Amendment of the Vietnam Law on Petroleum: Ensuring Petrovietnam’s initiative and legitimacy

Source

Deputy Minister of Industry and Trade (MoIT) Nguyen Sinh Nhat Tan shared that in the context of the world economy having a lot of influence on oil and gas activities, the draft Law on Petroleum (amended) has reduced, inherited and supplemented a number of basic contents; including regulations to ensure the initiative and legitimacy of the Vietnam Oil and Gas Group (Petrovietnam), contribute to creating more favorable conditions for state-owned enterprises and speeding up the approval process of oil and gas exploration and production projects…

Accordingly, the draft Law on Petroleum (amended) has supplemented and clarified regulations for state-owned enterprises and wholly-owned subsidiaries of state-owned enterprises (Petrovietnam, PVEP); specifying that state enterprises are responsible for making a number of reports on risk assessment and capital arrangements according to the law on management and use of state capital; ensure the synchronization, consistency, and specificity of the oil and gas industry.

Source: ITN

Specifically, for oil and gas projects with the participation of Petrovietnam, if an enterprise with 100% capital of Petrovietnam, Petrovietnam will have to prepare and approve risk assessment reports and capital arrangement plans; prepare a report on preliminary assessment of investment efficiency and capital arrangement plans and submit them together with an outline plan for oil and gas field development; prepare an investment efficiency assessment report and a plan to arrange capital to submit with the plan for early exploitation of oil and gas rigs… On the other hand, the draft law also stipulates that Petrovietnam has the right to participate with enterprises which have contributed capital of Petrovietnam in oil and gas contracts, exercise the right of priority to participate, and give priority to buying back part or all of the participation rights of contractors in oil and gas contracts and the order and procedures for approval…

In addition, the Petrovietnam Board of Directors will approve the use of Petrovietnam’s capital and enterprises with 100% capital of Petrovietnam when participating in oil and gas contracts; have the right to transfer the  participation in oil and gas contracts, regardless of the level of capital contribution, after the competent authority approves the contents related to the oil and gas contract and oil and gas activities in accordance with this Law. Petrovietnam’s Board of Directors approves the termination of the unsuccessful oil and gas search and exploration project and the cost of the unsuccessful search and exploration project.

Source: PVN

Petrovietnam Vice CEO. Le Ngoc Son said that with the principle of building, amending and supplementing the Petroleum Law on the basis of 6 major policy groups that the MoIT submitted to the Government in Report No. 1328/BCT-DKT dated March 17th, 2022 on the proposal to develop the Law on Petroleum (replacing the 1993 Law on Petroleum, amended and supplemented in 2000 and 2008), on the basis of identifying inadequacies, difficulties and obstacles in the implementation of the current Petroleum Law, Petrovietnam proposes to amend, supplement and complete the appropriate legal framework for oil and gas activities, in the direction that it is necessary to clearly define the legal status of Petrovietnam as a national oil and gas group; there are investment incentives to encourage and attract foreign investors to invest in the oil and gas sector in the near future…

Mr. Nguyen Quoc Thap, Vice Chairman of the Vietnam Oil and Gas Association, proposed, adjusted, and supplemented regulations on the implementation of oil and gas projects in series, investment procedures such as supplementing the rights and responsibilities of Petrovietnam. That is “Petrovietnam decides and approves investment, sale and transfer projects in the field of oil and gas exploration and production with capital up to 50% of the Group’s charter capital”. At that time, Petrovietnam will use specialized law in accordance with the spirit of the Law on Investment and will solve the remaining problems. If the project exceeds 50% of charter capital, Petrovietnam is responsible for reporting to the owner’s representative agency, which is the Committee for the Management of State Capital at Enterprises or the Prime Minister.

There are opinions that, it is necessary to supplement regulations on capital management principles with state-owned enterprises when participating in all stages of oil and gas activities and the role of contractors (investors); integrate the state management process of oil and gas with the process of management, use state capital to invest in production and business at enterprises, in order to reduce procedures and obstacles for enterprises, State management agency, and owner’s representative agency when carrying out approval procedures. At the same time, it is necessary to assign the Government to detail the processes, procedures, and records of management and use of state capital at enterprises when carrying out procedures for state management of oil and gas. The drafting agency needs to study and add to Chapter IX of the draft Law on Petroleum (amended) 1 article on responsibility for managing and using state capital invested in production and business at enterprises in business activities.