Hanoi (AFP) - Vietnam's state-run oil and gas giant PetroVietnam said Wednesday it had suspended production of crude oil in Venezuela in response to deepening economic woes in the South American country, an official told AFP.
PetroVietnam jointly operates the Junin-2 project in the Orinoco Delta with the Venezuelan state-owned firm PetrÃ³leos de Venezuela SA.
Work on the project has been suspended, a company official said, speaking on condition of anonymity.
Phung Dinh Thuc, PetroVietnam's chairman, has said the suspension was due to runaway inflation making the cost of doing business too high.
"The present situation in Venezuela is very difficult with the economy deteriorating and high inflation," he said, according to a report in the Saigon Economic Times last week.
"No investors can bear to bring in the money to hire services from Venezuela's companies for project implementation," he said.
Venezuela's inflation soared to 56.2 percent in 2013 -- the highest in Latin America, according to official figures.
Inflation is nearly three times as high as in 2012, when it hit around 20 percent.
PetroVietnam has decided to "suspend this project to continue negotiation with Venezuelan partner to change the terms and wait until the investment climate improves", the report said.
The Junin-2 project is estimated to have reserves of some 1.4 billion barrels of oil, the report said.
PetroVietnam said the project began producing oil in September 2012 and that they were targeting production of 200,000 barrels per day from their Venezuela projects.
PetroVietnam has been eager to expand oil production overseas as its production in Vietnam declines.
It has investments in oil fields in Russia Peru and Algeria amongst others, according to the Saigon Economic Times report.