Decision No. 49/2017/QD-TTg dated December 21, 2017 of the Prime Minister on removal of installations, equipment and facilities serving petroleum activities

DECISION

On removal of installations, equipment and facilities serving petroleum activities[1]

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the July 6, 1993 Petroleum Law; the June 9, 2000 Law Amending and Supplementing a Number of Articles of the Petroleum Law; and the June 3, 2008 Law Amending and Supplementing a Number of Articles of the Petroleum Law;

Pursuant to the Government’s Decree No. 95/2015/ND-CP of October 16, 2015, detailing a number of articles of the Petroleum Law;

At the proposal of the Minister of Industry and Trade;

The Prime Minister promulgates the Decision on removal of installations, equipment and facilities serving petroleum activities.

Chapter I

GENERAL PROVISIONS

Article 1.Scope of regulation and subjects of application

This Decision prescribes the removal of installations, equipment and facilities serving petroleum activities (below collectively referred to as petroleum installations) of organizations and individuals that carry out petroleum activities in Vietnam (below referred to as organizations and individuals).

Article 2.Application of agreements in petroleum contracts

1. This Decision applies to petroleum contracts and gas installations which have investment project approval decisions issued by competent authorities before or after the effective date of this Decision.

2. In case the signed petroleum contracts contain specific agreements on the financial security obligation which are different from the provisions of Chapter IV of this Decision regarding the setting up of the financial obligation security fund for the removal of petroleum installations, such agreements shall prevail.

Article 3.General principles

1. Organizations and individuals shall remove petroleum installations under petroleum installation removal plans approved by the Ministry of Industry and Trade and comply with this Decision and relevant legal documents. If, after approving such plan, the Ministry of Industry and Trade requests to leave wholly or partially in place petroleum installations, organizations and individuals shall abide by such request.

2. The removal of petroleum installations must ensure safety for humans and environmental protection; and satisfy the requirements on protection of the subsoil, environmental restoration, traffic safety, and protection of other resources at sea and in mainland locations where the installations are built.

3. Petroleum installations shall be designed to ensure that they can be removed upon completion of projects or when they are no longer needed for petroleum activities or fail to ensure safety for humans or the environment.

Article 4.Interpretation of terms

In this Decision, the terms below are construed as follows:

1. “Installations serving oil and gas field prospecting, exploration and development and oil and gas exploitation” means floating facilities and combinations of equipment and structures which are built, equipped or installed in a fixed or temporary manner on the mainland or at sea to serve oil and gas field prospecting, exploration and development and oil and gas exploitation.

2. “Gas installations” means installations and equipment serving gas collection, processing and transportation, offshore gas pipelines, land-based gas pipelines, gas processing-treatment plants, gas distribution stations, and gas pipelines from gas processing-treatment plants to consumer households (excluding low-pressure gas pipelines or similar pipelines supplying gas to consumer households).

3. “Underground pipelines” means pipelines that are laid under the ground or seabed according to designs approved by competent agencies.

4. “Exposed pipeline segments” means underground pipeline segments whose covering is eroded by time, making them open or displace from the initial locations, or which are laid on the seabed, the land surface or above the surface of rivers or lakes.

5. “Petroleum installation removal plan” means a document stating the method, technical, technological and environmental solutions, total cost, and schedule of removing petroleum installations.

6. “Jacket platform” means steel structures which are fixed by steel or concrete piles driven deep into the seabed to support the topside platform.

7. “Topside platform” means the upper part of a fixed installation, consisting of structures and equipment placed on the jacket platform.

8. “Gas processing-treatment plant” means a place for receiving, processing and treating gas.

9. “Equipment” means a combination of mechanic and electronic details which are installed and used for petroleum activities.

10. “Gas distribution station” means a facility for receiving processed gas for distribution to consumers.

Chapter II

FORMULATION, APPRAISAL AND APPROVAL OF REMOVAL PLANS, REMOVAL COMPLETION REPORTS

Article 5.Submission of petroleum installation removal plans

Within 9 months from the date of commercial operation of a petroleum installation or 1 year from the date of putting it into operation, organizations and individuals shall formulate a petroleum installation removal plan and submit it to the Ministry of Industry and Trade for consideration and approval.

Article 6.Submission of petroleum installation removal plans for approval

1. Organizations and individuals shall submit directly or send by post 1 dossier set to the Ministry of Industry and Trade.

2. A dossier for approval of a petroleum installation removal plan must comprise:

a/ A written request for approval of a petroleum installation removal plan;

b/ Vietnam Oil and Gas Group’s written approval of the plan (for dossiers submitted by petroleum contractors and member enterprises of the Group);

c/ One copy of the plan;

d/ Twenty-five summaries of the plan.

3. A petroleum installation removal plan must have the following principal contents:

a/ Introduction of the plan;

b/ Summary of the plan;

c/ A list of facilities, combinations of equipment and structures of the petroleum installation to be removed;

d/ Detailed description of facilities, combinations of equipment and structures of the petroleum installation to be removed;

dd/ Solutions and technical options for the removal;

e/ A plan on waste management and marine environment pollution control (specifying the types and volumes of waste, and methods of collection, storage, transportation and treatment of waste during the removal); and a plan on environmental incident prevention and response;

g/ Total cost of the removal, and plan and schedule of setting up the financial obligation security fund for the removal;

h/ Removal schedule;

i/ Project management and inspection regime;

k/ Supportive research outcomes (if any);

l/ Other contents.

Article 7.Process of appraising and approving petroleum installation removal plans

1. Within 15 working days after receiving a complete dossier of a petroleum installation removal plan prescribed in this Decision, the Ministry of Industry and Trade shall assume the prime responsibility for, and coordinate with related ministries and sectors in, appraising it. Within 15 working days from the date of appraisal, the Ministry of Industry and Trade shall consider and approve the plan.

2. If the appraisal results show that the petroleum installation removal plan needs to be modified or supplemented, within 5 working days from the date of appraisal, the Ministry of Industry and Trade shall send a written request to the organization or individual concerned for modifying or supplementing the plan or responding to the appraisal opinions.

Within 15 working days after receiving the modifications and supplementations or responses to the appraisal opinions from the concerned organization or individual, the Ministry of Industry and Trade shall consider and approve the plan.

Article 8.Updating and adjustment of petroleum installation removal plans

1. Organizations and individuals shall update and adjust a petroleum installation removal plan in one of the following cases:

a/ The field development plan or early oil and gas exploitation plan or oil and gas pipeline or petroleum installation construction project is adjusted or the petroleum installation is upgraded, expanded or additionally invested, leading to a forecast that the latest approved total cost of the removal will change at least 20%;

b/ At least 1 year before the petroleum contract or petroleum exploitation term expires or before the gas installation stops operating;

c/ The petroleum installation becomes unsafe and/or is irreparably damaged due to an incident.

2. Organizations and individuals shall submit directly or send by post 1 dossier set of the adjusted petroleum installation removal plan prescribed in Clause 3 of this Article to the Ministry of Industry and Trade.

3. A dossier of the adjusted petroleum installation removal plan must comprise:

a/ A written request for approval of the adjusted petroleum installation removal plan;

b/ Vietnam Oil and Gas Group’s written approval of the adjusted plan (for dossiers submitted by petroleum contractors and member enterprises of the Group;

c/ One copy of the adjusted plan;

d/ Twenty-five summaries of the adjusted plan.

4. An adjusted petroleum installation removal plan must have the following principal contents:

a/ The approved contents;

b/ The adjusted contents as compared to the approved plan, and the reasons for adjustment;

c/ One copy of the decision approving the petroleum installation removal plan, and of the previously adjusted petroleum installation removal plan(s) (if any).

5. The order for considering and approving an adjusted petroleum installation removal plan must comply with Article 7 of this Decision.

Article 9.Formulation and approval of reports on completion of the removal of petroleum installations

1. Within 9 months after completing the removal of a petroleum installation, organizations and individuals shall make a removal completion report and submit it to the Ministry of Industry and Trade for approval.

2. A report on completion of the removal of a petroleum installation must have the following principal contents:

a/ Description of the petroleum installation and removal activities already carried out;

b/ Removal schedule;

c/ Presentation and assessment of the differences (if any) between the actual removal activities and the approved removal plan;

d/ Actual cost of the removal;

dd/ Summary of environmental safety assurance activities already carried out, including collecting, transporting and disposing of debris and wastes, etc.;

e/ Commitment on the responsibility for the installation left in place (if any);

g/ Conclusions and proposals (if any).

3. The order and procedures for approving a report on completion of the removal of a petroleum installation must comply with Article 7 of this Decision.

Chapter III

REMOVAL OF PETROLEUM INSTALLATIONS

Section 1

REMOVAL OF INSTALLATIONS SERVING OIL AND GAS FIELD PROSPECTING, EXPLORATION AND DEVELOPMENT AND OIL AND GAS EXPLOITATION

Article 10.Removal of offshore fixed installations

1. Removal of the topside platform and attached equipment

a/ Technological systems (Christmas tree, collectors, separators, tanks, oil pumps, transmission pipelines, etc.), solution system, cement, energy system, fire and explosion prevention and fighting system, drilling formwork, collector pipelines, protection structures, anchor blocks and points, anchor ropes, risers and their bases, etc., shall be cleaned before being removed or shall be transported ashore for disposal under regulations;

b/ The topside platform and attached equipment shall be completely removed, collected and classified for the purpose of reuse, recycling or disposal in accordance with law;

c/ Wastes shall be collected and disposed of in accordance with law.

2. Removal of the jacket platform and attached equipment

a/ The jacket platform and attached equipment shall be removed for reuse or disposal in accordance with law;

b/ All piles, pipes and structures driven into the seabed shall be cut under the natural seabed surface, ensuring that no part thereof emerges above the seabed surface and that such does not obstruct navigation and other marine exploitation activities. The depth of the cuts will depend on the seabed erosion conditions in the relevant areas.

Article 11.Removal of floating facilities

1. Organizations and individuals shall clean oil and chemicals from floating facilities, structures and attached equipment (soft pipelines, conduits, etc.) before removing these floating facilities.

2. Floating facilities, structures and attached equipment shall be transported out of their installation places, completely removed and transported to other places for reuse or ashore for storage or disposal in accordance with law.

Article 12.Removal of offshore infield pipelines

1. Organizations and individuals shall remove all connecting pipelines and suspended pipeline segments and may do so only after having cleaned oil, gas and chemicals in such pipelines.

2. Other facilities and equipment related to petroleum installations (electric and optical cable systems, submarine valves, control devices, etc.) shall be wholly removed, collected and classified for the purpose of reuse, recycling or disposal in accordance with law.

3. Organizations and individuals are not required to remove underground pipelines or pipelines that do not need to be removed but shall clean oil, gas and chemicals in these pipelines.

4. The leaving in place of any underground pipelines or pipelines that do not need to be removed and the cleaning of these pipelines should be stated in plans on removal of petroleum installations. Pipeline cleaning results should be stated in removal completion reports.

Article 13.Preservation or disposal of oil wells

The disposal or preservation of oil wells upon the expiration of their useful life pending their removal must comply with current regulations.

Article 14.Removal of installations serving oil and gas field prospecting, exploration and development and oil and gas exploitation on the mainland

The removal of petroleum installations on the mainland must comply with Articles 10, 12 and 13 of this Decision and must ensure safety for humans and the environment in accordance with law.

Section 2

REMOVAL OF GAS INSTALLATIONS

Article 15.Removal of installations and equipment serving gas collection, processing and transportation and removal of offshore gas pipelines

1. The removal of installations and equipment serving offshore gas collection, processing and transportation must comply with Article 10 of this Decision.

2. The removal of offshore gas pipelines must comply with Article 12 of this Decision.

Article 16.Removal of gas pipelines on the shore or running across rivers, lakes or fixed installations

1. Organizations and individuals shall remove gas pipelines on the shore or running across rivers or lakes and may do so only after having cleaned oil, gas and chemicals in these pipelines.

2. For gas pipelines laid under fixed installations or on the bottom of rivers, lakes or canals without affecting waterway navigation, organizations and individuals are not required to remove them but shall clean oil, gas and chemicals in these pipelines. The leaving in place and cleaning of these pipelines should be stated in plans on removal of petroleum installations. Pipeline cleaning results should be stated in removal completion reports.

Article 17.Removal of installations of gas processing-treatment plants

1. Organizations and individuals shall clean installations of gas processing-treatment plants before removing them.

2. Installations and attached equipment shall be completely removed, collected and classified for reuse, recycling or disposal in accordance with law.

3. Wastes shall be collected and treated in accordance with law before being disposed of.

Section 3

GENERAL REQUIREMENTS ON REMOVAL OF PETROLEUM INSTALLATIONS

Article 18.Disposal and management of wastes

Organizations and individuals shall dispose of and manage wastes in accordance with law.

Article 19.Safety assurance

1. Organizations and individuals shall ensure that all removal activities be carried out in a safe manner and in accordance with regulations on safety management in petroleum and maritime activities.

2. Before removing petroleum installations, organizations and individuals shall submit to the Ministry of Industry and Trade for approval safety documents, including safety management program, risk assessment report and emergency response plan.

3. The contents of a safety management program, risk assessment report or emergency response plan and order of its approval must comply with law.

4. In the course of removing petroleum installations, organizations and individuals shall:

a/ Establish, maintain and develop safety management systems to control risks in all removal activities;

b/ Ensure that risks of removal activities be identified, analyzed and assessed and appropriate measures be taken to control and minimize risks and prove that risks are allowable as prescribed by law;

c/ Establish and maintain emergency response systems to ensure that necessary response measures be taken rapidly and effectively and help mitigate harms to humans, the environment or property in case incidents or accidents occur;

d/ Ensure occupational safety and health for removal workers;

dd/ Take necessary measures to ensure safety for humans and property and protect the environment, and send reports to the Ministry of Industry and Trade and Ministry of Natural Resources and Environment on incidents that affect the safety of humans, property or the environment.

Article 20.Environmental protection

1. Environmental monitoring for removal of petroleum installations

a/ Before removing petroleum installations, organizations and individuals shall carry out environmental monitoring and make environmental monitoring reports and send them to the Ministry of Natural Resources and Environment. Monitoring results must be stated in removal plans. Data of environmental monitoring activities carried out within 2 years before the removal of petroleum installations may be used for reporting to the Ministry of Natural Resources and Environment;

b/ Within 9 months after finishing removal activities, organizations and individuals shall again carry out environmental monitoring and make environmental monitoring reports and send them to the Ministry of Natural Resources and Environment. Such a report must assess the impacts of the entire removal process and natural restorability of the environment. Post-removal monitoring results shall be stated in removal completion reports;

c/ The network of environmental monitoring stations and indicators used for environmental analysis and assessment are the same as those for monitoring in the course oil and gas exploitation and petroleum installation operation.

2. Scope, network, samples and indicators for environmental monitoring

a/ For the removal of petroleum installations, the scope, network, samples and indicators for environmental monitoring are the same as those for the final monitoring in the stage of operation of petroleum installations;

b/ For the removal of pipelines, the scope, network, samples and indicators for environmental monitoring are the same as those for the environmental monitoring before the pipelines are installed.

3. Collection of debris and clearing of petroleum installation sites

a/ Debris collection and survey activities should be stated in plans on removal of petroleum installations;

b/ After each round of removal, organizations and individuals should survey and collect debris on the seabed that is discharged from removal or exploitation activities;

c/ The scope of debris survey shall be measured from the outer edge of a petroleum installation

- Within a diameter of at least 90 meters, for drilled wells;

- Within a diameter of at least 100 meters, for production platforms;

- Within a diameter of at least 90 meters, for submarine wellheads and distribution clusters;

- Within a diameter of at least 10 meters, for petroleum pipelines and other installations.

4. Organizations and individuals shall deal with environmental incidents
(if occurring).

5. Organizations and individuals shall notify the Ministry of Natural Resources and Environment, Ministry of Industry and Trade and provincial-level People’s Committees of the localities where petroleum installations are built of the plans on and resources for environmental incident prevention and response in the course of removal of petroleum installations.

Article 21.Special cases

1. In the course of carrying out petroleum activities, if petroleum installations are seriously damaged or face safety risks, affecting the safety of petroleum activities, organizations and individuals shall immediately remove wholly or partially petroleum installations and concurrently report thereon to the Ministry of Industry and Trade.

2. In the course of removing petroleum installations, any unanticipated circumstances that obstruct and delay removal activities under the approved removal plans, organizations and individuals shall make adjustments to such plans and submit them to the Ministry of Industry and Trade.

Organizations and individuals shall submit directly or send by post a report on the above adjustments to the Ministry of Industry and Trade. Within 15 working days after receiving the report, the Ministry of Industry and Trade shall examine and approve it. If disapproving these adjustments, the Ministry of Industry and Trade shall issue a written notice stating the reason to the organizations or individuals.

Article 22.Postponement of removal of petroleum installations

1. Organizations and individuals that carry out oil and gas prospecting, exploration and exploitation activities or own gas installations may propose postponement of the removal of petroleum installations under Clause 2, 3 or 4 of this Article.

2. Conditions for postponement of the removal of petroleum installations

a/ The petroleum installations still maintain their integrity and pose no risk to future removal activities;

b/ The postponement satisfies the requirements on overall safety, navigation safety and environmental protection under Vietnamese law and international petroleum industry practices;

c/ The postponement is needed for scientific research or national defense and security or in other cases of necessity;

d/ The financial obligation security fund for removal of petroleum installations has been properly set up and fully paid under the approved removal plan;

dd/ For drilled wells, the postponement of their removal is permitted only when organizations and individuals take the responsibility for all issues that may arise from the postponement;

e/ Petroleum installations remain usable and satisfy safety requirements.

3. Organizations and individuals shall submit directly or send by post proposals for postponement of removal of petroleum installations to the Ministry of Industry and Trade. Such proposal must specify:

a/ Actual status of petroleum installations;

b/ Removal plan;

c/ Reason for the proposed postponement;

d/ Management of possible risks;

dd/ Expected postponement time;

e/ Solutions to ensuring the integrity of petroleum installations;

g/ Conclusions and recommendations.

4. The order and procedures for approving the postponement of removal of petroleum installations must comply with Article 7 of this Decision.

Article 23.Leaving of petroleum installations in place

1. In case organizations and individuals have fulfilled the financial security obligation under approved removal plans, the leaving wholly or partially in place of petroleum installations may be considered in one of the following cases:

a/ The removal is technically infeasible;

b/ Removal solutions have been implemented but petroleum installations cannot be recovered safely;

c/ Their removal may harm human life or seriously affect the marine environment but will not affect navigation safety;

d/ Marine pipelines that were originally laid on the seabed have become wholly buried in a natural manner like submarine ones or there are some pipeline segments unburied but organizations and individuals decide to bury them;

dd/ Wellhead equipment; submarine installations; and concrete piles, pipelines anchor blocks and structures of the jacket platform are driven into the seabed in maritime zones having a minimum depth of 500 meters, except special cases related to national defense;

e/ The drilled wells’ supports, and piles, pipelines and structures driven into the seabed are cut from the seabed upward;

g/ The leaving of petroleum installations in place is proved to be necessary.

2. Organizations and individuals shall submit directly or send by post their proposals on leaving petroleum installations in place to the Ministry of Industry and Trade. Such a proposal must state:

a/ Actual status of petroleum installations;

b/ Reason for proposing the leaving of petroleum in place;

c/ Management of possible risks;

d/ Solutions to ensuring the integrity of petroleum installations;

dd/ Conclusions and recommendations.

3. The Ministry of Industry and Trade shall consider and approve the leaving in place of petroleum installations that fall into one of the cases specified in Clause 1 of this Article. The order and procedures for approving the leaving of petroleum installations in place must comply with Article 7 of this Decision.

4. Responsibilities of organizations and individuals when their petroleum installations are left in place

a/ To submit dossiers of request for sending out maritime signs to competent agencies for issuance of notices to mariners;

b/ To set up maritime warning systems for petroleum installations left in place;

c/ To transfer the whole financial obligation security fund for removal of petroleum installations and relevant legal documents to Vietnam Oil and Gas Group for management and use for future removal activities.

Chapter IV

FINANCIAL OBLIGATION SECURITY FOR THE REMOVAL OF PETROLEUM INSTALLATIONS

Section 1

FINANCIAL OBLIGATION SECURITY FOR THE REMOVAL OF INSTALLATIONS SERVING OIL AND GAS FIELD PROSPECTING, EXPLORATION AND DEVELOPMENT AND OIL AND GAS EXPLOITATION

Article 24.Obligation to remove petroleum installations in the stage of oil and gas field prospecting and exploration

1. In the stage of oil and gas field prospecting and exploration, organizations and individuals are obliged to remove petroleum installations serving oil and gas prospecting and exploration activities (drilled wells, equipment and other facilities) when they are no longer needed or used for petroleum activities according to annual work programs and budget funds (without having to make financial contributions).

2. Costs related to removal activities are expenses for petroleum activities for recovery under petroleum contracts.

Article 25.Method of financial obligation security for the removal of petroleum installations for petroleum projects involving exploitation activities

Financial obligation security for the removal of petroleum installations shall be provided by the method of setting up the financial obligation security fund, except the case of applying another method of providing financial obligation security for the removal of petroleum installations prescribed in Clause 2, Article 2 of this Decision.

Article 26.Time of setting up the financial obligation security fund

1. Within 1 year from the time of exploiting the first oil and gas flow, organizations and individuals shall set up the financial obligation security fund for removal of petroleum installations according to the approved plan on removal of petroleum installations.

2. For organizations and individuals that currently exploit oil and gas but have not yet set up the financial obligation security fund for the removal of petroleum installations, they shall set up this fund immediately after the effective date of this Decision, except the case of applying another method of providing financial obligation security for the removal of petroleum installations prescribed in Clause 2, Article 2 of this Decision.

3. The financial obligation security fund shall be set up annually according to the removal plans approved by the Ministry of Industry and Trade. If such plan is not approved by the Ministry of Industry and Trade within 1 year from the time of exploiting the first oil and gas flow, a provisional fund shall be set up based on the data provided in the field development plan approved by the Prime Minister or the early exploitation plan approved by the Ministry of Industry and Trade. The annual deduction for setting up the fund shall be adjusted after the Ministry of Industry and Trade approves the removal plan.

Article 27.Principles of setting up, adjustment, use and finalization of the financial obligation security fund

The setting up, adjustment and finalization of the financial obligation security fund must comply with Articles 77, 78 and 79 of the Government’s Decree No. 95/2015/ND-CP of October 16, 2015, detailing a number of articles of the Petroleum Law.

Article 28.Levels of deductions for setting up the financial obligation security fund

The annual level of deduction for setting up the financial obligation security fund for removing petroleum installations shall be determined according to the following formula:

Of which:

- E_nis the level of deduction for setting up the fund in year n, calculated in US dollar (USD).

- A_nis the actually exploited output of year n, calculated in barrel of oil equivalent.

- B_nis the total cost of removal activities of year n, B_n= (b₁- b₂), of which:

+ b₁is the total estimated cost of removal activities under the most recently approved removal plan, calculated in USD.

+ b₂is the cost estimated in the approved latest removal plan for the items of equipment, assets or installations already removed by year (n-1), calculated in USD.

- C_(n-1)is the balance of the financial obligation security fund as of December 31 of year (n-1), which is the total balance of all accounts at the fund of Vietnam Oil and Gas Group for the oil and gas fields concerned, certified by related commercial banks, calculated in USD.

- I_(n-1)is the bank deposit interest which organizations and individuals receive (if any) after Vietnam Oil and Gas Group performs on their behalf the obligations toward the state budget for year (n-1).

- D_nis the residual recoverable reserve, D_n= d₁- d₂, of which:

+ d₁is the recoverable reserve determined by the end of year n under the approved field development plan or early exploitation plan, calculated in barrel of oil equivalent.

+ d₂is the total exploited output accumulated from the oil and gas fields concerned by year (n-1), calculated in barrel of oil equivalent.

Article 29.Obligation to set up the financial obligation security fund in case organizations and individuals terminate exploitation or petroleum contracts expire

1. Before terminating exploitation or terminating petroleum contracts ahead of time, organizations and individuals shall fully set up the financial obligation security fund in accordance with this Decision.

2. If petroleum installations are not required to be removed upon the termination of exploitation or expiration of petroleum contracts, organizations and individuals shall fully transfer the financial obligation security fund to Vietnam Oil and Gas Group.

Article 30.Currency used for setting up the financial obligation security fund

The currency used for setting up the financial obligation security fund is US dollar.

Article 31.Management of the financial obligation security fund

1. Vietnam Oil and Gas Group shall manage the financial obligation security fund for the removal of petroleum installations.

2. When the financial obligation security fund is not used, Vietnam Oil and Gas Group shall deposit the money amount of this fund for each oil and gas field or petroleum contract into the accounts opened at stably operating commercial banks which are on the list provided by the State Bank of Vietnam. The annual interest left after fulfillment of financial obligations toward the State shall be accounted as an increase in the financial obligation security fund.

3. Tax payment for interest earned by the financial obligation security fund

If the financial obligation security fund earns an interest, organizations and individuals shall declare and pay enterprise income tax in accordance with the law on enterprise income tax. Such interest shall be monitored separately for tax payment under regulations.

Article 32.Use, inspection and finalization of the financial obligation security fund

1. The financial obligation security fund shall be used for the removal of petroleum installations.

Organizations and individuals may use this fund for performing their removal obligation under the approved plan on removal of petroleum installations as well as the approved annual working program and budget funds for removal activities. Within 20 days after receiving a funding request from an organization or individual and relevant documents, Vietnam Oil and Gas Group shall transfer an amount of money from this fund which is equivalent to the value deducted by the organization or individual for setting up the fund for each item under the approved removal plan. For the difference between the actual cost of removal activities and the maximum amount that Vietnam Oil and Gas Group may transfer from the fund according to their funding request, organizations and individuals are obliged to make contributions in proportion to their participation benefits for the administer to carry out removal activities.

The estimated removal cost of the removed items shall be excluded from the total removal cost stated in the most recently approved removal plan for adjusting the value of future deductions for the financial obligation security fund.

2. Inspection of the use of the financial obligation security fund

Annually, Vietnam Oil and Gas Group shall audit and certify actual amounts of money from the financial obligation security fund which organizations and individuals have used for the removal of petroleum installations.

3. Finalization of the financial obligation security fund

a/ Within 30 days from the date the Ministry of Industry and Trade approves a report on completion of the removal of petroleum installations, Vietnam Oil and Gas Group shall coordinate with organizations and individuals in finalizing the removal cost.

b/ If, after the finalization, the balance of the financial obligation security fund is higher than zero, such balance shall be used as follows:

- If organizations and individuals have fully recovered the amount of money they have deducted for setting up the financial obligation security fund, the fund’s balance shall be distributed to them and Vietnam Oil and Gas Group according to the proportion of dividing oil or gas profits based on the highest oil or gas output scale already applied under the petroleum contract.

- If organizations and individuals have not yet fully recovered the amount of money they have deducted for setting up the financial obligation security fund, the fund’s balance shall be first refunded to them for offsetting the unrecovered amount. The fund’s balance (if any) after the offsetting shall be distributed to organizations and individuals and Vietnam Oil and Gas Group according to the proportion of dividing oil or gas profits based on the highest oil or gas output scale already applied under the petroleum contract.

4. Annually, Vietnam Oil and Gas Group shall report to the Ministry of Industry and Trade and Ministry of Finance on the management, use, inspection and finalization of the financial obligation security fund for the removal of petroleum installations.

Article 33.Handling of the difference between the financial obligation security fund received by Vietnam Oil and Gas Group and the cost of removal of petroleum installations

1. If the financial obligation security fund is larger than the paid cost of removal activities, Vietnam Oil and Gas Group shall perform financial obligations for and distribute such difference in accordance with law.

2. If the financial obligation security fund is smaller than the paid cost of removal activities, Vietnam Oil and Gas Group may offset the deficit by allocating it over 5 years at most into its production and business expenses.

Section 2

FINANCIAL OBLIGATION SECURITY FOR THE REMOVAL OF GAS INSTALLATIONS

Article 34.Method of providing financial obligation security for the removal of gas installations

1. Financial obligation security for the removal of gas installations shall be provided by the method of setting up the financial obligation security fund.

2. Annual deductions for the fund for the removal of gas installations shall be accounted as production and business expenses of organizations and individuals.

Article 35.Time of setting up the financial obligation security fund

Within 1 year after transporting or processing the first gas flow or right after the plan on removal of gas installations is approved, organizations and individuals shall make deductions for setting up the financial obligation security fund.

Article 36.Level of deductions for setting up the financial obligation security fund

The level of annual deduction for setting up the financial obligation security fund for removal of gas installations shall be determined as follows:

Of which:

- E_nis the level of deduction for setting up the fund in year n, calculated in VND;

- A_nis the transported gas output of year n under the approved plan on removal of gas installations, calculated in million cubic meters of gas;

- Bis the approved total cost of removal;

- C_(n-1)is the fund’s balance as of December 31 of year (n-1) (inclusive of both principal and interest by the end of year (n-1)), calculated in VND;

- D_nis the total transported gas volume in year n under the approved investment report, calculated in million cubic meters of gas.

Article 37.Management of the financial obligation security fund

1. Organizations and individuals that own gas installations shall set up, manage and use the financial obligation security fund under the approved removal plan. If gas installations are permitted to be left in place under Article 23 of this Decision, these organizations and individuals may account the fund’s balance as their income.

2. When the financial obligation security fund is not used yet, organizations and individuals may deposit the amount of money of the fund for each gas project into their accounts opened at stably operating commercial banks which are on the list provided by the State Bank of Vietnam. The annual interest left after fulfilling financial obligations toward the State shall be accounted as an increase in the fund.

3. If the financial obligation security fund earns an interest, organizations and individuals shall declare and pay enterprise income tax thereon in accordance with the law on enterprise income tax. The interest earned from this fund shall be separately monitored for tax payment under regulations.

4. Annually, organizations and individuals shall report on the setting-up, management and use of the financial obligation security fund to the Ministry of Industry and Trade.

5. If many investors co-invest in a gas installation, they may co-own the deposit accounts of the financial obligation security fund.

Article 38.Use and finalization of the financial obligation security fund

1. The fund shall be used for removing gas installations. Organizations and individuals may use the fund for performing the removal obligation under the approved plan on removal of gas installations.

2. The fund shall be finalized in accordance with law.

3. Balance of the financial obligation security fund

a/ If the financial obligation security fund is larger than the amount necessary for the removal of gas installations, the difference shall be accounted as income of organizations and individuals that own such gas installations after fulfilling their financial obligations toward the State in accordance with law;

b/ If the financial obligation security fund is smaller than the amount necessary for the removal of gas installations, at least 6 months before the gas installations expire or terminate operation, organizations and individuals shall make full contributions under the approved removal plan in proportion to their money amounts they have contributed in order to own the gas installations.

Article 39.Currency used for setting up the financial obligation security fund

The currency used for setting up the financial obligation security fund is Vietnam dong.

Chapter V

IMPLEMENTATION PROVISIONS

Article 40.Responsibilities of ministries

1. The Ministry of Industry and Trade

To assume the prime responsibility for, and coordinate with the Ministries of Transport; Natural Resources and Environment; Construction; and Finance in, inspecting and examining activities of removing petroleum installations.

2. The Ministry of Finance

To coordinate with the Ministry of Industry and Trade in examining and inspecting the management, use and finalization of the financial obligation security fund.

3. The State Bank of Vietnam

a/ Annually, to provide a list of stably operating commercial banks to Vietnam Oil and Gas Group and organizations and individuals that manage the financial obligation security fund for the removal of gas installations for the purpose of depositing the fund’s money in accordance with this Decision;

b/ If detecting that a commercial bank on the provided list is likely to be placed under special control or likely to become insolvent, the State Bank of Vietnam shall promptly notify such to Vietnam Oil and Gas Group and organizations and individuals that manage the financial obligation security fund for the removal of gas installations for taking proactive measures.

4. The Ministries of Natural Resources and Environment; Construction; and Transport shall, within the ambit of their functions and powers, coordinate with the Ministry of Industry and Trade in performing the state management of activities of removing petroleum installations.

Article 41.Transitional provisions

1. For plans on removal of petroleum installations approved before the effective date of this Decision, organizations and individuals may still implement them.

2. Organizations and individuals that currently exploit oil and gas but have not yet submitted a plan on removal of petroleum installations shall make such plan and submit it to the Ministry of Industry and Trade for approval in accordance with this Decision and relevant regulations.

3. For gas installations which currently operate or for which competent authorities have issued investment project approval decisions before the effective date of this Decision, organizations and individuals shall work out a specific handling plan suitable to each project and submit it to the Ministry of Industry and Trade for consideration and submission to the Prime Minister for decision.

Article 42.Effect

This Decision takes effect on February 12, 2018, and replaces the Prime Minister’s Decision No. 40/2007/QD-TTg of Mach 21, 2007, on removal of fixed installations, equipment and facilities serving petroleum activities.

Article 43.Organization of implementation

Ministers, heads of ministerial-level agencies, heads of government-attached agencies, and chairpersons of provincial-level People’s Committees shall implement this Decision.-

For the Prime Minister
Deputy Prime Minister
TRINH DINH DUNG