Law on Oil and Gas 2022, Law No. 12/2022/QH15

LAW ON OIL AND GAS^[1]

Pursuant to the Constitution of the Socialist Republic of Vietnam;

The National Assembly promulgates the Law on Oil and Gas.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Law provides for basic oil and gas investigation and oil and gas activities within the mainland, islands and seas of the Socialist Republic of Vietnam.

Article 2. Subjects of application

This Law applies to Vietnamese and foreign agencies, organizations and individuals involved in basic oil and gas investigation and oil and gas activities.

Article 3. Interpretation of terms

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

1. Oil and gas include crude oil, natural gas and solid or semi-solid hydrocarbons in the natural state, and unconventional oil and gas. Unconventional oil and gas include coal gas, shale oil or argillite oil, shale gas or argillite gas, combustible ice, bitumen or oil and gas in other forms that may exist.

2. Basic oil and gas investigation means the research, survey and investigation of geological formations and material composition, conditions and laws of oil and gas generation aiming to evaluate oil and gas potentials and prospects for use as the basis for setting orientations for oil and gas prospecting activities.

3. Oil and gas activities include activities of oil and gas prospecting, oil and gas field development, oil and gas production, and decommissioning of oil and gas structures.

4. Oil and gas contract means a written agreement signed between the Vietnam Oil and Gas Group and a contractor/contractors to conduct oil and gas activities.

5. Oil and gas production sharing contract means an oil and gas contract containing terms on the sharing of products between the contractual parties on the basis of the quantity of oil and gas obtained from oil and gas activities in the respective contract area; contractors are entitled to cost recovery from oil and gas production, take full responsibility for financial and technical aspects and bear risks by themselves.

6. Combustible ice means the mixture of hydrocarbons and water in the natural, solid state that exists in the form of frozen crystals.

7. Oil and gas structures include drilling platforms, production platforms, auxiliary platforms, storages, floating storages, pipeline systems, mooring buoys, wells and combinations of related facilities, machinery and equipment, and facility structures that are manufactured, constructed, buried and installed permanently or temporarily in service of oil and gas activities.

8. Shale oil or argillite oil means hydrocarbons in the natural, liquid state that is contained in shale or argillite formations.

9. Oil and gas initially-in-place means the calculated or estimated quantity of oil and gas existing initially in naturally occurring accumulations, whether or not discovered by wells.

10. Crude oil means hydrocarbons in the natural, liquid state, asphalt, ozokerite and condensate. Condensate is a liquid hydrocarbon obtained from natural gas by condensation or production.

11. Oil and gas services mean commercial, technical and technological services in service of basic oil and gas investigation and oil and gas activities.

12. Oil and gas project means an independent project or a collection of component projects that is/are formed for the purpose of conducting oil and gas activities.

13. Oil and gas recovery coefficient means the ratio of the quantity of recoverable oil and gas to the quantity of oil and gas initially-in-place of a field or reservoir.

14. Outline plan for oil and gas field development means a document presenting the contents of general research on the necessity, feasibility and preliminary efficiency of an oil and gas field development project with a view to selecting an appropriate field development plan, taking into consideration the potential for future expansion of the field or area (if any).

15. Plan on early production of an oil and gas field means a document presenting the contents of research on the necessity, feasibility and efficiency of the option on early development of the oil and gas field in order to implement oil and gas production concurrently with collection of additional information on the field or reservoir or the course of action for production with the goal of optimizing the oil and gas field development.

16. Oil and gas field development plan means a document presenting the contents of research on the necessity, feasibility and efficiency of the selected oil and gas field development option for use as the basis for developing the oil and gas field.

17. Plan on decommissioning of oil and gas structures means a document presenting the contents of research on technical, technological and environmental options and solutions for, and costs and progress of, the decommissioning of oil and gas structures.

18. Oil and gas production means activities conducted to recover oil and gas from oil and gas fields.

19. Shale gas or argillite gas means hydrocarbons in the natural, gaseous state that is contained in shale or argillite formations.

20. Associated gas means hydrocarbons in the gaseous state that is separated during the recovery and processing of crude oil.

21. Coal gas means hydrocarbons with the main constituent being methane in the gaseous state that is contained in coal seams.

22. Natural gas means hydrocarbons in the natural, gaseous state that is extracted from wells, including also associated gas.

23. Oil and gas block means an area delimited by points with definite geographical coordinates, which is demarcated for the purpose of conducting oil and gas activities.

24. Open oil and gas block means an oil and gas block that is currently under no oil and gas contract.

25. Oil and gas field means a combination of underground geological formations that have been identified as having one or more than one oil and gas-containing reservoir or aquifer.

26. Marginal oil and gas field means an oil and gas field that cannot be developed for exploitation as the investment efficiency is asymptotically lower than the minimum level, given the technological level and normal economic and technical conditions at the time of evaluation.

27. Operator means an organization representing contractors to an oil and gas contract to operate oil and gas activities within the scope of authorization under the provisions of the oil and gas contract.

28. Contractor means an investor that is entitled to conduct oil and gas activities on the basis of an oil and gas contract.

29. Oil and gas discovery means an accumulation of oil and gas discovered by well drilling.

30. Oil and gas field development means activities of planning, designing, procuring, manufacturing, constructing and installing oil and gas structures for the purpose of oil and gas production.

31. Participating interests means the rights, interests, obligations and responsibilities of contractors under an oil and gas contract. Participating interests of each contractor at each time is expressed in percentage, and recorded in the oil and gas contract and the investment registration certificate.

32. Vietnam Oil and Gas Group is the state enterprise whose international name is VIETNAM OIL AND GAS GROUP, called PETROVIETNAM for short, abbreviated as PVN.

33. Oil and gas prospecting means an activity conducted for the purpose of discovering oil and gas accumulations and appraising such accumulations.

34. International oil and gas industry practices mean standards, methods and procedures that have been widely accepted and used by oil and gas investors and countries conducting basic oil and gas investigation and oil and gas activities in the world.

35. Decommissioning of oil and gas structures means an activity conducted for the purpose of demolition, dismantlement, destruction, conversion, and temporary or permanent preservation or other technical measures conformable to law and international oil and gas industry practices with regard to oil and gas structures that are no longer necessary for oil and gas activities.

36. Cost recovery means the receipt back of costs already paid for conducting oil and gas activities from the oil and gas production output in the area under an oil and gas contract that is allowed to be recovered under the oil and gas contract.

37. Oil and gas reserve means the quantity of oil and gas expected to be commercially recoverable from the quantity of oil and gas initially-in-place of a field with certain economic and technical conditions.

38. Declaration of commercial discovery means a written notice sent from a contractor to the Vietnam Oil and Gas Group of a profitably exploitable oil and gas discovery.

Article 4. Application of the Law on Oil and Gas, relevant laws, foreign laws, international oil and gas industry practices

1. In case there are differences in the provisions of the Law on Oil and Gas and those of another law on a specific issue concerning basic oil and gas investigation and oil and gas activities, the Law on Oil and Gas’s provisions concerning the following issues shall prevail:

a/ The competence, order and procedures for investment in oil and gas projects;

b/ The competence of the Members’ Council of the Vietnam Oil and Gas Group to approve, and the responsibility of the Commission for Management of State Capital at Enterprises for giving opinions on, the use of capital by the Vietnam Oil and Gas Group and enterprises with 100% capital held by the Vietnam Oil and Gas Group when exercising the right to participate in oil and gas contracts and the preemptive right to buy participating interests under oil and gas contracts and when conducting oil and gas activities according to the phases of oil and gas contracts and oil and gas projects; the participation of the Vietnam Oil and Gas Group in oil and gas contracts together with the enterprises in which the Vietnam Oil and Gas Group contributes capital; cost handling principles; and management and use of information, data, documents, specimens, oil and gas structures and other assets that have been installed and invested under terminated oil and gas contracts in order to continue to conduct oil and gas activities or decommission oil and gas structures received for decommissioning;

c/ The selection of contractors to sign oil and gas contracts.

2. In case another law that is promulgated after the effective date of this Law provides for the competence, order, procedures and conditions for conducting basic oil and gas investigation and oil and gas activities differently from the Law on Oil and Gas, such law must specify issues to which the Law on Oil and Gas shall apply, issues to which the Law on Oil and Gas shall not apply, and issues to which it shall apply.

3. The parties to an oil and gas contract may agree in the contract on the application of foreign laws or international oil and gas industry practices if the consequences of such application are not contrary to the basic principles of Vietnam’s law, in case Vietnam’s law contains no provisions thereon.

Article 5. The State’s policies on oil and gas

1. The State shall encourage Vietnamese and foreign organizations and individuals to invest in basic oil and gas investigation and oil and gas activities in Vietnam in order to increase oil and gas reserves and production output in potential areas and deep-water and offshore areas, contributing to ensuring national energy security, developing national economy, and protecting Vietnam’s legitimate rights and interests in accordance with international law.

2. The State shall guarantee the ownership over investment capital, assets and other lawful rights and interests of Vietnamese and foreign organizations and individuals conducting basic oil and gas investigation and oil and gas activities in Vietnam.

3. The State shall not collect levy for the use of sea areas for basic oil and gas investigation and oil and gas activities, treatment and transportation of oil and gas resources exploited in Vietnam’s maritime zones to shore via pipelines under oil and gas contracts.

4. The State shall adopt investment incentive policies for oil and gas projects on the basis of each oil and gas block or field in order to promote unconventional oil and gas prospecting, development and production, oil and gas blocks and fields located in deep-water and offshore areas, areas with extremely difficult geographical conditions or complicated geological conditions, and marginal oil and gas fields; and to increase oil and gas recovery coefficient.

5. The State shall encourage Vietnamese and foreign organizations and individuals to share, access and use oil and gas infrastructure and structures in service of basic oil and gas investigation and oil and gas activities under agreement.

Article 6. Principles of basic oil and gas investigation and oil and gas activities

1. Vietnam’s oil and gas resources belong to the entire-people ownership with the State acting as the owner’s representative and performing the uniform management.

2. Organizations and individuals shall conduct basic oil and gas investigation and oil and gas activities on the basis of respect for independence, sovereignty, territorial integrity, sovereign rights and jurisdiction, and assurance of interests and national security of Vietnam, and compliance with Vietnam’s law and treaties to which the Socialist Republic of Vietnam is a contracting party.

3. Organizations and individuals conducting basic oil and gas investigation and oil and gas activities shall comply with Vietnam’s laws on national defense, national security, social order and safety, community well-being, environmental protection, climate change response, oil spill response, protection of natural resources and cultural heritages and conservation of historical-cultural relics and scenic spots.

4. Organizations and individuals conducting basic oil and gas investigation and oil and gas activities shall use state-of-the-art techniques and technologies, comply with national technical regulations, and apply standards conformable with Vietnam’s law and international oil and gas industry practices.

5. Organizations and individuals conducting oil and gas activities shall purchase insurance for structures, equipment and facilities used for oil and gas activities, liability insurance for environmental damage, third-party civil liability insurance, personal accident insurance and other types of insurance in accordance Vietnam’s law and international oil and gas industry practices.

6. All specimens, documents, information and data obtained during the course of conducting basic oil and gas investigation and oil and gas activities shall be managed by the State. The collection, handover, management, use and security of specimens, documents, information and data obtained during the course of conducting basic oil and gas investigation and oil and gas activities must comply with Vietnam’s law and  agreements on implementation of basic oil and gas investigation and oil and gas contracts.

Article 7. Bases for conducting oil and gas activities

1. Oil and gas activities shall be conducted on the basis of signed oil and gas contracts for oil and gas blocks on the list approved by the Prime Minister, except enhanced oil recovery of oil and gas fields, field clusters and blocks as specified at Point c, Clause 2, and Point b, Clause 3, Article 41 of this Law.

2. The Prime Minister shall approve the list of oil and gas blocks and adjustments thereto on the basis of the proposal of the Vietnam Oil and Gas Group and the appraisal results and reports of the Ministry of Industry and Trade.

3. The Government shall provide for dossiers, order and procedures for appraisal and approval of the list of oil and gas blocks and adjustment thereto.

Article 8. Requirements on oil and gas safety

1. Organizations and individuals conducting oil and gas activities must establish safety zones around oil and gas structures.

2. The safety zone around an offshore oil and gas structure embraces:

a/ A no-entry zone, except for subsea structures, which is an area determined by a radius of 500 meters from the outermost edge of the oil and gas structure to all directions, covering also the anchor position in case the  structure is a floating facility or movable structure, except for special cases decided by the Prime Minister;

b/ A no-anchor or no-subsea activity zone, which is an area determined within the distance of 2 nautical miles from the outermost edge of the oil and gas structure, even in case the structure is a subsea structure, where the anchoring of facilities and ships and subsea activities are prohibited, except special cases approved by contractors or decided by the Prime Minister.

3. The safety zone around an onshore oil and gas structure is a safety zone around the onshore structure and equipment serving oil and gas activities, which shall be determined depending on geographical and social conditions of the area where oil and gas activities are conducted and serve the purpose of ensuring the safety of humans and facilities in the course of conducting oil and gas activities.

4. Organizations and individuals conducting oil and gas activities shall perform the following tasks to ensure oil and gas safety:

a/ Formulating documents on safety management, including safety management program, risk assessment report, and emergency response plan, and submitting them to competent state management agencies for approval;

b/ Establishing, maintaining and developing a safety management system to ensure control of risks in all oil and gas activities;

c/ Establishing and maintaining an effective emergency response system, minimizing damage upon occurrence of incidents or accidents causing harms to humans, the environment or property;

d/ Equipping an warning system capable of detecting bad situations that are likely to occur, causing danger to oil and gas structures and the environment, and automatically notifying and informing the events to the operation center, for unmanned offshore oil and gas structures;

dd/ Equipping guard ships to ensure promptly response to emergency cases, for manned offshore oil and gas structures. Operators of oil and gas activities on adjacent oil and gas fields or blocks may share guard ships but must ensure continuous operation of guard ships in order to promptly respond to emergency cases.

5. The Government shall detail this Article.

Article 9. Prohibited acts in basic oil and gas investigation and oil and gas activities

1. Conducting basic oil and gas investigation and oil and gas activities without permission of competent state management agencies.

2. Taking advantage of basic oil and gas investigation and oil and gas activities to affect national defense, security and national interests, and lawful rights and interests of organizations and individuals; causing environmental pollution.

3. Taking advantage of basic oil and gas investigation and oil and gas activities to exploit other natural resources and minerals.

4. Obstructing lawful activities in basic oil and gas investigation and oil and gas activities.

5. Deliberately sabotaging property, equipment, and oil and gas structures; destroying specimens, information and data obtained in the course of conducting basic oil and gas investigation and oil and gas activities.

6. Illegally providing specimens, information and data obtained from basic oil and gas investigation and oil and gas activities.

7. Committing corruption or causing loss and waste in the course of conducting basic oil and gas investigation and oil and gas activities.

Chapter II

BASIC OIL AND GAS INVESTIGATION

Article 10. Organization of basic oil and gas investigation

1. Based on strategies and master plans on energy and mineral resources and proposals of organizations meeting the conditions specified in Article 12 of this Law, the Ministry of Industry and Trade shall assume the prime responsibility for, and coordinate with the Ministry of Natural Resources and Environment and related ministries and agencies in, formulating a list of schemes on basic oil and gas investigation in a way that must ensure generality and consistency and submit such list to the Prime Minister for approval. The list of schemes on basic oil and gas investigation must cover information on organizations in charge of conducting basic oil and gas investigation, sources and estimates of funds for conducting basic oil and gas investigation, and time and form of organization of basic oil and gas investigation.

Upon receipt of a proposal for conducting basic oil and gas investigation in the area in which eligible entities have been assigned to conduct basic geological investigation of minerals or exploration and exploitation of minerals in accordance with the law on minerals, the Prime Minister shall decide on the coordination between related organizations and individuals on the basis of ensuring the highest efficiency and maximum national interests.

2. Funds for conducting basic oil and gas investigation shall be included in state budget estimates, the budget of the Vietnam Oil and Gas Group, and funds of organizations and individuals.

3. Forms of organizing the implementation of schemes on basic oil and gas investigation include:

a/ Assignment of tasks, in case state agencies or enterprises take charge of the implementation of the schemes;

b/ Agreement between the Vietnam Oil and Gas Group and other organizations in case these organizations take charge of the implementation of the schemes.

4. Based on the approved list of schemes on basic oil and gas investigation, the Ministry of Industry and Trade shall assume the prime responsibility for, and coordinate with the Ministry of Natural Resources and Environment and related ministries and agencies in:

a/ Approving detailed outlines and cost estimates for the implementation of schemes on basic oil and gas investigation; approving the contents of agreements between the Vietnam Oil and Gas Group and the organizations in charge of conducting oil and gas fundamental investigation in the case specified at Point b, Clause 3 of this Article;

b/ Guiding the implementation of schemes on basic oil and gas investigation; examining and supervising the implementation of schemes on basic oil and gas investigation;

c/ Organizing pre-acceptance tests and approving the outcomes of schemes on basic oil and gas investigation;

d/ Appraising expenditure items and approving the final accounts of funds from the state budget (if any) and expenditure items of the Vietnam Oil and Gas Group (if any) for implementation of schemes on basic oil and gas investigation.

5. Reports on outcomes of basic oil and gas investigation shall be updated to the national database system on geology and minerals.

6. The Government shall detail this Article.

Article 11. Contents of basic oil and gas investigation

1. Conducting geological and geophysical research and survey and investigation of geological formations and material composition, drilling for the purposes of collecting data and specimens, making reports, drawing geological and geophysical maps of areas under investigation and thematic maps in service of oil and gas prospecting, combined with carrying out research on geohazards, environmental geology and other minerals, and drawing relevant thematic maps.

2. Searching for signs of oil and gas, evaluating oil and gas potential and prospects, implementing zoning and classification by object and group of geological formations in order to identify new oil and gas areas and set orientations for oil and gas prospecting activities.

Article 12. Conditions for conducting basic oil and gas investigation

1. Organizations in charge of conducting basic oil and gas investigation must have sufficient financial and technical capacity and experience in basic oil and gas investigation according to the Government’s regulations.

2. Disqualified organizations must enter into partnerships with other organizations or individuals so as to be qualified for conducting basic oil and gas investigation as specified in Clause 1 of this Article.

3. Individuals participating in basic oil and gas investigation must enter into partnerships with organizations so as to be qualified for conducting basic oil and gas investigation as specified in Clause 1 of this Article.

Article 13. Rights and obligations of organizations conducting basic oil and gas investigation

1. Organizations conducting basic oil and gas investigation have the following obligations:

a/ To comply with the contents of approved schemes;

b/ To ensure the truthfulness and completeness in collecting and synthesizing documents and information on oil and gas geology; to ensure confidentiality of information in the course of conducting basic oil and gas investigation;

c/ To protect minerals and other natural resources in the course of conducting basic oil and gas investigation;

d/ To submit reports on the outcomes of basic oil and gas investigation to the Ministry of Natural Resources and Environment for updating to the national database system on geology and minerals.

2. Organizations conducting basic oil and gas investigation have the right to transfer abroad documents obtained in the course of conducting basic oil and gas investigation and specimens of assorted categories in a quantity conformable with their characteristics and the requirements for analysis and trial processing according to the approved schemes and shall comply with the law on protection of state secrets and other relevant laws.

3. Organizations other than state agencies and enterprises conducting basic oil and gas investigation have the rights specified in Clause 2 of this Article and the following rights:

a/ To manage the exploitation and use of information, data and outcomes of basic oil and gas investigation according to the approved agreements;

b/ To use information according to the commitment on document confidentiality, and propose cost recovery when participating in bidding for, and signing, oil and gas contracts for oil and gas blocks in areas for which basic oil and gas investigation has been conducted under the schemes.

Article 14. Management, exploitation and use of specimens, documents, information, data and outcomes of basic oil and gas investigation

1. State agencies and enterprises in charge of conducting basic oil and gas investigation shall manage specimens, documents, information, data and outcomes of basic oil and gas investigation they conduct; other organizations in charge of conducting basic oil and gas investigation shall submit specimens, documents, information, data and approved outcomes of basic oil and gas investigation to the Vietnam Oil and Gas Group for management.

2. Organizations and individuals may exploit and use documents, information, data and outcomes of basic oil and gas investigation to carry out research and evaluation and make proposal on signing of oil and gas contracts and shall pay charges for exploitation and use of oil and gas documents in accordance with the law on charges and fees or approved agreements.

3. Organizations and individuals that access, refer to, exploit and use documents, information, data and outcomes of basic oil and gas investigation must ensure information confidentiality in accordance with law and agreements.

4. The Government shall detail this Article.

Chapter III

SELECTION OF CONTRACTORS FOR SIGNING OIL AND GAS CONTRACTS

Article 15. Forms of contractor selection

The selection of contractors to sign oil and gas contracts for open oil and gas blocks shall be carried out in one of the following forms:

1. Open bidding;

2. Restricted bidding;

3. Competitive offer;

4. Contractor appointment.

Article 16. Conditions for participation in bidding for selection of contractors

Organizations and individuals participating in bidding for selection of contractors to sign oil and gas contracts must satisfy the following conditions:

1. Having establishment and operation registration certificates granted in accordance with the law of their country, for institutional contractors; or having full civil act capacity in accordance with the law of the country of which they are citizens, for individual contractors;

2. Having sufficient financial and technical capacity and experience in oil and gas activities; those who do not satisfy this condition must enter into partnerships with other organizations and individuals so as to be qualified for participating in the bidding.

Article 17. Contractor selection plan

1. A contractor selection plan shall be formulated for one or several oil and gas block(s) on the approved list of oil and gas blocks according to Clause 2, Article 7 of this Law in service of the selection of contractors to sign oil and gas contracts.

2. Major contents of a contractor selection plan must include:

a/ A list of oil and gas blocks and form of contractor selection for each oil and gas block;

b/ Preliminary evaluation of oil and gas potential of each oil and gas block;

c/ Time for the selection;

d/ Criteria for selecting contractors;

dd/ Evaluation method.

Article 18. Open bidding

1. The selection of contractors to sign oil and gas contracts in the form of open bidding shall be applied on the principle of competition with regard to oil and gas blocks not falling into the cases specified in Articles 19, 20 and 21 of this Law.

2. The process of open bidding includes the following steps:

a/ Announcing the invitation for bid;

b/ Registering for participation in the bidding;

c/ Issuing the bidding dossier;

d/ Receiving bid dossiers, opening bids and evaluating bid dossiers;

dd/ Appraising, approving and announcing contractor selection results and basic economic and technical conditions of the oil and gas contract;

e/ Negotiating and finalizing the oil and gas contract;

g/ Appraising, approving and signing the oil and gas contract.

Article 19. Restricted bidding

1. The selection of contractors to sign oil and gas contracts in the form of restricted bidding shall be applied to cases with special requirements that only a few contractors can satisfy.

2. The process of restricted bidding includes the same steps as those of the process of open bidding specified in Clause 2, Article 18 of this Law.

Article 20. Competitive offer

1. The selection of contractors to sign oil and gas contracts in the form of competitive offer shall be applied in case the concerned oil and gas blocks are not included in the current contractor selection plan and at least 2 organizations or individuals that fully meet the conditions specified in Article 16 of this Law submit proposals for signing oil and gas contracts.

2. The process of competitive offer includes the following steps:

a/ Announcing competitive offer;

b/ Registering for participation in competitive offer;

c/ Issuing the dossier of invitation for making competitive offers;

d/ Receiving and evaluating dossiers of competitive offer;

dd/ Appraising, approving and announcing contractor selection results and basic economic and technical conditions of the oil and gas contract;

e/ Negotiating and finalizing the oil and gas contract;

g/ Appraising, approving and signing the oil and gas contract.

Article 21. Contractor appointment

1. The selection of a contractor to sign an oil and gas contract in the form of contractor appointment shall be applied to an oil and gas block in the following cases:

a/ It is related to national defense and security;

b/ There is only one organization or individual that fully satisfies the conditions specified in Article 16 of this Law proposing the signing of an oil and gas contract for the block after information thereon has been made public for 30 days but no other contractors show interest;

c/ The contractor currently performing the oil and gas contract for the concerned oil and gas block proposes additional investment in the same contract area with economic and technical conditions under a new oil and gas contract after the signed oil and gas contract expires.

2. The process of contractor appointment includes the following steps:

a/ Issuing the dossier of request for contractor appointment;

b/ Receiving dossiers of proposals and evaluating dossiers of proposals;

c/ Appraising, approving and announcing contractor selection results and basic economic and technical conditions of the oil and gas contract;

d/ Negotiating and finalizing the oil and gas contract;

d/ Appraising, approving and signing the oil and gas contract.

Article 22. Criteria for selection of contractors and methods of evaluating bid dossiers, competitive offer dossiers and dossiers of proposals

1. Contractor selection criteria include:

a/ The contractor’s capacity and experience;

b/ Technical conditions suitable to each oil and gas block;

c/ Economic conditions suitable to each oil and gas block.

2. Methods of evaluating bid dossiers, competitive offer dossiers and dossiers of proposals according to the scoring, comparison and synthesis methods.

3. The Government shall detail this Article.

Article 23. Reviewing and approving contractor selection results

A contractor shall be proposed to be selected when the following conditions are met:

1. Its/his/her bid dossier, competitive offer dossier or dossier of proposals is valid;

2. It/he/she satisfies the requirements on capacity and experience in oil and gas activities;

3. It/he/she satisfies technical requirements;

4. It/he/she satisfies economic requirements;

5. Its/his/her bid dossier or competitive offer dossier is ranked first.

Article 24. Organization of contractor selection

1. The Vietnam Oil and Gas Group has the following responsibilities:

a/ To formulate a plan on contractor selection and report it to the Ministry of Industry and Trade for appraisal and submission to the Prime Minister for approval;

b/ To announce the invitation for bid or competitive offer; to issue bidding dossiers, dossiers of invitation for making competitive offers or dossiers of request for contractor appointment; to organize the evaluation of bid dossiers, competitive offer dossiers or dossiers of proposals;

c/ To report on the contractor selection results to the Ministry of Industry and Trade for appraisal and submission to the Prime Minister for approval;

d/ To notify the contractor selection results and the basic economic and technical conditions of the oil and gas contract, organize the negotiation and finalize the contents of the oil and gas contract for reporting to the Ministry of Industry and Trade for appraisal and submission to the Prime Minister for approval for use as a basis for signing the oil and gas contract.

2. The Government shall provide for dossiers, order and procedures for selecting contractors to sign oil and gas contracts.

Article 25. Bid security

1. Bidders are obliged to take bid security measures as required in the bidding dossiers.

2. Bid security shall be refunded to bidders if they do not win bids or after the oil and gas contract is signed.

Chapter IV

OIL AND GAS CONTRACTS

Article 26. Approval of oil and gas contracts

1. After concluding the negotiation for an oil and gas contract, based on the approved contractor selection results, the Vietnam Oil and Gas Group shall, before signing the oil and gas contract, report on the contents of the contract to the Ministry of Industry and Trade for appraisal and submission to the Prime Minister for approval.

2. The appraisal contents of an oil and gas contract include:

a/ The validity of the dossier for appraisal and approval of the contents of the oil and gas contract;

b/ The reasonability of the contract negotiation results;

c/ The conformity of the draft contract with the approved contractor selection results and relevant regulations.

3. The Prime Minister’s approval of the contents of oil and gas contracts shall serve as the ground for contractors’ signing of oil and gas contracts and the substitute for the approval of investment policy for oil and gas projects under the Law on Investment and the Law on Public Investment.

4. The Government shall provide for dossiers, order and procedures for appraisal and approval of oil and gas contracts.

Article 27. Issuance of investment registration certificates

1. Based on signed oil and gas contracts, the Ministry of Industry and Trade shall issue investment registration certificates to contractors conducting oil and gas activities.

2. Major contents of an investment registration certificate include:

a/ Name of the oil and gas contract, oil and gas block, and oil and gas project;

b/ Objectives and scale;

c/ Location;

d/ Operating office;

dd/ Contractors, proportion of participating interests, operator;

e/ Minimum financial commitment for the oil and gas prospecting period;

g/ The contractor’s responsibilities for financial and technical aspects and for bearing risks by itself/himself/herself;

h/ The contractor’s right to cost recovery from oil and gas production under the oil and gas contract;

i/ Term of the oil and gas contract;

k/ Effective date of the oil and gas contract.

3. The Government shall provide for dossiers, order and procedures for issuance of investment registration certificates.

Article 28. Modification of oil and gas contracts and investment registration certificates

1. The modification of oil and gas contracts shall be approved by the Prime Minister based on the Vietnam Oil and Gas Group’s proposals and the Ministry of Industry and Trade’s appraisal reports.

2. The Ministry of Industry and Trade shall modify investment registration certificates  of contractors based on the approved modified oil and gas contracts.

3. The Government shall provide for dossiers, order and procedures for appraisal and approval of the modification of oil and gas contracts and investment registration certificates.

Article 29. Types of oil and gas contracts

1. Oil and gas production sharing contract.

2. Other types of oil and gas contracts.

Article 30. Major contents of oil and gas contracts

1. Major contents of an oil and gas production sharing contract include:

a/ The legal status and participating interests of the contractor(s) signing the contract;

b/ Objects of the contract;

c/ The delimitation of the contract area and time schedule for returning the contract area;

d/ The validity, term and periods of the contract, conditions on extension of periods, change of contract term, and extension of the contract;

dd/ Rights and obligations of contractual parties and the operator;

e/ Minimum work commitment and minimum financial commitment for each period of the contract;

g/ Principles of oil and gas production sharing and determination of recoverable costs;

h/ Principles of selecting contractors providing oil and gas services and goods for oil and gas activities;

i/ The host country’s right over assets and oil and gas structures after cost recovery and contract termination;

k/ Conditions on transfer of rights and obligations of contractual parties;

l/ The Vietnam Oil and Gas Group’s right to participate in the contract upon commercial discoveries and preemptive right to buy the contractor’s participating interests, rights and obligations under the contract upon occurrence of transfer;

m/ Commitments on commissions, training, scientific research funds and priority given to the employment of Vietnamese laborers and use of Vietnamese services;

n/ Responsibilities to protect the environment and ensure safety while conducting oil and gas activities; obligations to decommission oil and gas structures;

o/ Conditions for termination of the contract, handling of violations;

p/ Methods of settling disputes arising from the contract and applicable laws.

2. The Prime Minister shall decide on major contents of oil and gas contracts of other types in conformity with particularities of oil and gas fields, field clusters and blocks.

3. The Government shall promulgate the model oil and gas production sharing contract.

Article 31. Term of oil and gas contracts

1. The term of an oil and gas contract must not exceed 30 years, of which the oil and gas prospecting period must not exceed 5 years, except the case specified in Clause 2 of this Article.

2. The term of the oil and gas contract for an oil and gas block on the list of oil and gas blocks entitled to investment incentives and special investment incentives must not exceed 35 years, of which the oil and gas prospecting period must not exceed 10 years.

3. The term of an oil and gas contract may be extended but for no more than 5 years; the oil and gas prospecting period may be extended but for no more than 5 years based on the Ministry of Industry and Trade’s approval, except the case specified in Clause 4 of this Article.

4. In special cases due to national defense and security reasons, complicated oil and gas geological conditions, particular difficulties regarding field conditions for conducting oil and gas activities or when it is necessary to meet time conditions for ensuring efficient gas production, the Prime Minister shall permit the extension of the term of oil and gas contracts or the extension of oil and gas prospecting period specified in Clause 3 of this Article based on the Ministry of Industry and Trade’s appraisal opinions.

5. A contractor who has declared a commercial discovery but has neither found out outlet markets nor satisfied conditions regarding pipelines and processing equipment may retain the discovered gas area. The period of retaining the discovered gas area must not exceed 5 years, based on the Ministry of Industry and Trade’s approval. When such period expires, if the contractor still fails to find out outlet markets and satisfy conditions regarding pipelines and processing equipment, the Prime Minister shall consider permitting the extension of the period of retaining the area for at most 2 more years based on the Ministry of Industry and Trade’s approval. During the period of retaining the discovered gas area, the contractor shall perform its/his/her jobs as committed under the oil and gas contract.

6. In force majeure cases, parties to an oil and gas contract may negotiate to suspend the exercise of a number of rights and performance of a number of obligations under the oil and gas contract; the Vietnam Oil and Gas Group shall report thereon to the Ministry of Industry and Trade for decision. The duration of suspension of the exercise of a number of rights and performance of a number of obligations under an oil and gas contract due to a force majeure reason shall be counted from the time the force majeure event occurs till the time the force majeure event ends.

7. The duration of suspension of the exercise of a number of rights and performance of a number of obligations under an oil and gas contract for national defense and security reasons shall be decided by the Prime Minister at the request of competent agencies.

8. The extended duration of the oil and gas prospecting period, the period of retaining the discovered gas area for which declaration of commercial discovery has been made and the duration of suspension of the exercise of a number of rights and performance of a number of obligations under an oil and gas contract in a force majeure case or for national defense and security reasons shall not be included in the term of the oil and gas contract.

9. The Government shall provide for dossiers, order and procedures for extension of the term of oil and gas contracts, extension of the oil and gas prospecting period, decision on the period of retaining discovered gas areas, and decision on the duration of suspension of the exercise of a number of rights and performance of a number of obligations under oil and gas contracts in force majeure cases or for national defense and security reasons.

Article 32. Areas, return of areas, and expansion of areas of oil and gas contracts, consolidation of oil and gas discoveries and oil and gas fields

1. The area of an oil and gas contract covers the area of one or more than one oil and gas block specified in the oil and gas contract.

2. A contractor is obliged to return part of the oil and gas contract area at the end of each stage of the oil and gas prospecting period and decommission oil and gas structures in the to-be-returned area in accordance with this Law and relevant laws.

3. A contractor may propose the retention of the whole area of the oil and gas contract or suspension of the performance of the obligation to return the oil and gas contract area in case it/he/she has submitted a proposal to continue conducting oil and gas exploration and appraisal with regard to a number of potential formations in the to-be-returned area based on the Ministry of Industry and Trade’s approval.

4. Upon a commercial discovery, if the oil and gas field encroaches the area of an adjacent open oil and gas block, the contractor may propose the expansion of the area of the oil and gas contract.

5. Upon a commercial discovery, if the oil and gas field encroaches the area of one or more than one adjacent oil and gas block for which oil and gas contracts have been signed, the contractors may propose the consolidation of oil and gas discoveries and oil and gas fields for appraisal and joint development with a view to raising economic efficiency and optimizing the efficiency of oil and gas resources.

6. Contractors shall submit to the Vietnam Oil and Gas Group for consideration and reporting to the Ministry of Industry and Trade for the latter to appraise and submit to the Prime Minister for approval the expansion of  oil and gas contract areas and consolidation of oil and gas discoveries and oil and gas fields for appraisal and joint development.

7. When it is necessary to build structures and install equipment outside the area of an oil and gas contract for production, processing and transportation of oil and gas from the oil and gas contract area, the contractor may propose such construction and installation in the outline plan for oil and gas field development, the plan on early production of the oil and gas field (if any) and the oil and gas field development plan and submit such plans for appraisal and approval under Articles 46, 47 and 48 of this Law.

8. The Government shall provide for dossiers, order and procedures for submission, appraisal and approval of the retention of, or suspension of the performance of the obligation to return, oil and gas contract areas, expansion of oil and gas contract areas, and consolidation of oil and gas discoveries and oil and gas fields.

Article 33. Levels of cost recovery in oil and gas contracts

Parties to an oil and gas contract may agree upon the contractor’s level of cost recovery in the oil and gas contract as follows:

1. Up to 50% of the yearly oil and gas production output, for oil and gas contracts for ordinary oil and gas blocks;

2. Up to 70% of the yearly oil and gas production output, for oil and gas contracts for oil and gas blocks and fields entitled to investment incentives;

3. Up to 80% of the yearly oil and gas production output, for oil and gas contracts for oil and gas blocks and fields entitled to special investment incentives.

Article 34. Languages used in oil and gas contracts

The languages used in oil and gas contracts and accompanying documents are Vietnamese and English or another common foreign language as agreed upon by contractual parties. The Vietnamese and English versions or the version in another common foreign language have equal legal validity.

Article 35. Invalidation of oil and gas contracts

1. An oil and gas contract shall be invalidated as specified therein or when the contract expires but is not eligible for extension under Clauses 3 and 4, Article 31 of this Law.

2. An oil and gas contract shall be terminated prematurely as agreed upon by contractual parties provided that the contractor has fulfilled its/his/her committed obligations and must notify thereof to the Vietnam Oil and Gas Group 6 months before the time of proposing the premature termination of the contract.

Article 36. Transfer of participating interests, rights and obligations of contractors under oil and gas contracts

1. Contractors may transfer their participating interests, rights and obligations under oil and gas contracts. The transfer of the whole or part of participating interests, rights and obligations of a contractor under an oil and gas contract must satisfy the following conditions:

a/ The transferee commits to taking over the transferor’s participating interests, rights and obligations and complying with the signed oil and gas contract;

b/ Both the transferor and transferee satisfy the conditions specified in this Law and other relevant laws;

c/ The transferor is obliged to pay taxes, charges and fees relating to the transfer in accordance with the law on taxes, charges and fees and other relevant laws.

2. The transfer of participating interests, rights and obligations of contractors under oil and gas contracts shall be approved by the Prime Minister based on the Ministry of Industry and Trade’s appraisal and take effect in modified investment registration certificates.

3. The Government shall provide for dossiers, order, procedures for submission, appraisal and approval of the transfer of participating interests, rights and obligations of contractors under oil and gas contracts.

Article 37. Settlement of disputes arising from oil and gas contracts

Disputes arising from oil and gas contracts must be first of all settled through negotiation and conciliation. In case negotiation and/or conciliation fail(s), disputes may be settled at arbitration or court as specified in oil and gas contracts in accordance with the Law on Investment and other relevant laws.

Article 38. Operating offices of foreign operators under oil and gas contracts

1. Foreign operators shall establish operating offices in Vietnam to implement oil and gas contracts. Operating offices must have their own seals and may open accounts, recruit employees, and exercise their rights and perform their obligations within the scope of authorization stated in the contracts and operating agreements reached among contractors and in accordance with Vietnam’s law.

2. A foreign operator may use one operating office in Vietnam to manage and operate oil and gas activities under one or more than one oil and gas contract in the country. Administrative overheads and operating costs of each oil and gas contract must be allocated and separately accounted.

3. In case of changing the address or the head of an operating office or taking over an operating office due to change of operator, the operator shall send a written notice to the investment registration agency of the locality where the operating office is located.

4. In case of terminating the operation of the operating office, an operator shall send a dossier of notification of termination of the operation of the operating office to the investment registration agency of the locality where the operating office is located.

5. The Government shall provide for dossiers, order and procedures for the establishment and termination of the operation of operating offices and changes in the case specified in Clause 3 of this Article.

Article 39. Exercise of the right to participate in, preemptive right to buy participating interests, and taking over of participating interests under, oil and gas contracts

1.The Vietnam Oil and Gas Group may exercise the right to participate in oil and gas contracts and preemptive right to buy part or the whole of participating interests under signed oil and gas contracts in case contractors intend to transfer their participating interests to others based on conditions on the transfer that have been agreed upon between the contractors and potential transferees.

2.The Vietnam Oil and Gas Group may take over all participating interests, data and existing oil and gas structures of contractors in case the latter decide to withdraw from oil and gas contracts due to special reasons approved by the Prime Minister.

3. The Vietnam Oil and Gas Group shall report to the Ministry of Industry and Trade for appraisal and submission to the Prime Minister for consideration and decision the Vietnam Oil and Gas Group’s exercise of the right to participate in, the preemptive right to buy participating interests and taking over of all participating interests of contractors under, oil and gas contracts.

4. The Government shall provide for dossiers, order and procedures for submission, appraisal and approval of the exercise of the right to participate in, preemptive right to buy participating interests and taking over of the contractors’ participating interests under, oil and gas contracts; mechanisms for management, monitoring, use and handling of finances with regard to assets and participating interests taken over from contractors due to special reasons.

Article 40. Proposal of additional investment plans and signing of new oil and gas contracts prior to the expiration of existing oil and gas contracts

1. At least 2 years before its/his/her oil and gas contract expires, a contractor may propose an additional investment plan to increase reserves, raise oil and gas recovery coefficient and extract oil and gas in the same contract area with suitable economic and technical conditions so as to sign a new oil and gas contract after the signed contract expires.

2. Based on the proposal of the contractor implementing the oil and gas contract, the Vietnam Oil and Gas Group shall report to the Ministry of Industry and Trade for appraisal and submission to the Prime Minister for consideration and approval the appointment of the contractor to sign a new oil and gas contract under Point c, Clause 1, and Clause 2, Article 21 of this Law.

3. The contractor signing a new oil and gas contract may continue to use free-of-charge oil and gas information, data, documents, specimens and structures and other assets already installed and invested in the same contract area to conduct oil and gas activities under the new contract provided that the host country’s interests under the new contract is determined, taking into consideration the fact that the contractor is not  required to pay for use of oil and gas information, data, documents, specimens and structures and other assets already installed and invested to conduct oil and gas activities.

Article 41. Taking over of oil and gas fields, field clusters and blocks from contractors upon expiration of oil and gas contracts

1. At least 2 years before an oil and gas contract expires, the Vietnam Oil and Gas Group shall report to the Ministry of Industry and Trade on the plan on subsequent handling of the oil and gas field, field cluster or blocks under operation in the contract area.

2. At least 6 months before an oil and gas contract expires, if no new contract is signed under Article 40 of this Law, the Vietnam Oil and Gas Group shall report to the Ministry of Industry and Trade for appraisal and submission to the Prime Minister for approval the plan on subsequent handling of the oil and gas field, field cluster or blocks according to one of the following options:

a/ Stopping production activities at the oil and gas field, field cluster or blocks;

b/ Continuing to conduct production activities at the oil and gas field, field cluster or blocks under a new oil and gas contract with suitable economic and technical conditions. In this case, the contractor signing the new oil and gas contract may use oil and gas information, data, documents, specimens and structures and other assets installed and invested in the same contract area under Clause 3, Article 40 of this Law;

c/ Assigning the Vietnam Oil and Gas Group to conduct enhanced oil recovery at the oil and gas field, field cluster or blocks.

3. In case of continuing to conduct production activities at the oil and gas field, field cluster or blocks under Point b, Clause 2 of this Article, upon the expiration of the oil and gas contract, the Vietnam Oil and Gas Group shall take over the oil and gas field, field cluster or blocks in status quo from the contractor and operate oil and gas activities under the financial mechanism stated in the approved plan on handling the oil and gas field, field cluster or blocks until a new oil and gas contract is signed but for at most 2 years. After  2 years from the time of taking over the oil and gas field, field cluster or blocks, if there is no contractor expressing interest or when it is unable to select a contractor to sign a new oil and gas contract, the Vietnam Oil and Gas Group shall report to the Ministry of Industry and Trade for appraisal and submission to the Government for approval the plan on subsequent handling of the oil and gas field, field cluster or blocks according to either of the following 2 options:

a/ Stopping production activities at the oil and gas field, field cluster or blocks;

b/ Assigning the Vietnam Oil and Gas Group to conduct enhanced oil recovery at the oil and gas field, field cluster or blocks.

4. The Government shall provide for dossiers, order and procedures for submission, appraisal and approval of plans on subsequent handling of oil and gas fields, field clusters and blocks, contents of subsequent handling plans; and financial mechanisms to be applied until new oil and gas contracts are signed.

5. The Prime Minister shall decide on mechanisms for enhanced oil recovery of oil and gas at oil and gas fields, field clusters and blocks in the cases specified at Point c, Clause 2 and Point b, Clause 3 of this Article.

Chapter V

OIL AND GAS ACTIVITIES

Article 42. Onshore oil and gas field development projects; oil and gas field development projects with comprehensive chains of onshore and offshore oil and gas structures and equipment

1. In the course of making an outline plan for oil and gas field development, if deeming it necessary to build a comprehensive chain of onshore and offshore oil and gas structures and equipment outside the initial contract area to serve oil and gas production, processing and transportation  to produce oil and gas commodities, thus  raising economic efficiency of the oil and gas field development project, the Vietnam Oil and Gas Group shall report to the Ministry of Industry and Trade for appraisal and submission to the Prime Minister for approval the policy on implementation of the oil and gas field development project with a comprehensive chain of onshore and offshore oil and gas structures and equipment.

2. The repurposing of forests and land (if any) in service of onshore oil and gas field development projects and oil and gas field development projects with comprehensive chains of onshore and offshore oil and gas structures and equipment is as follows:

a/ The National Assembly shall decide on the policy on repurposing of forests and land in service of onshore oil and gas field development projects before outline plans for oil and gas field development are approved under Clause 1, Article 46 of this Law, and in service of oil and gas field development projects with a comprehensive chain of onshore and offshore oil and gas structures and equipment before the Prime Minister approves the policy on implementation of the projects under Clause 1 of this Article in case the implementation of the projects requires the repurposing of 50 hectares or more of land of national parks, nature reserves, landscape protection zones, scientific research and experimentation forests, special-use forests, watershed protection forests or border protection forests; 500 hectares or more of land of wet-rice fields with 2 or more crops per year;  500 hectares or more of wind- or sand-shielding protection forests, tidal wave-shielding or sea encroachment-preventing protection forests; or 1,000 hectares or more of land of production forests;

b/ Except the case specified at Point a of this Clause, for onshore oil and gas field development projects, the Prime Minister shall decide on the policy on repurposing of forests or land before the outline plans for oil and gas field development are approved under Clause 1, Article 46 of this Law, and for oil and gas field development projects with a comprehensive chain of onshore and offshore oil and gas structures and equipment, the Prime Minister shall decide on the policy on repurposing of forests or land concurrently with approving the implementation of such projects under Clause 1 of this Article;

c/ After obtaining competent state agencies’ decisions on the policy on repurposing of forests or land and approved outline plans for oil and gas field development, provincial-level People’s Committees shall decide on the repurposing of forests or land for oil and gas field development projects.

3. The Government shall provide for dossiers, order and procedures for implementing Clause 1, and Points b and c, Clause 2, of this Article and dossiers for submission to the National Assembly specified at Point a, Clause 2 of this Article.

Article 43. Formulation and approval of annual operating programs and budgets

1. Based on their commitments in oil and gas contracts and approved programs and plans (if any), contractors shall formulate and submit their annual operating programs and budgets to the Vietnam Oil and Gas Group for approval.

2. Major contents of an annual operating program and budget include:

a/ Work contents;

b/ Cost estimates;

c/ Labor utilization plan.

Article 44. Formulation, appraisal and approval of oil and gas prospecting programs

1. During the oil and gas prospecting period, contractors shall, based on oil and gas contracts, formulate oil and gas prospecting programs and submit them to the Vietnam Oil and Gas Group for appraisal and approval.

2. Major contents of an oil and gas prospecting program include:

a/ Overview of the oil and gas contract;

b/ The history of oil and gas prospecting, appraisal, development and production (if any);

c/ Geological and geophysical documents, drilling reports and documents on other surveys and researches;

d/ Geological characteristics, oil and gas systems, evaluation of oil and gas resources;

dd/ Implementation progress, volume of work, cost estimates;

e/ Plan on assurance of safety and environmental protection, covering also safety and handling of incidents, solutions for preventing and dealing with risks of pollution;

g/ Projected outcomes, assessment of risks concerning oil and gas prospecting;

h/ Conclusions and recommendations.

3. Contents of appraisal of an oil and gas prospecting program include:

a/ Evaluating the conformity of geological and geophysical documents, drilling reports and documents on other surveys and researches;

b/ Evaluating the reasonability of data on geological characteristics, the oil and gas system and evaluation of oil and gas resources;

c/ Evaluating the feasibility and reasonability of the implementation progress, volume of work and cost estimates;

d/ Evaluating the satisfaction of safety and environmental protection requirements;

dd/ Evaluating results of and risks concerning oil and gas prospecting.

4. Upon occurrence of a change in the major contents of oil and gas prospecting programs specified in Clause 2 of this Article, contractors shall propose the modification of the programs and submit the modified programs to the Vietnam Oil and Gas Group for appraisal and approval.

5. In the course of oil and gas field development and oil and gas production, contractors may propose additional oil and gas prospecting and formulate additional oil and gas prospecting programs for submission to the Vietnam Oil and Gas Group for appraisal and approval under Clauses 2 and 3 of this Article.

Article 45. Formulation, appraisal and approval of reports on oil and gas resources and reserves

1. Based on oil and gas exploration and appraisal results, if finding commercial oil and gas discoveries in oil and gas contract areas, contractors shall make reports on oil and gas resources and reserves and submit them to the Vietnam Oil and Gas Group for reporting to the Ministry of Industry and Trade for appraisal and approval.

2. Major contents of a report on oil and gas resources and reserves include:

a/ The history of oil and gas exploration, appraisal, development and production;

b/ Documents on seismic surveys and other geophysical exploration methods; drilling reports; and documents on other surveys and researches;

c/ Regional and field geology;

d/ Reservoir specifications, including geological formations of oil and gas reservoirs, well geophysics, field technology, and results of oil, gas and water extraction and injection (if any);

dd/ Calculation of oil and gas initially-in-place and oil and gas reserves of oil and gas discoveries and oil and gas fields;

e/ Conclusions and recommendations.

3. Contents of appraisal of a report on oil and gas resources and reserves include:

a/ Evaluation of the results of oil and gas exploration and appraisal;

b/ Rationality with regard to geology, geological reservoir modeling, reservoir specifications and field technology;

c/ The rationality and reliability of results of calculation of oil and gas initially-in-place and oil and gas reserves.

4. The Vietnam Oil and Gas Group shall monitor and sum up oil and gas resources and reserves of oil and gas fields in the territory of Vietnam and annually update information on oil and gas resources and reserves for reporting to the Ministry of Industry and Trade.

5. Contractors shall update reports on oil and gas resources and reserves of each field for 3 years after the first flow of commercial oil and gas and then make updates once every 5 years. In case the total quantity of oil and gas initially-in-place changes by more than 15% compared to the figure of the latest approval, contractors shall make an updated report on oil and gas resources and reserves and submit it to the Vietnam Oil and Gas Group for the latter to report it to the Ministry of Industry and Trade for consideration and approval in accordance with this Article.

6. The Government shall provide for dossiers, order and procedures for submission, appraisal and approval of reports on oil and gas resources and reserves.

Article 46. Formulation, appraisal and approval of outline plans for oil and gas field development

1. After reports on oil and gas resources and reserves are approved, contractors shall proceed with the oil and gas field development stage and formulate outline plans for oil and gas field development for submission to the Vietnam Oil and Gas Group for reporting to the Ministry of Industry and Trade for appraisal and approval.

2. Major contents of an outline plan for oil and gas field development include:

a/ History of oil and gas prospecting and appraisal, geological model of the oil and gas field, and the appraisal plan in the next stage;

b/ Field technologies, preliminary oil and gas recovery coefficient; projected development option, and the selected option;

c/ Forecast of production output and field operation management;

d/ The preliminary design based on the selected development option and preliminary identification of investment costs;

dd/ Drilling technologies, and the well drilling and completion plan;

e/ Safety assurance and environmental protection plan;

g/ Economic and technical assessment, and selection of a suitable development option at the time of reporting;

h/ Major specifications and criteria of the selected plan to serve as grounds for making the general technical design;

i/ Preliminary gas consumption option;

k/ Assessment of technology risks, fluctuations of oil prices and the project’s financial situation;

l/ Expected implementation progress;

m/ For an onshore oil and gas field development project and an oil and gas field development project with a comprehensive chain of onshore and offshore oil and gas structures and equipment, in addition to the contents specified at Points a, b, c, d, dd, e, g, h, i, k, and l of this Clause, the following contents must be added in accordance with the law on construction: the project’s preliminary land use demand; demand for use of natural resources; conformity of the project with relevant strategies and master plans; assessment of socio-economic impacts; and assurance of national defense and security;

n/ Conclusions and recommendations.

3. Contents of appraisal of an outline plan for oil and gas field development include:

a/ Assessment of the conformity of field technologies, forecasts of production output and preliminary oil and gas recovery coefficient;

b/ Assessment of the conformity of projected development option and the selected option regarding drilling technologies and production technologies; and major specifications and criteria of the selected option to serve as grounds for making the general technical design;

c/ Assessment of the satisfaction of requirements on safety and environmental protection;

d/ The rationality of preliminary assessment of techno-economic efficiency; technology risks, fluctuations of oil and gas prices and the project’s financial situation;

dd/ Assessment of the conformity with relevant master plans;

e/ The appraisal contents in accordance with the law on construction with regard to the contents specified at Point m, Clause 2 of this Article.

4. The formulation, appraisal and approval of outline plans for oil and gas field development shall replace the formulation, appraisal and approval of prefeasibility study reports for construction investment in oil and gas projects in accordance with the Law on Construction.

5. In case of changing the selected development option, land use demand (if any), or gas consumption plan in the approved outline plan for oil and gas field development, the contractor shall submit adjustments to the outline plan to the Vietnam Oil and Gas Group for reporting to the Ministry of Industry and Trade for consideration and approval. The adjustment of other contents of the outline plan shall be considered and approved by the Vietnam Oil and Gas Group.

6. The Government shall provide for dossiers, order and procedures for submission, appraisal and approval of outline plans for oil and gas field development.

Article 47. Formulation, appraisal and approval of plans on early production of oil and gas fields

1. Upon the approval of outline plans for oil and gas field development, when it is necessary to study and collect additional information to mitigate future risks, contractors may formulate plans on early production of oil and gas fields for submission to the Vietnam Oil and Gas Group for reporting to the Ministry of Industry and Trade for appraisal and approval.

2. Major contents of a report on a plan on early production of an oil and gas field include:

a/ The outcomes of research on geological characteristics of the field;

b/ Figures and analyses of compositions and nature of fluids and reservoirs, studies of field simulation models, field technologies and production designs, forecast of oil and gas production output, and oil and gas recovery coefficient;

c/ Information on production technologies and feasibility reports;

d/ Well drilling and completion technologies;

dd/ Descriptions of the system of production structures and equipment currently in use;

e/ Datasheet of the general technical design;

g/ Plans on natural resource protection, environmental and ecological protection, including also safety assurance and incident settlement, solutions for preventing and handling pollution risks and decommissioning of oil and gas structures;

 h/ Calculation of the total investment amount and economic efficiency of the project on early production of the oil and gas field;

i/ Assessment of technology risks, fluctuations of crude oil prices and the project’s financial situation;

k/ Implementation progress;

l/ Estimated expenses for decommissioning of oil and gas structures;

m/ Agreement on the gas selling price frame, for gas production projects;

n/ For an onshore oil and gas field development project or an oil and gas field development project with a comprehensive chain of onshore and offshore oil and gas structures and equipment, in addition to the contents specified at Points a, b, c, d, dd, e, g, h, i, k, l and m of this Clause, the following contents must be added in accordance with the law on construction: information on the project’s current land-use status, conditions for land recovery, land use demand; construction location; plan on connection of technical infrastructure facilities inside and outside the oil and gas structures; solutions on construction and major materials used; assessment of socio-economic impacts, and assurance of national defense and security;

o/ Conclusions and recommendations.

3. Contents of appraisal of a plan on early production of an oil and gas field include:

a/ Assessment of the conformity with the selected option in the outline plan for oil and gas field development;

b/ Assessment of the conformity of geological features of the field, characteristics of fluids and reservoirs, the field simulation model, production design, oil and gas production output, and oil and gas recovery coefficient;

c/ Assessment of the conformity of the drilling technology, production technology, and system of structures and equipment;

d/ Assessment of the rationality of the assessment of economic efficiency; technology risks, fluctuations of oil and gas prices, the project’s financial situation, and implementation progress;

dd/ Assessment of the conformity of design solutions, and applicable standards in the general technical design;

e/ Assessment of the satisfaction of requirements on safety and environmental protection;

g/ Appraisal contents in accordance with the law on construction, for the contents specified at Point n, Clause 2 of this Article.

4. The formulation, appraisal and approval of plans on early production of oil and gas fields shall replace the formulation, appraisal and approval of feasibility study reports on construction investment in oil and gas projects in accordance with the Law on Construction.

5. A contractor shall submit to the Vietnam Oil and Gas Group for consideration and approval adjustments to a plan on early production of an oil and gas field in case such adjustments lead to an increase of less than 10% in the total investment amount for the following contents:

a/ Adjustment of the quantity and size of intra-field pipelines, adjustment of equipment capacity to increase the efficiency of the project and oil and gas recovery coefficient;

b/ Adjustment for the purpose of optimizing the location, sequence and number of drilled wells to improve the outputs and reserves or optimizing investment;

c/ Application of technical solutions to add or open new reservoirs detected in the process of drilling for increasing production output and raising the project’s efficiency;

d/ Experimental production to increase the oil and gas recovery coefficient;

dd/ Additional drilling of infill wells.  

6. Contractors shall submit adjustments to plans on early production of oil and gas fields to the Vietnam Oil and Gas Group for consideration and reporting to the Ministry of Industry and Trade for appraisal and approval in cases other than those specified in Clause 5 of this Article.

7. After completing the implementation of plans on early production of oil and gas fields, contractors shall submit to the Vietnam Oil and Gas Group for consideration and reporting to the Ministry of Industry and Trade results of implementation of the plans and update production models together with figures and analyses to prove and conclude on the possibility to apply experimental diagrams in production to the whole oil and gas fields.

8. The Government shall provide for the conditions for formulation of plans on early production of oil and gas fields, and dossiers, order and procedures for submission, appraisal and approval of plans on early production of oil and gas fields.

Article 48. Formulation, appraisal and approval of oil and gas field development plans

1. After the outline plan for oil and gas field development is approved or before the expiration of the duration for implementation of the plan on early production of an oil and gas field, a contractor shall formulate an oil and gas field development plan for submission to the Vietnam Oil and Gas Group for reporting to the Ministry of Industry and Trade for appraisal and approval.

2. Major contents of a report on an oil and gas field development plan include:

a/ The result of implementation of the plan on early production of the oil and gas field (if any);

b/ The outcomes of the research on geological features of the field;

c/ Figures and analyses of compositions and characteristics of fluids and reservoirs, researches on field simulation models, field technologies and production designs, forecast of oil and gas production output, and oil and gas recovery coefficient;

d/ Information on production technologies and feasibility reports;

dd/ Well drilling and completion technologies;

e/ Descriptions of the system of production structures and equipment currently in use;

g/ Datasheet of the general technical design;

h/ Plans on natural resource protection and environmental and ecological protection, including also safety assurance and incident handling, solutions for prevention and handling of pollution risks and decommissioning of oil and gas structures;

i/ Calculation of the total investment amount and economic efficiency of the project;

k/ Assessment of technology risks and the project’s financial situation;

l/ Implementation progress and schedule;

m/ Statistics of technical principles and regulations applied in the process of drilling for production;

n/ Agreement on the gas selling price frame, for gas production projects;

o/ Estimated expenses for decommissioning of oil and gas structures;

p/ For an onshore oil and gas field development project or an oil and gas field development project with a comprehensive chain of onshore and offshore oil and gas structures and equipment, in addition to the contents specified at Points a, b, c, d, dd, e, g, h, i, k, l, m, n and o of this Clause, the following contents must be added in accordance with the law on construction: information on the project’s current land-use status, conditions for land recovery, land use demand; construction location; plans on connection of technical infrastructure facilities inside and outside oil and gas structures; solutions on construction and major materials used; assessment of socio-economic impacts, and assurance of national defense and security;

q/ Conclusions and recommendations.

3.  Appraisal contents of an oil and gas field development plan include:

a/ Assessment of the conformity with the selected option in the outline plan for oil and gas field development;

b/ Assessment of the conformity of geological features of the field, characteristics of fluids and reservoirs, field simulation model, field extraction design, oil and gas production output, and oil and gas recovery coefficient;

c/ Assessment of the conformity of the drilling technology, production technology, and system of oil and gas structures and equipment;

d/ Assessment of the rationality of the assessment of economic efficiency, technology risks, fluctuations of oil and gas prices, the project’s financial situation, and implementation progress;

dd/ Assessment of the conformity of design solutions, and applicable standards in the general technical design;

e/ Assessment of the satisfaction of requirements on safety and environmental protection;

g/ Appraisal contents in accordance with the law on construction, for the contents specified at Point p, Clause 2 of this Article.

4. The formulation, appraisal and approval of oil and gas field development plans shall replace the formulation, appraisal and approval of feasibility study reports on construction investment in oil and gas projects in accordance with the Law on Construction.

5. A contractor shall submit to the Vietnam Oil and Gas Group for consideration and approval adjustments to an oil and gas field development plan in case such adjustments lead to an increase of less than 10% in the total investment amount for the following contents:

a/ Adjustment of the quantity and size of intra-field pipelines, adjustment of equipment capacity and quantity to increase the efficiency of the project or oil and gas recovery coefficient;

b/ Adjustment for the purpose of optimizing the location, sequence and number of drilled wells to improve the output and reserves, or optimizing investment;

c/ Application of technical solutions to add or open new reservoirs detected in the process of drilling for increasing production output and raising the project’s efficiency;

d/ Experimental production to enhance the oil and gas recovery coefficient;

dd/ Additional drilling of infill wells.

6. Contractors shall submit adjustments to oil and gas field development plans to the Vietnam Oil and Gas Group for consideration and reporting to the Ministry of Industry and Trade for appraisal and approval in cases other than those specified in Clause 5 of this Article.

7. The Government shall provide for the dossiers, order and procedures for submission, appraisal and approval of oil and gas field development plans.

Article 49. Gas combustion and discharge

1. Contractors shall collect gases, after used in oil and gas fields (if any), in the process of oil and gas production, and formulate option on gas collection in plans on early production of oil and gas fields or oil and gas field development plans.

2. Contractors may combust and discharge gases in the following cases:

a/ In the process of testing reservoirs for clearing and cleaning wells; completing, repairing or treating wells, or relieving well pressure;

b/ In case of emergency to ensure safety for humans, property and oil and gas activities or in case gas treatment and transportation systems are suspended due to incidents;

c/ According to annual plans on gas combustion and discharge relating to operation safety and periodical maintenance of oil and gas fields approved by the Vietnam Oil and gas Group.

Article 50. Formulation, appraisal and approval of plans on decommissioning of oil and gas structures

1. In the course of conducting oil and gas activities, upon the completion of each stage or termination of oil and gas contracts, contractors shall decommission oil and gas structures that are heavily damaged or technologically inappropriate and consequently are no longer used or cannot be used for oil and gas activities as they are likely to affect the safety and efficiency of oil and gas activities.

2. Within 1 year from the date of production of the first flow of commercial oil and gas from its/his/her oil and gas contract area, a contractor shall formulate and submit a plan on decommissioning of oil and gas structures to the Vietnam Oil and Gas Group for reporting to the Ministry of Industry and Trade for appraisal and approval.

3. At least 1 year before its/his/her oil and gas contract terminates or the duration of oil and gas production at the oil and gas field ends, a contractor shall update the plan on decommissioning of oil and gas structures for submission to the Vietnam Oil and Gas Group for reporting to the Ministry of Industry and Trade for appraisal and approval.

4. Major contents of a plan on decommissioning of oil and gas structures include:

a/ The list and descriptions of facilities, equipment combinations, and items of to-be-decommissioned oil and gas structures;

b/ Technical solutions and options for decommissioning of oil and gas structures;

c/ The plan on waste management and control of marine environment pollution, plan on environmental monitoring, plan on prevention of, and response to, environmental incidents, and plan to ensure safety in the process of decommissioning oil and gas structures;

d/ Estimation of decommissioning expenses, and the plan and progress on allocation of funds for securing the performance of the obligation of decommissioning of oil and gas structures;

dd/ The progress of decommissioning of oil and gas structures.

5. Appraisal contents of a plan on decommissioning of oil and gas structures include:

a/ Assessment of the conformity of the list of facilities, equipment combinations and items of to-be-decommissioned oil and gas structures;

b/ Assessment of the conformity of technical solutions and plans on decommissioning of oil and gas structures;

c/ Assessment of the conformity of the plans on waste management and control of marine environment pollution, prevention of, and response to, environmental incidents, and safety assurance;

d/ Assessment of the conformity and rationality of estimation of decommissioning expenses, the plan on and progress of making allocations to the fund for securing the performance of the obligation of decommissioning of oil and gas structures.

6. In case of adding or expanding facilities, equipment and drilling wells, leading to an increase of less than 20% in the cost estimates stated in its/his/her latest approved plan on decommissioning of oil and gas structures, a contractor shall submit adjustments to the plan on decommissioning of oil and gas structures to the Vietnam Oil and Gas Group for consideration and approval.

7. In the course of implementation of oil and gas development and production projects, if deeming that incident-involving oil and gas structures cannot be repaired or are unsafe for operation, contractors shall submit plans on decommissioning of these structures to the Vietnam Oil and Gas Group for consideration and approval.

8. A contractor shall submit adjustments to its/his/her plan on decommissioning of oil and gas structures to the Vietnam Oil and Gas Group for reporting to the Ministry of Industry and Trade for appraisal and approval in the following cases:

a/ There is addition or expansion of facilities, equipment or drilled wells, a change in technological and technical requirements, or service price slippage, leading to an increase of 20% or more of the cost estimates stated in the latest approved oil and gas facility decommissioning plan.

b/ The decommissioning of oil and gas structures must be implemented in phases but such has not been identified in the approved plan on decommissioning of oil and gas structures, the decommissioning is postponed or the oil and gas structures are to be retained.

9. The Government shall provide for the dossiers, order and procedures for submission, appraisal and approval of plans on decommissioning of oil and gas structures.

Article 51. Funds for securing the performance of the obligation of decommissioning of oil and gas structures

1. The performance of the obligation of decommissioning of oil and gas structures shall be secured by making of allocations to a fund.

2. Within 1 year from the date of production of the first flow of commercial oil and gas from its/his/her oil and gas contract area, a contractor shall make allocations to a fund for securing the performance of the obligation of decommissioning of oil and gas structures. The allocation to the fund shall be made annually based on the approved plan on decommissioning of oil and gas structures and remitted to the Vietnam Oil and Gas Group. The level of allocation by each contractor shall be equivalent to its/his/her participating interests in the oil and gas contract and included in recovery costs of the oil and gas contract.

3. Before its/his/her oil and gas contract terminates or when the duration of oil and gas production at the oil and gas field ends, a contractor shall complete the making of allocations to the fund for securing the performance of the obligation of decommissioning of oil and gas structures.

4. The Vietnam Oil and Gas Group shall manage funds for securing the performance of the obligation of decommissioning of oil and gas structures in accordance with law, meeting requirements for decommissioning of oil and gas structures under approved plans on decommissioning of oil and gas structures. During the period of time when a fund is not used, the Vietnam Oil and Gas Group shall deposit the fund amount to a commercial bank in which the State holds controlling shares; interests generated annually after fulfilling law-prescribed financial obligations shall be recorded as increases in the fund.

5. In case the balance of a fund for securing the performance of the obligation for decommissioning of oil and gas structures is not enough for covering necessary expenses for the decommissioning of oil and gas structures, the contractor(s) shall make an additional contribution to the fund to guarantee the fulfillment of the obligation of decommissioning of oil and gas structures. In case the balance of a fund exceeds the necessary expenses for the decommissioning of oil and gas structures, the remainder left after the obligation of decommissioning of oil and gas structures is fulfilled shall be refunded to the parties to the oil and gas contract according to contractual terms.

6. The Government shall provide in detail the making of allocations to, and management and use of, funds for securing the performance of the obligation of decommissioning of oil and gas structures.

Article 52. Decommissioning of oil and gas structures

1. Contractors shall decommission oil and gas structures under approved plans on decommissioning of oil and gas structures. The decommissioning of oil and gas structures must meet law-prescribed requirements on safety assurance and environmental protection.

2. Contractors shall submit to the Vietnam Oil and Gas Group for reporting to the Ministry of Industry and Trade for approval the retention of part or the whole of oil and gas structures; and postponement of the decommissioning of part or the whole of oil and gas structures.

3. Contractors shall immediately decommission part or the whole of heavily damaged oil and gas structures and seriously degraded oil and gas structures that are unfixable and likely to affect the safety of oil and gas activities.

4. In the course of oil and gas production, contractors may decommission ahead of schedule part or a number of items and equipment, and abandon wells that are listed in approved plans on decommissioning of oil and gas structures and no longer usable so as to reduce operation and maintenance costs under Clause 7, Article 50 of this Law.

5. The Government shall provide for dossiers, order and procedures for submission, appraisal and approval of the retention, postponement of decommissioning, or decommissioning of part of the whole, of oil and gas structures.

Chapter VI

INCENTIVES FOR OIL AND GAS ACTIVITIES AND RESOURCE EXPLOITATION POLICIES APPLICABLE TO OIL AND GAS FIELDS, FIELD CLUSTERS AND BLOCKS SUBJECT TO ENHANCED OIL RECOVERY

Article 53. Subjects eligible for incentives

1. Oil and gas blocks and fields shall be eligible for investment incentives:

a/ Oil and gas blocks lay in deep or offshore waters or areas with extremely difficult geographical conditions or complicated geological characteristics;

b/ Bidding for ordinary oil and gas blocks has been held according to economic and technical conditions stated in oil and gas contracts but there is no proposals from contractors or investors;

c/ Oil and gas blocks are formed from returned areas under oil and gas contracts applicable to ordinary oil and gas blocks;

d/ Ordinary oil and gas blocks are returned by contractor before oil and gas contracts expire;

dd/ Oil and gas blocks are formed from the consolidation of returned areas or oil and gas blocks are returned by contractors as specified at Points c and d of this Clause;

e/ Marginal oil and gas fields belong to ordinary oil and gas blocks for which oil and gas contracts have been signed;

g/ Oil and gas production at oil and gas fields may be further conducted at the time the concerned oil and gas contracts terminate but minimum investment efficiency cannot be reached given the application of economic and technical conditions of the signed ordinary oil and gas contracts; or,

h/ There is no oil and gas prospecting for new objects or no new oil and gas discoveries in sedimentary basins.

2. Oil and gas blocks and fields shall be eligible for special investment incentives when:

a/ Bidding has been held for oil and gas block according to conditions applicable to oil and gas blocks eligible for investment incentives but there are no proposals from contractors or investors;

b/ Oil and gas blocks are formed from returned areas under oil and gas contracts applicable to oil and gas blocks eligible for investment incentives;

c/ Oil and gas blocks eligible for investment incentives are returned by contractors before oil and gas contracts expire;

d/ Oil and gas blocks are formed from returned areas and oil and gas blocks are returned by contractors as specified at Point b and c of this Clause;

dd/ Marginal oil and gas fields belong to oil and gas blocks eligible for investment incentives for which oil and gas contracts have been signed;

e/ Oil and gas production at oil and gas fields may be further conducted at the time of termination of oil and gas contracts eligible for investment incentives but minimum investment efficiency cannot be reached given the application of economic and technical conditions of such contracts; or,

g/ Oil and gas blocks of unconventional oil and gas.

3. The Prime Minister shall promulgate the list of oil and gas blocks and fields eligible for investment incentives or special investment incentives.

4. The Government shall detail this Article.

Article 54. Incentive policies

1. Incentive policies applicable to oil and gas blocks and fields shall be implemented through oil and gas contracts.

2. Oil and gas contracts for oil and gas blocks and fields eligible for investment incentives are entitled to the enterprise income tax rate of 32%, the crude oil export duty of 10%, and the cost recovery level of up to 70% of the yearly oil and gas production output.

3. Oil and gas contracts for oil and gas blocks and fields eligible for special investment incentives are entitled to the enterprise income tax rate of 25%, the crude oil export duty of 5%, and the cost recovery level of up to 80% of the yearly oil and as production output.

Article 55. Policies on exploitation of natural resources applicable to oil and gas fields, field clusters and blocks under enhanced oil recovery

1. The policies on exploitation of natural resources applicable to oil and gas fields, field clusters and blocks under enhanced oil recovery under Point c, Clause 2 and Point b, Clause 3, Article 41 of this Law are specified as follows:

a/ The difference between revenues and costs of exploitation of natural resources applicable to oil and gas fields, field clusters and blocks under enhanced oil recovery shall be remitted to the state budget on the principle of ensuring the efficiency of enhanced oil recovery and strict control of costs of oil and gas activities;

b/ It is permitted to use free of charge information, data, documents, specimens, oil and gas structures and other assets that have been installed and invested under terminated oil and gas contracts for conducting enhanced oil recovery;

c/ The additional investment for exploitation of natural resources applicable to oil and gas fields, field clusters and blocks under enhanced oil recovery, the decommissioning of oil and gas structures and the handling after the decommissioning when enhanced oil recovery is completed must comply with this Law and on the basis of balancing revenues from enhanced oil recovery of oil and gas fields, field clusters and blocks.

2. The Government shall detail this Article.

Chapter VII

ACCOUNTING, AUDITING AND ACCOUNT-FINALIZATION FOR OIL AND GAS ACTIVITIES

Article 56. Accounting and auditing of oil and gas activities under oil and gas contracts

1. The accounting and auditing of oil and gas activities under oil and gas contracts must comply with Vietnam’s law on accounting and auditing and international oil and gas industry practices.

2. Enterprise income tax on oil and gas activities shall be determined on the basis of oil and gas contracts in accordance with this Law and the Law on Enterprise Income Tax, regardless of production and business results (loss or profit) of enterprises entering into oil and gas contracts.

3. In case an oil and gas block has marginal oil and gas fields that belong to oil and gas blocks for which oil and gas contracts have been signed under Point e, Clause 1, and Point dd, Clause 2, Article 53 of this Law, the accounting and auditing and tax declaration and payment shall be carried out for oil and gas fields and under oil and gas contracts.

Article 57. Account-finalization of costs of oil and gas activities under oil and gas contracts

1. The contractor shall carry out account-finalization of costs of oil and gas activities under an oil and gas contract after completing each work item and each stage in the oil and gas contract or when completing the oil and gas project or a component project of the oil and gas project.

2. The account-finalization of costs must ensure that the costs are expressed in a truthful, complete, reasonable and valid manner in accordance with Vietnam’s law.

3. The Government shall detail this Article.

Chapter VIII

RIGHTS AND OBLIGATIONS OF CONTRACTORS

Article 58. Rights of contractors

1. A contractor has the following rights:

a/ To be entitled to investment incentives and guarantees in accordance with Vietnam’s law;

b/ To use collected specimens, information and data for conducting oil and gas activities;

c/ To recruit employees, with priority given to Vietnamese employees;

d/ To hire organizations and individuals to provide oil and gas services and goods serving oil and gas activities in accordance with this Law and in conformity with international oil and gas industry practices;

dd/ To be entitled to exemption from import duty and export duty to serve oil and gas activities in accordance with the law on import duty and export duty;

e/ To own oil and gas products and other products produced under oil and gas contracts after fulfilling financial obligations in accordance with law; to sell these products together by instalments and at different times without being regarded as violating the competition law;

g/ To export and sell in Vietnam’s market oil and gas products under its/his/her ownership as agreed upon in the oil and gas contract, unless the contractor is obliged to sell such products in Vietnam’s market as specified in Clause 8, Article 59 of this Law. The contractor is not required to apply for an export license when exporting products under its/his/her ownership;

h/ To recover costs of oil and gas activities as agreed upon in the oil and gas contract;

i/ To access and use existing traffic systems, infrastructure facilities and oil and gas structures in accordance with law; to access and use existing infrastructure facilities and oil and gas structures to conduct oil and gas activities under a contract or an agreement signed with a unit acting as the owner or managing the operation of infrastructure facilities and oil and gas structures on the basis of ensuring the interests of the parties in accordance with law;

k/ To purchase foreign currencies at commercial banks to contribute capital to oil and gas contracts and perform the obligation toward the state budget;

l/ To exercise other rights in accordance with this Law.

2. In addition to the rights specified in Clause 1 of this Article, contractors being foreign organizations and individuals have the following rights:

a/ To open accounts in Vietnam and abroad in accordance with the law on foreign exchange management;

b/ To remit abroad their lawful incomes from oil and gas activities under oil and gas contracts in accordance with the law on foreign exchange management and other relevant laws after fulfilling financial obligations in accordance with law;

c/ To purchase foreign currencies from commercial banks to conduct current transactions and other licensed transactions in accordance with the law on foreign exchange management.

Article 59. Obligations of contractors

1. To implement commitments stated in oil and gas contracts.

2. To declare and pay taxes, charges and fees in accordance with Vietnam’s law.

3. To transfer technologies; to train and employ Vietnamese employees and ensure the lawful and legitimate rights and interests of employees.

4. To comply with regulations on national defense and security; to take measures to protect the environment and ensure safety in oil and gas activities; to implement regulations and instructions of state management agencies on cost norms and economic and technical norms.

5. To report on oil and gas activities to competent state management agencies, the Vietnam Oil and Gas Group and competent tax offices in accordance with the tax laws when transfer operations arise, resulting in the change of owners of contractors currently holding the participating interests in oil and gas contracts in Vietnam.

6. To provide necessary documents for examination teams and inspection teams of functional agencies upon request.

7. To decommission oil and gas structures, equipment and facilities after completing oil and gas activities in accordance with law.

8. To sell in Vietnam’s market at the Government’s request the following products:

a/ Natural gas under their ownership as agreed upon in gas production development projects;

b/ Crude oil under their ownership at internationally competitive prices.

9. To transfer their contributed capital amounts to joint accounts opened in Vietnam by operators or operators’ offices to make payments for oil and gas activities under oil and gas contracts.

10. To share the use of existing infrastructure facilities and oil and gas structures with third parties under contracts or agreements among the parties provided that it does not affect oil and gas activities and complies with Vietnam’s law and international oil and gas industry practices.

11. To create conditions for organizations and individuals to carry out activities of scientific research, prospecting and exploitation of minerals and natural resources other than oil and gas in oil and gas contract areas in accordance with Vietnam’s law on the principle that these activities do neither obstruct oil and gas activities nor cause harms to humans, assets and the environment.

12. To organize the selection of contractors to provide oil and gas services and goods in service of oil and gas activities in adherence to the principles of competition, fairness, transparency, efficiency and conformity with oil and gas contracts; to report to the Vietnam Oil and Gas Group on the organization of selection of contractors to provide oil and gas services and goods in service of oil and gas activities.

13. To perform other obligations in accordance with this Law and other relevant laws.

Chapter IX

FUNCTIONS, RIGHTS AND OBLIGATIONS OF THE VIETNAM OIL AND GAS GROUP IN BASIC OIL AND GAS INVESTIGATION AND OIL AND GAS ACTIVITIES

Article 60. Functions of the Vietnam Oil and Gas Group in basic oil and gas investigation and oil and gas activities

1. To conduct basic oil and gas investigation and oil and gas activities in the capacity as a contractor signing oil and gas contracts in accordance with this Law. The participation of the Vietnam Oil and Gas Group and enterprises in which the Vietnam Oil and Gas Group contributes capital in oil and gas contracts under Article 39 of this Law shall not be regarded as violating the law on management and use of state capital invested in production and business at enterprises.

2. After a scheme on basic oil and gas investigation is approved, to sign an agreement on basic oil and gas investigation with an organization other than the state agency or enterprise in charge of implementing the scheme on basic oil and gas investigation. 

3. After an oil and gas contract is approved, to sign and manage the contract with organizations and individuals conducting oil and gas activities; to exercise the right to participate in, and the preemptive right to buy, part or the whole of the participating interests of the contractor under, the oil and gas contract, including also special cases.

4. When oil and gas contract expires, to take over oil and gas fields, field clusters and blocks from contractors and manage and operate them in order to select other contractors to sign new oil and gas contracts.

5. To conduct oil and gas production at oil and gas fields, field clusters and blocks under enhanced oil recovery according to policies on exploitation of natural resources.

6. To perform the functions specified in Clauses 2, 3, 4 and 5 of this Article, the Vietnam Oil and Gas Group has the rights and obligations specified in Articles 61 and 62 of this Law.

Article 61. Rights of the Vietnam Oil and Gas Group

1. To sign agreements with organizations other than state agencies or enterprises in charge of implementing schemes on basic oil and gas investigation; to manage and supervise the implementation of agreements related to the exploitation of information, data and outcomes of basic oil and gas investigation in accordance with this Law and other relevant laws.

2. To sign oil and gas contracts with organizations and individuals to conduct oil and gas activities in accordance with this Law and other relevant regulations.

3. To manage and supervise the performance of oil and gas contracts; to approve annual operating programs and budget estimates for activities; to audit costs of oil and gas activities under oil and gas contracts; to approve the account-finalization of costs under oil and gas contracts.

4. To approve oil and gas prospecting programs, adjusted programs on oil and gas prospecting and additional programs on oil and gas prospecting under Article 44 of this Law.

5. To approve adjustments to outline plans for oil and gas field development, plans on early production of oil and gas fields, plans on oil and gas field development, and plans on decommissioning of oil and gas structures specified in Clause 5, Article 46; Clause 5, Article 47; Clause 5, Article 48; and Clause 6, Article 50, of this Law; to approve options on decommissioning of oil and gas structures specified in Clause 7, Article 50 of this Law.

6. To supervise the designing and construction of oil and gas structures under oil and gas contracts.

7. To sell products of the host country together with products of the Vietnam Oil and Gas Group as a contractor that are produced under the oil and gas contract; to be permitted to sell such products together with other contractors under the oil and gas contract as specified at Point e, Clause 1, Article 58 of this Law.

8. To manage and operate oil and gas activities; to conduct enhanced oil recovery and make additional investment in exploitation of natural resources for oil and gas fields, field clusters and blocks under enhanced oil recovery, and monitor and use assets related to the taking over of the contractor’s participating interests and oil and gas fields, field clusters and blocks.

Article 62. Obligations of the Vietnam Oil and Gas Group

1. To organize the management, administration and efficient and rational exploitation of oil and gas resources, the protection of natural resources and the environment, and the assurance of safety in oil and gas activities.

2. To organize the management, storage, preservation and use of specimens, documents, information, data and outcomes of basic oil and gas investigation of which organizations other than state agencies or enterprises take charge; and specimens, documents, information and data obtained in the course of conducting oil and gas activities and after completion of oil and gas contracts, ensuring organizations’ and individuals’ right of access to documents, information, data and outcomes of oil and gas basic investigation and oil and gas activities.

3. To manage and strictly supervise the implementation of basic oil and gas investigation agreements related to the exploitation of information, data and outcomes of basic oil and gas investigation in accordance with law and signed agreements.

4. To effectively manage and strictly supervise the performance of oil and gas contracts in accordance with law and oil and gas contracts.

5. To report on oil and gas activities to competent state management agencies on a periodical basis or upon request.

6. To propose solutions and coordinate at the request of, competent state management agencies in formulating policies, strategies and orientations related to the organization of rational and efficient exploitation of oil and gas resources, protection of natural resources and the environment and sustainable development.

Article 63. Approval of the use of capital of the Vietnam Oil and Gas Group and enterprises with 100% capital held by the Vietnam Oil and Gas Group in oil and gas activities

The Members’ Council of the Vietnam Oil and Gas Group shall:

1. Approve the use of capital of the Vietnam Oil and Gas Group and enterprises with 100% capital held by the Vietnam Oil and Gas Group, regardless of the approved amount of contributed capital in accordance with this Law, in the following cases:

a/ To exercise the right to participate in oil and gas contracts and the preemptive right to buy part or the whole of the participating interests specified in Article 39 of this Law;

b/ To conduct oil and gas activities according to stages of an oil and gas contract or oil and gas project;

2. To approve the termination of unsuccessful oil and gas projects and costs of unsuccessful oil and gas projects of the Vietnam Oil and Gas Group and enterprises with 100% capital held by the Vietnam Oil and Gas Group;

3. To report on approved contents specified in Clauses 1 and 2 of this Article to the Commission for Management of State Capital at Enterprises for monitoring, examination and supervision.

Article 64. Handling of costs of the Vietnam Oil and Gas Group

1. Costs of basic oil and gas investigation conducted by the Vietnam Oil and Gas Group shall be paid from the source of after-tax profits of the Vietnam Oil and Gas Group, in addition to those covered by the state budget (if any).

2. Costs of oil and gas prospecting of unsuccessful oil and gas prospecting projects of the Vietnam Oil and Gas Group shall, after the Members’ Council of the Vietnam Oil and Gas Group issues decisions on the termination of the oil and gas projects and account-finalization of costs, be paid from the source of annual after-tax profits of the Vietnam Oil and Gas Group and distributed within 5 years from the date of issuance of such decisions.

3. The costs specified in Clauses 1 and 2 of this Article shall be paid from the source of after-tax profits of the Vietnam Oil and Gas Group before deducting its income to assorted funds in accordance with the law on management and use of state capital invested in production and business operations at enterprises.

4. The Vietnam Oil and Gas Group may use the host country’s profits of the proceeds from the sale of oil and gas products under oil and gas contracts before determination of the profit amounts to be distributed to the host country and remitted into the state budget in order to pay for the following costs and obligations:

a/ Costs payable by the host country as stated in oil and gas contracts and to be paid by the Vietnam Oil and Gas Group on behalf of the host country;

b/ Obligations toward the host country’s profits from proceeds from the sale of oil and gas products under oil and gas contracts to be performed by the Vietnam Oil and Gas Group on behalf of the host country;

c/ Costs of management and supervision of oil and gas contracts;

d/ Costs of maintenance of oil and gas contracts in case of taking over the participating interests from contractors for special reasons or performing the Prime Minister-assigned tasks related to oil and gas activities.

Chapter X

STATE MANAGEMENT OF AND RESPONSIBILITIES OF THE COMMISSION FOR MANAGEMENT OF STATE CAPITAL AT ENTERPRISES FOR BASIC OIL AND GAS INVESTIGATION AND OIL AND GAS ACTIVITIES

Article 65. State management responsibilities for basic oil and gas investigation and oil and gas activities

1. The Government shall perform the unified state management of basic oil and gas investigation and oil and gas activities.

2. The Ministry of Industry and Trade shall take responsibility before the Government for performing the state management of basic oil and gas investigation and oil and gas activities, and has the following tasks and powers:

a/ To promulgate according to its competence or submit to competent state agencies for promulgation legal documents, strategies and plans on development of the oil and gas industry;

b/ To formulate, promulgate and guide cost norms and technical and economic norms for basic oil and gas investigation and oil and gas activities;

c/ To sum up, monitor and report on the development and outcomes of prospecting, production, domestic consumption and export of oil and gas;

d/ To undertake international cooperation;

dd/ To guide, disseminate, and organize, monitor, examine and evaluate the implementation of, legal documents on oil and gas;

e/ To examine, inspect, handle violations and settle complaints and denunciations about basic oil and gas investigation and oil and gas activities according to its competence;

g/ To assume the prime responsibility for, and coordinate with ministries and ministerial-level agencies in, examining and supervising the exercise of the rights and the fulfilment of obligations of the Vietnam Oil and Gas Group as specified in Articles 61 and 62 of this Law;

h/ To perform other tasks related to state management of basic oil and gas investigation and oil and gas activities falling within its competence in accordance with this Law.

3. Ministries, ministerial-level agencies and provincial-level People’s Committees shall, within the ambit of their tasks and powers, coordinate with the Ministry of Industry and Trade in performing the state management of basic oil and gas investigation and oil and gas activities.

Article 66. Responsibilities of the Commission for Management of State Capital at Enterprises

1. To contribute opinions on the use of capital of the Vietnam Oil and Gas Group when exercising the right to participate in oil and gas contracts and the preemptive right to buy participating interests under oil and gas contracts, and conducting oil and gas activities according to stages of an oil and gas contract or oil and gas project, and send such opinions to the Ministry of Industry and Trade for summing up in the course of appraisal in accordance with this Law.

2. To examine and supervise the contribution of capital to oil and gas contracts, the transfer of the participating interests under oil and gas contracts, and the performance of oil and gas activities according to stages of an oil and gas contract or oil and gas project of the Vietnam Oil and Gas Group.

Chapter XI

IMPLEMENTATION PROVISIONS

Article 67. To amend and supplement a number of articles of the Law on Enterprise Income Tax and the Law on Royalties

1. To amend and supplement Clause 3, Article 10 of Law No. 14/2008/QH12 on Enterprise Income Tax which has a number of articles amended and supplemented under Law No. 32/2013/QH13, Law No. 71/2014/QH13 and Law No. 61/2020/QH14, as follows:

To replace the phrase “The enterprise income tax rate for prospecting and exploitation of oil, gas and other precious and rare natural resources in Vietnam is between 32% and 50%, depending on each project and business establishment.” with the phrase “The enterprise income tax rate for oil and gas activities is between 25% and 50%, depending on each oil and gas contract; the enterprise income tax rate for prospecting and exploitation of other precious and rare natural resources in Vietnam is between 32% and 50%, depending on each project and business establishment.”.

2. To amend and supplement Clause 1, Article 3 of Law No. 45/2009/QH12 on Royalties, which has a number of articles amended and supplemented under Law No. 71/2014/QH13 as follows:

“1. Royalty payers include organizations and individuals that extract royalty-liable natural resources, except case of exploitation of natural resources for oil and gas fields, field clusters and blocks under enhanced oil recovery in accordance with the law on oil and gas.”.

Article 68. Effect

1. This Law takes effect on July 1, 2023.

2. The July 6, 1993 Law on Oil and Gas, which has a number of articles amended and supplemented under Law No. 19/2000/QH10, Law No. 10/2008/QH12 and Law No. 35/2018/QH14, ceases to be effective on the effective date of this Law.

Article 69. Transitional provisions

1. Contractors entering into oil and gas contracts that have investment registration certificates granted before the effective date of this Law shall continue to comply with such contracts and certificates.

2. Oil and gas schemes, reports, plans and programs approved before the effective date of this Law will remain valid without being required to be added with the contents provided in this Law.

3. Oil and gas reports, plans, programs and contracts submitted to competent agencies before the effective date of this Law are not required to be re-submitted and shall be appraised and approved in accordance with regulations issued before the effective date of this Law.

4. Enhanced oil recovery under the operating mechanism approved before the effective date of this Law will continue to comply with the decisions and regulations issued before the effective date of this Law.

This Law was passed on November 14, 2022, by the XV^th National Assembly of the Socialist Republic of Vietnam at its 4^th session.-

Chairman of the National Assembly
VUONG DINH HUE