Law Amending and Supplementing Certain Provisions of the Oil Law No. 10/2008/QH12

LAW

Amending and supplementing certain articles of the Petroleum Law

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BASED ON THE CONSTITUTION OF THE SOCIALIST REPUBLIC OF VIETNAM IN 1992 AS AMENDED AND COMPLEMENTED BY RESOLUTION NO. 51/2001/QH10;

The National Assembly promulgates the Law amending and supplementing certain articles of the Petroleum Law 1993 which has been amended and supplemented according to the Law amending and supplementing certain articles of the Petroleum Law No. 19/2000/QH10,

Article 1. Amending and supplementing certain articles of the Petroleum Law:

c) Medium- and long-term loans to pay abroad for imported goods and services when the borrower has sufficient foreign currency from production and business revenue to repay the loan. This provision shall be implemented until September 30, 2019;

“1. Petroleum includes crude oil, natural gas, and hydrocarbons in gaseous, liquid, solid, or semi-solid states in their natural condition, including coalbed methane, sulfur, and similar substances accompanying hydrocarbons but does not include coal, shale, bitumen, or other minerals from which oil can be extracted.”

2. Clause 12 of Article 3 shall be amended and supplemented as follows:

“12. Encouraged investment petroleum project means a project conducting petroleum activities in deep waters, offshore areas, regions with particularly difficult geographical conditions, complex geological conditions, and other areas listed in the blocks decided by the Prime Minister; exploration and development projects for coalbed methane.”

3. Supplement Clause 13 of Article 3 as follows:

“13. Coalbed methane is hydrocarbon, primarily methane in gaseous or liquid form, contained in coal seams or adjacent reservoirs.”

4. Clause 14 of Article 3 shall be added as follows:

“14. Fixed installation means a construction or installation that is built and installed permanently and used to serve petroleum activities.”

5. Clause 15 of Article 3 shall be added as follows:

“15. - Column (10): Remaining value recorded in accounting books or value according to the appraisal result at the time of handover (if applicable). is a combination of mechanical, electrical, electronic components, and other constituent parts installed and used to serve petroleum activities.”

6. Article 8 is amended and supplemented as follows:

"Article 8.

The exploration and appraisal area for a petroleum contract shall be determined based on the blocks decided by the Prime Minister."

7. Article 13 is amended and supplemented as follows:

“Article 13.

During the course of petroleum activities, after completing each phase or stage or ending the petroleum contract, organizations and individuals conducting such activities must dismantle fixed installations, equipment, and means of transportation no longer in use and restore the environment in accordance with the provisions of the law.”

8. Article 14 is amended and supplemented as follows:

"Article 14.

The Vietnam Oil and Gas Group - Parent Company, known internationally as VIETNAM OIL AND GAS GROUP, abbreviated as PETROVIETNAM, acronym PVN (hereinafter referred to as the Vietnam Oil and Gas Group), is a state-owned enterprise conducting petroleum activities and signing petroleum contracts with organizations and individuals conducting petroleum activities in accordance with the provisions of the law.”

9. Article 17 shall be amended and supplemented as follows:

"Article 17.

1. The term of a petroleum contract shall not exceed twenty-five years, including a five-year exploration phase.

For encouraged investment petroleum projects and exploration and development projects for natural gas, the term of a petroleum contract shall not exceed thirty years, including a seven-year exploration phase.

2. The term of a petroleum contract may be extended, but not more than five years; the term of the exploration phase may be extended, but not more than two years.

In special cases, the extension of the exploration period or the term of the petroleum contract shall be considered and decided by the Prime Minister.

3. After declaring a commercial discovery but without a market for consumption and suitable pipeline and processing facilities, the Contractor may retain the discovered gas area. The retention period for the discovered gas area shall not exceed five years and may be extended by two additional years in special circumstances. During this waiting period, the Contractor must carry out the work commitments under the petroleum contract.

4. In cases of force majeure or other special circumstances, the parties to the petroleum contract may agree on a temporary suspension of some rights and obligations under the contract. The suspension period due to force majeure shall be extended until the force majeure event ends. The suspension period in other special circumstances shall be decided by the Prime Minister, but not exceeding three years.

5. The extended exploration phase period, the retention period for the discovered gas area declared as a commercial discovery, and the suspension period of some rights and obligations under the petroleum contract in cases of force majeure or other special circumstances shall not be counted within the term of the petroleum contract.

6. A petroleum contract may terminate before its expiration date provided that the Contractor completes all committed obligations and obtains agreement from the contracting parties.

7. The Government shall stipulate the conditions for temporarily suspending some rights and obligations of the petroleum contract in special circumstances; the conditions and procedures for extending the exploration period or the term of the petroleum contract.”

10. Article 23 shall be amended and supplemented as follows:

"Article 23.

A petroleum contract must be approved by the Prime Minister and become effective according to the Investment Certificate."

11. Article 24 shall be amended and supplemented as follows:

"Article 24.

1. The transfer of a petroleum contract in whole or in part by the parties to the contract must meet the following conditions:

a) The transferee commits to performing the contents of the petroleum contract already signed by the transferor;

b) Ensuring the conditions for transferring capital and projects in accordance with the laws on investment.

The transfer of a petroleum contract in whole or in part must be approved by the Prime Minister and become effective according to the Investment Certificate that has been adjusted.

2. The Vietnam Oil and Gas Group has the right of first refusal to purchase a portion or the entire transferred petroleum contract.

3. The transferor has the obligation to pay taxes and fees in accordance with the laws on tax, fees, and charges.”

12. Article 26 shall be amended and supplemented as follows:

"Article 26.

The Contractor has the right to conclude contracts for petroleum services, but must prioritize concluding such contracts with Vietnamese organizations and individuals.

The bidding and conclusion of contracts for petroleum services directly related to exploration, development, and production activities shall be carried out in accordance with specific regulations issued by the Government.

Vietnam shall undertake aviation services itself or enter into joint venture contracts with foreign countries to provide aviation services for petroleum activities.”

13. Subpoint d of Clause 1 of Article 28 shall be amended and supplemented as follows:

"d) Is exempt from import tax and export tax in accordance with the provisions of the Law on Export Tax and Import Tax."

14. Point g Clause 1 Article 28 shall be amended and supplemented as follows:

"g) Is entitled to export its own portion of oil and gas pursuant to the agreement in the oil and gas contract without needing to apply for an export permit, except in cases provided for in Clause 9 Article 30 of this Law."

15. Article 29 shall be amended and supplemented as follows:

"Article 29.

Subcontractors are entitled to the rights stipulated in points a, c and d Clause 1 Article 28 of this Law.

A foreign organization or individual acting as a subcontractor may transfer the recovered costs and profits obtained during the operation of oil and gas services out of the country."

16. Clause 9 Article 30 shall be amended and supplemented as follows:

"9. Sell at the domestic market when required by the Government:

a) Natural gas under their ownership based on agreements in gas development and exploitation projects;

b) Their own crude oil portion according to international competitive prices."

17. Article 32 shall be amended and supplemented as follows:

"Article 32.

1. Organizations and individuals conducting oil and gas activities, foreigners, and Vietnamese working for Oil and Gas Contractors, Joint Venture Oil and Gas Enterprises, and Subcontractors must pay taxes as prescribed by tax laws.

2. Income from oil and gas activities after paying corporate income tax will be returned by the state budget to the Vietnam Oil and Gas Group for investment in developing oil and gas projects in accordance with the law."

18. Article 38 shall be amended and supplemented as follows:

"Article 38.

1. The Government shall uniformly manage state administration over oil and gas activities.

2. The Ministry of Industry and Trade shall be responsible before the Government for implementing state management over oil and gas activities as follows:

a) Issuing regulations within its authority or submitting to competent state agencies for issuance of normative legal documents, strategies, plans, and development programs for the oil and gas industry;

b) Taking the lead in submitting to the Prime Minister for approval of oil and gas contracts, oil and gas investment projects in accordance with investment laws, reporting reserves, overall development plans for fields, field development plans, bidding results for oil and gas blocks and oil and gas contracts, cooperation plans to implement oil and gas activities in overlapping areas with foreign countries, extending exploration and production periods or oil and gas contract periods, temporary suspension periods of oil and gas contracts due to force majeure or special circumstances;

c) Organizing the establishment and submission to the Prime Minister for approval of the list of blocks, demarcation, and adjustment of block boundaries;

d) Summarizing, monitoring, and reporting on the situation of oil and gas development, exploration, extraction, consumption, and export;

đ) Approving early production plans in contract area zones; approving plans, inspecting, and handling violations in the removal of fixed facilities, equipment, and means of service for oil and gas activities that are no longer in use, and environmental restoration in accordance with the law;

e) Deciding to allow the burning off of associated gas; reclaiming fields if the contractor does not develop the field and extract oil and gas according to the time limit specified in the approved field development plan;

g) Managing training, capacity building, and human resource development for oil and gas activities; establishing reasonable systems and policies to attract human resources for oil and gas activities;

h) Implementing international cooperation in the oil and gas sector;

i) Promoting and disseminating education on oil and gas laws;

k) Inspecting, auditing, handling violations, and resolving complaints and denunciations regarding oil and gas activities;

l) Performing other state management tasks related to oil and gas activities as prescribed by law.

3. Ministries and ministerial-level agencies within their respective duties and powers shall be responsible for implementing state management over oil and gas activities in accordance with the law.

4. People's Committees of provinces and centrally-administered cities within their respective duties and powers shall be responsible for implementing state management over oil and gas activities in their localities in accordance with the law."

19. Replace the phrase “Vietnam Oil Corporation” with the phrase “Vietnam Oil and Gas Group” in Clause 5 Article 3, Clause 9 Article 15, Articles 20, 21, 22, 25, and Clause 6 Article 30 of the 1993 Petroleum Law which has been amended and supplemented by the Law Amending and Supplementing Certain Provisions of the Petroleum Law No. 19/2000/QH10.

20. Repeal Articles 33, 34, 35, 36, 37, and 39 of the 1993 Petroleum Law which have been amended and supplemented by the Law Amending and Supplementing Certain Provisions of the Petroleum Law No. 19/2000/QH10.

Article 2. This Law shall take effect from January 1, 2009.

This Law was passed by the National Assembly of the Socialist Republic of Vietnam, the 12th term, third session, on June 3, 2008./.