the derivatives trading market in Vietnam, there are currently two parallel views: The first view considers promoting the use and development of hedging tools as the development of financial instruments used to hedge risks caused by fluctuations in world commodity prices for physical commodity contracts of the business The second point of view The promotion of the use and development of hedging tools is the development of a centralized market for buying and selling physical goods for Vietnam (commodity trading floors for Vietnam) thereby creating an index Separate commodity prices for Vietnamese goods such as coffee, rubber, rice, etc Considering the two viewpoints on the development of the derivatives trading market in Vietnam mentioned above, the author's point of view is that these two opinions are correct and need to coexist in order for the market to develop sustainably transparent and efficient 4.1.2 Orientation to hedging price risks in petroleum business - Consider the prevention of price risks in the petroleum business as an important and necessary task for the business activities of petroleum enterprises Enterprises are proactive in hedging price risks, not avoiding price fluctuations - Petroleum enterprises need to build a model of price risk management in petroleum business From there, maintaining the direct supervisory role of the board of directors on price risk; Develop a plan to deal with price weakness and maintain effective controls - Encourage petrol and oil businesses to use tools to prevent price risks with a transparent reward and punishment mechanism - Depending on the administrative and financial capacity, the team of the petroleum business can use many tools or focus on a single tool that is most effective - Hedging tool - Hedging price is a popular tool, mainly for gasoline businesses in the world Enterprises need to have specific measures to promote the use of hedging tools Having a policy on training and retraining human resources for enterprises in management and price risk prevention in business in accordance with international practices and standards - firms have established specialized division in charge of the work depth e o ng price risk management Or can use the service, unit independent consultants or outside experts wonder i to restrict and minimize the price risk , intensify international cooperation to participate in the derivatives market goods 4.2 SOLUTIONS TO PREVENTING PRICE RISK IN PETROLIMEX BUSINESS AT PETROLIMEX GROUP 4.2.1 Group of solutions for Petrolimex Solution : Propose a management model for hedging price risks for Petrolimex Group, the initial step in using hedging tools - derivatives trading From the failure of Petrolimex Singapore and the experience of some countries The author builds: “ The management model for hedging price risk for Petrolimex in the initial step of using the Hedging tool , with the following contents : (1) Principles ; (2) Organization ; (3) Risk management ; (4) Transactions ; (5) Reporting and control ; (6) Regarding the financial mechanism and tax policy ; (7) Internal legal issues ; (8) Transaction execution process Solution 2: Improve capacity in preventing risks of petroleum price fluctuations at Petrolimex Group From the failure of Petrolimex Singapore , Petrolimex needs to have a specific strategy to properly deal with the main contents: Firstly, Focus on the approach and view on risk management, specifically risks related to price fluctuations and a modern approach, in line with international trends and practices Second, Constantly improve and improve the basic knowledge of commodity trading Third, it is necessary to develop a team of analysts and experts to improve decision-making and develop an appropriate price hedging strategy It is necessary to attract and organize the rational use of the risk management team of petroleum price fluctuations at Petrolimex Fourth, In addition to information sources from media agencies, SGDs and international news agencies, Petrolimex can use the information and analysis sources that MXV is providing, directly participate in and enjoy the training content, training and other professional exchange models that MXV is implementing Solution 3: Applying a software system to monitor, analyze and evaluate the evolution and forecast of petrol price fluctuations (i) Application of software system to monitor, analyze and evaluate petroleum developments In the era of industrial revolution 4.0, petroleum enterprises need to apply a software system to monitor, analyze and evaluate developments and forecast petrol prices to assist in data collection and reporting From there, effective measures to prevent price risks are introduced (ii) Software system for reference price and forecast of crude oil price fluctuations The content of some popular technical analysis models in crude oil price forecasting is presented very specifically in the CQG Desktop software system Solution 4: Select suitable banks or financial intermediaries Petrolimex selects the appropriate bank or financial intermediary Commercial banks and Petrolimex must cooperate in the process of accessing and using derivative financial instruments 4.2.2 Group of support solutions (macro) Solution 1: The state needs to improve the legal framework for the derivatives market Firstly, Create a healthy and stable derivatives market ; Secondly , Building and perfecting the legal environment to facilitate the use of Hedging tools in petroleum business activities Decree 83/CP on petroleum trading, when amended, should focus on clarifying the content of issues related to the use of hedging : Firstly, Regarding the concept of tools, hedging operations and the right to apply tools, this profession ; Second, the range of instruments (hedging) derivatives are allowed to use ; Thirdly, the rights and responsibilities of the leading petrol and oil trader depend greatly on the type of business ; Fourth, on the scope of the Transaction Contract ; T year, the entity organizing the market ; Sixth, on tax and fee policies for derivatives trading activities The State considers promulgating the " Law on Trading Derivatives on the Centralized Market", Third , open the market for all financial institutions to deploy derivative contracts; Diversify and perfect the Hedging tool Fourth , Mandatory requirements for hedging in the market and requirements for registration and preparation of financial statements Fifth , perfecting the technical operations of Hedging tools - derivatives trading Sixth, Capital and collateral requirements in trading Hedging instruments- derivatives trading Solution 2: Improve operational efficiency and capacity to provide derivative services at the Commodity Exchange of Vietnam (MXV) Solution 3: Completing the legal framework in petroleum business Firstly, Perfecting the petroleum business management mechanism Second, Perfecting the petrol price management mechanism Currently, the domestic supply of petroleum accounts for a relatively large proportion Therefore, it is proposed that the base price formula is calculated as follows: The base price of petrol is determined by (=) The price of petrol from imported sources multiplied by (x) the proportion (%) of petroleum output from imported sources plus (+) Petrol price from domestic production multiplied by (x) the proportion (%) of petroleum output from domestic sources The operating time for petrol prices should be reduced to 10 days on the 1st, 11th and 21st of every month Third, improve the tool of Price Stabilization Fund Thus in order to further strengthen the openness, transparency and accountability of T h run press clue petroleum business in the implementation of appropriation, use and management of the fund balance BOG petrol should be defined more clearly , stricter reporting and tracking mechanism (BOG Fund account balance at the bank) , responsibility for public disclosure of BOG Fund balance At the same time, reviewing and amending regulations on how to calculate deposit interest for the Fund's amount at commercial banks, accordingly, it will be calculated according to the demand deposit interest rate and account the increase in the Fund's account ; regulations on financial sources in case the leading petroleum trader uses the BOG Fund while the BOG Fund at the enterprise is negative the lowest level between the bank and the petroleum business in accordance with the Law on Credit Institutions In addition, it is necessary to add specific regulations on sanctions in cases of violations related to responsibilities in the formation, management, accounting and use of the BOG Fund On that basis, the Ministry of Finance should provide specific guidance on the setting up, use and management of the BOG Fund and inspect and supervise the implementation of these regulations Fourth, Modernize and transparent economic-financial information and build a national information channel on petroleum 4.3 REQUEST In order for the price hedging tool - derivative trading to be implemented and developed, it is recommended to: 4.3.1 To the Government It is necessary to develop a Law on Trading in Derivatives When there are no conditions to promulgate the Law, the Government needs to issue a Decree on " derivative trading and derivatives trading activities" in the immediate future , to uniformly adjust the organization and operation of the derivatives market and trading in derivative products 4.3.2 Ministry of Industry and Trade Develop and issue a system of legal documents related to the operation and market supervision of commodity trading floors, replacing Decree 51 ; Amendment of Decree 83/ND-CP on petrol and oil trading 4.3.3 State bank The State Bank promulgates documents stipulating necessary conditions for financial institutions to be allowed to participate in the derivatives market and to deploy derivative products 4.3.4 The financial Promulgating a mechanism for accounting and tax related to commodity derivatives 4.3.5 For Petrolimex Open training classes or send staff related to business activities to participate in training classes on knowledge of derivative products Develop principles, plans, transaction processes, manage and supervise the trading of commodity derivatives in the Group CONCLUDE In the petroleum business, risk management is increasingly important, especially the risk of price fluctuations On the basis of applying knowledge synthesis, research methods, the thesis has achieved the set goals and tasks: Firstly, an overview of domestic and foreign research works related to the content of the thesis A ã apply general economic research methods to accomplish goals and tasks of research Second, Establish a theoretical framework explaining the theoretical basis of price risk The thesis has analyzed the nature of each tool, especially analyzing the price hedging tool (hedging) which is the main and popular tool used by petroleum enterprises in other countries Third, the thesis evaluates the business results of Petrolimex Group from 2015-2020 The situation of price risk prevention in petroleum business at Petrolimex Group is also analyzed in detail by the thesis The reason for the failure of Petrolimex Singapor One Member Limited Liability Company, a subsidiary of Petrolimex Group, first implemented the Heding tool in 2014 to hedge the price risk that suffered heavy losses affect the business performance of the whole Petrolimex Group Regarding the use of the price stabilization fund to prevent price fluctuations, clearly analyze the advantages as well as the remaining limitations for the prevention of price risks in business for petroleum enterprises From the survey results, collecting information, the thesis analyzes and evaluates the results, there are limitations to the hedging of price risks at Petrolimex Group, the causes of those limitations and the need for support in using using Hedging Fourthly, analyze the views of hedging instruments on the price of oil trading is price stabilization fund and Bathrooms price (Hedging) derivative transaction Regarding solutions to hedging price risks, the thesis also proposes a system of solutions (including 04 specific solutions) for Petrolimex In order to promote the use of Hedging tool, the thesis has introduced a system of macro-support solutions, including solutions for completing the legal framework for the derivatives market; Solution Improve operational efficiency and capacity to provide derivative services at the Commodity Exchange of Vietnam (MXV); Regarding the completion of the legal framework in the petroleum business, 04 specific solutions have also been given To promote the use of hedging tool in hedging price risk, the thesis has also proposed recommendations to the competent authorities of the Government, the Ministry of Industry and Trade, the State Bank, the Ministry of Finance and corporations Petrolimex some specific issues PUBLICATIONS RELATED TO THE THESIS 1- Overcoming the error caused by incorrect tax application in calculating the base price of petrol and oil causing damage to consumers- Journal of Scientific Research and Audit / No 1022/2016 2- Issues that need to be improved on the petrol and oil price regulation mechanism Journal of Scientific Research and Audit / No 104-6/2016 3- Lien Ministry "wrongly" calculated excise tax, how should it behave? Journal of Auditing Scientific Research / No 108-10-2016” 4- Stabilization Fund: A tool to hedge against risks of petrol price fluctuations - Journal of Scientific Research and Audit / No 118-08/2017 5- Completing the basic valuation in petroleum business- Journal of Scientific Research and Audit / No 132-10-2018 6- A look back at the world petrol price movement in 2018 and forecast for 2019- Journal of Scientific Research and Audit / No 134-12/2018 7- Solutions to develop commodity derivatives market in Vietnam-Industry and Trade Magazine April 2018 8- Promoting the use of derivatives in petroleum business in our country TC Economics Central Economic Commission, May 2019 9- Inadequacies of Decree 83/ND-CP on business gasoline – TCDN Newsletter No 9/2019 10- Putting petroleum products on the Vietnam Commodity Exchange - one of the tools to hedge against price fluctuations Economic Review - Central Economic Commission, October 50, 2019 11- Some issues need to be considered to ensure efficiency, rationality and transparency when amending Decree 83/2014/ND-CP on petrol and oil trading Journal of Auditing Scientific Research.No 151-5/2020 12- It is necessary to amend and supplement regulations on the use of derivatives in Decree 83/CP on “petroleum trading” Journal of Auditing Scientific Research.No 152-7/2020 13 Evolution crude oil prices in 10 years and forecast trends in the coming period Business Finance Magazine No 9/2020 14- Some new contents in the Draft amending and supplementing Decree 83/2014/ND-CP on petrol and oil trading Journal of Auditing Scientific ResearchDecember 2020 15- Some new contents on the price management mechanism in the Draft amending and supplementing Decree 83/2014/ND-CP on petrol and oil trading Financial Review, December 2020 16- Buying and selling goods through the Commodity Exchange - some issues to be discussed Journal of Scientific Research and Audit No 163-5/2021 ... hedging price risks in business for petroleum enterprises Chapter Situation of hedging against price risks in petroleum business at Petrolimex Group Chapter Solutions to prevent price risks in petroleum. .. the prevention of price risks in the business of the company, can it be applicable for petrol businesses in Vietnam? (3) What is the current situation of price hedging in petroleum business at Petrolimex. .. stabilize prices CHAPTER SOLUTIONS FOR PREVENTION OF PRICE RISK IN BUSINESS PETROLIMEX CORPORATION PETROLIMEX 4.1 POINTS AND ORIENTATIONS FOR PREVENTION OF PRICE RISK IN THE PETROLEUM BUSINESS 4.1.1