Circular No. 107/2014/TT-BTC guides accounting for the management of oil and gas operations.

 

CIRCULAR

Guidelines on accounting for Oil and Gas Operators

Based on the Accounting Law dated June 17, 2003;

Pursuant to the Petroleum Law dated July 6, 1993 and the Law Amending and Supplementing Certain Provisions of the Petroleum Law in 2000, the Law Amending and Supplementing Certain Provisions of the Petroleum Law in 2008;

Pursuant to Decree No. 129/2004/NĐ-CP dated May 31, 2004 of the Government detailing and guiding the implementation of certain provisions of the Accounting Law in business operations;

Pursuant to Decree No. 33/2013/NĐ-CP dated April 22, 2013 of the Government promulgating the model contract of the Production Sharing Contract;

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decision No. 40/2007/QĐ-TTg dated March 21, 2007 of the Prime Minister on the collection of fixed assets, equipment, and means serving oil and gas activities;

At the proposal of the Director of the Accounting and Auditing Regulations Department,

The Minister of Finance issues this Circular guiding accounting for Oil and Gas Operators.

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

Thông tư này quy định chi tiết khoản 4 Điều 38 Luật Thủy sản số 18/2017/QH14 đã được sửa đổi, bổ sung tại điểm c khoản 21 Điều 14 Luật số 146/2025/QH15.

- This Circular specifies accounting for Oil and Gas Operators. Matters not covered in this Circular shall be carried out in accordance with the Accounting Law and guiding documents of the Accounting Law; the Accounting System for Enterprises issued pursuant to Decision No. 15/2006/QĐ-BTC dated March 20, 2006 of the Minister of Finance, Circular No. 244/2009/TT-BTC dated December 31, 2009, and other documents amending, supplementing, and replacing the Accounting System for Enterprises (hereinafter referred to as the current Accounting System for Enterprises).

- Oil and Gas Operators shall apply the accounting accounts prescribed in the current Accounting System for Enterprises and those amended and supplemented in this Circular to suit their operational characteristics and management requirements.

Thông tư này áp dụng đối với tổ chức, cá nhân có liên quan đến hoạt động kinh doanh đối tượng thủy sản nuôi chủ lực trên lãnh thổ Việt Nam.

This Circular applies to Oil and Gas Operators, including joint operating companies (collectively referred to as Oil and Gas Operators), representing the parties involved in petroleum contracts conducting exploration, appraisal, and production activities in Vietnam.

Article 2. Interpretation of Terms

An Oil and Gas Operator is an organization or individual representing the parties involved in petroleum contracts, managing activities within the scope of authorization.

Abbreviations JOC, POC, and PSC in this Circular are understood as follows:

1. JOC: Joint Operating Company. Under the petroleum contract, the contractors agree to establish a joint operating company acting as an agent representing the parties involved in the contract to carry out exploration, appraisal, development, and production activities within the contract area, operating as the sole operator on behalf of the contractors to fulfill rights and obligations within the scope of authorization according to the joint operation agreement and in compliance with decisions of the Management Committee.

2. PSC: Production Sharing Contract. Under this form, the participating parties appoint an operator who will act on behalf of the participating parties to conduct exploration, appraisal, evaluation, development, and production activities according to the powers, agreements, and provisions of the Production Sharing Contract.

3. POC: Participating Operating Company. The contractors agree to establish a Petroleum Operating Company, with the Vietnamese side represented by the Vietnam Oil and Gas Group (PVN) serving as the Operator.

Article 3. Writing used in accounting

1. In cases where the Oil and Gas Contract stipulates the use of foreign language writing, it shall be implemented according to the provisions of the Oil and Gas Contract and must be translated into Vietnamese upon specific request from state management agencies.

2. In cases where the Oil and Gas Contract does not specify the writing used in accounting, the writing used on accounting vouchers, accounting books, and financial reports in Vietnam shall be Vietnamese. If it is necessary to use a foreign language, both Vietnamese and the foreign language must be used simultaneously.

Article 4. Unit of currency used in accounting

1. In cases where the Oil and Gas Contract specifies the unit of currency used in accounting, it shall be implemented according to the provisions of the Oil and Gas Contract.

2. In cases where the Oil and Gas Contract does not specify the unit of currency used in accounting, the unit of currency used in accounting shall comply with the provisions of the Accounting Law and guiding documents for the Accounting Law.

Chapter II
GUIDELINES FOR ACCOUNTING APPLICABLE TO OIL AND GAS OPERATORS

Article 5. Accounting account system

1. The Oil and Gas Operator shall apply the accounting account system issued under the current Corporate Accounting Regulations, with amendments and supplements to some accounts and renaming of some accounting accounts as follows:

a) Supplement Account 246 - "Exploration, Appraisal, and Evaluation Costs". This account is used to reflect exploration, appraisal, and evaluation costs of oil and gas and the settlement situation of exploration, appraisal, and evaluation costs of oil and gas. Exploration, appraisal, and evaluation costs in oil and gas contracts are monitored in detail according to each Oil and Gas Contract.

b) Supplement Account 247 - "Development Costs". This account is used to reflect development costs of oil and gas fields and the settlement situation of investment value for development in oil and gas contracts.

c) Supplement Account 248 - "Production Costs". This account is used to reflect production costs incurred during the production phase of each Oil and Gas Contract.

d) Supplement Account 249 - "Non-Recoverable Costs": This account is used to reflect costs incurred during the exploration, appraisal, and evaluation phases; the development phase; and the production phase but not permitted to be recovered according to the provisions of the Oil and Gas Contract and costs suspended or eliminated during the audit process based on the Audit Report of the Vietnam Oil and Gas Group.

đ) Supplement Account 251 - "Recoverable Costs": This account reflects the amount of costs that have been recovered through cost recovery oil based on the principle of cost before - recovery before as stipulated in the Oil and Gas Contract.

e) Rename Account 341 - "Long-term Loans" to "Contributed Capital of Other Contractors": This account is used to reflect the contributed capital of other contractors who are not the parent company - Operator participating in the contract according to the provisions of the Oil and Gas Contract. Account 341 - Contributed Capital of Other Contractors shall be supplemented with two sub-accounts as follows:

- Sub-account 3411 - Contributed Capital of Other Contractors: This sub-account is used to reflect the capital contributed by other contractors participating in the contract according to the provisions of the Oil and Gas Contract.

- Sub-account 3412 - Recovery of Contributed Capital of Other Contractors: This sub-account is used to reflect the contributed capital of other contractors participating in the contract that has been recovered through cost recovery oil based on the principle of cost before - recovery before.

g) Rename Account 411 - "Business Capital Source" to "Contributed Capital of Parent Company - Operator". This account reflects the current status and changes in the contributed capital of the Parent Company - Operator according to the provisions of the Oil and Gas Contract. Account 411 - Contributed Capital of Parent Company - Operator shall be supplemented with two sub-accounts as follows:

- Sub-account 4111 - "Contributed Capital of Parent Company - Operator": This sub-account is used to reflect the capital contributed by the parent company - Operator according to the provisions of the Oil and Gas Contract.

- Sub-account 4112 - "Recovery of Contributed Capital of Parent Company - Operator": This sub-account is used to reflect the contributed capital of the parent company - Operator that has been recovered through cost recovery oil based on the principle of cost before - recovery before.

h) Rename Account 642 - "Corporate Management Costs" to "General Administrative Expenses". This account reflects corporate management and administrative expenses of the Oil and Gas Operator incurred during the period.

2. The accounting account system applicable to the Oil and Gas Operator with the above amendments and supplements is issued in Appendix No. 01 attached hereto. In cases where the Oil and Gas Operator engages in other economic activities, they may use related accounts outside the accounting account system prescribed in this Circular, provided that such accounts fall within the accounting account system prescribed in the current Corporate Accounting Regulations without the need to seek approval from the Ministry of Finance.

Article 6. Accounting for exploration, appraisal, and evaluation costs

1. Account 246 - Exploration, Appraisal, and Evaluation Costs is used to reflect costs incurred during the exploration, appraisal, and evaluation of oil and gas. These costs are tracked in detail according to each Oil and Gas Contract.

2. Accounting Principles

a) Exploration, appraisal, and evaluation costs for oil and gas are expenses incurred with the aim of searching for, assessing the potential of oil and gas, determining the existence of reserves and the commercial viability of oil and gas within the scope of the target (formation, system, structure, cluster, block, or sedimentary basin). Such costs include: preparation, geological, geophysical, geochemical surveys, and other surveys; analyses and studies, drilling, well completion; formation testing; well repair; well abandonment; appraisal plans and other related works. Exploration, appraisal, and evaluation costs may include:

- Costs related to collecting geophysical, geochemical, geological, and reservoir data, including processing, reprocessing, analyzing, and interpreting data;

- Labor, raw materials, fuel, supplies, equipment, and service costs used in drilling exploration wells and appraisal wells;

- General administrative management costs allocated to exploration, appraisal, and evaluation activities;

- Other direct costs related to the exploration, appraisal, and evaluation phase.

b) In cases where the Oil and Gas Contract stipulates that certain items below can be deducted from exploration, appraisal, and evaluation costs (after fulfilling all obligations to the state budget as prescribed by law, if applicable):

- Revenue from extracted oil and gas used to offset exploration, appraisal, and evaluation costs;

- Revenues from insurance or compensation directly related to exploration, appraisal, and evaluation activities;

- Income from leasing third parties' assets directly related to exploration, appraisal, and evaluation activities;

- Proceeds from the disposal of assets directly related to exploration, appraisal, and evaluation activities;

- Other revenues directly related to exploration, appraisal, and evaluation activities.

If the revenues mentioned above relate to multiple activities and cannot be separately allocated to specific activities such as exploration, appraisal, and evaluation; development activities; and production activities, the Operator shall allocate the revenues and reduce costs (including exploration, appraisal, and evaluation costs, development costs, and production costs) according to the most appropriate criteria for each Oil and Gas Contract and the Operator's operational characteristics.

c) Upon expiration of the Oil and Gas Contract term, the Operator must settle the total exploration, appraisal, and evaluation costs and the recovered costs. The difference between the exploration, appraisal, and evaluation costs and the actual recovered costs shall be reduced from the contributions of the parties.

d) The Operator must aggregate and track in detail recoverable exploration, appraisal, and evaluation costs and unrecoverable costs according to each Oil and Gas Contract. The Operator may open detailed second-level and third-level accounts under Account 246 - Exploration, Appraisal, and Evaluation Costs in accordance with their management requirements.

3. Content, Structure, and Accounting Method of Account 246 - Exploration, Appraisal, and Evaluation Costs

Debit Side: Relevant costs associated with exploration, appraisal, and evaluation activities incurred during the period.

Credit Side:

- Other revenues are recorded to reduce exploration, appraisal, and evaluation costs.

- Transfer of exploration, appraisal, and evaluation costs at the end of the Oil and Gas Contract.

Debit Balance: Accumulated exploration, appraisal, and evaluation costs at the reporting date.

4. Accounting Methods for Exploration, Appraisal, and Evaluation Costs

a) When exploration, appraisal, and evaluation costs related to the Oil and Gas Contract, such as geological-geophysical costs; drilling costs, are incurred, record:

Debit Account 246 - Exploration, Appraisal, and Evaluation Costs

Debit Account 133 - Deductible VAT

Credit accounts 111, 112, 331.

b) Where the Oil and Gas Contract stipulates that purchased raw materials, tools, and equipment are not immediately included in exploration, appraisal, and evaluation costs but only recognized as costs when put into use for these purposes, upon purchase, they must be processed through inventory and accounted for according to current regulations. When raw materials, tools, and equipment are issued for exploration, appraisal, and evaluation activities, record:

Debit Account 246 - Exploration, Appraisal, and Evaluation Costs

Credit Accounts 152, 153.

c) Periodically allocate general administrative management costs to exploration, appraisal, and evaluation costs, record:

Debit Account 246 - Exploration, Appraisal, and Evaluation Costs

Credit Account 642 - General Administrative Management Costs.

d) Record revenues from insurance or claims related to oil and gas activities, proceeds from leasing third parties' assets, ownership rights, adjustments received from suppliers due to substandard or non-conforming materials previously recorded as costs; proceeds from disposing of materials and assets previously recorded as costs but no longer needed for oil and gas operations, and other revenues directly related to exploration, appraisal, and evaluation activities (after fulfilling tax obligations as prescribed by law, if applicable), according to the provisions of the Oil and Gas Contract, record:

Debit Accounts 111, 112

Credit Account 246 - Exploration, Appraisal, and Evaluation Costs (if reducing recoverable costs)

Credit Account 338 - Other Payables, Receivables (If payable to PVN)

Credit Account 33311 - VAT Output Tax Due (if applicable)

e) Upon termination of the Oil and Gas Contract, the Operator shall transfer the recovered exploration, appraisal, and evaluation costs, record:

Debit Account 251 - Recovered Costs

Credit Account 246 - Exploration, Appraisal, and Evaluation Costs.

g) Upon termination of the Petroleum Contract, if the exploration, appraisal, and evaluation costs incurred exceed the amount of such costs that have been recovered, the difference shall be recorded as a reduction in the capital contribution of the parties, recorded as follows:

Debit Accounts 3411, 4111

Credit Account 246 - Exploration, Appraisal, and Evaluation Costs.

Article 7. Accounting for Development Costs

1. Account 247 - Development Costs is used to reflect development costs for oil and gas fields. Development costs are tracked in detail according to each Petroleum Contract.

2. Accounting Principles

a) Development costs include all direct and indirect costs related to the development activities of one or more oil and gas strata within the development area of each Petroleum Contract, including:

- Costs related to drilling and completing development wells, such as geological engineering survey costs for drilling, well design costs, and other drilling-related costs during the development phase;

- Construction costs for developing the field, such as field design costs, technology flow diagrams, design and construction of production platforms, pipeline systems, feasibility studies, technological design costs, and other costs associated with the development phase;

- Costs such as labor, consumable materials, and services without residual value arising during the drilling and deepening of wells;

- General administrative management costs allocated to development activities;

- Other costs directly related to development activities.

b) In cases where the Petroleum Contract stipulates that certain items may be recorded as reductions in development costs, the Operator shall record reductions in development costs in accordance with the provisions of the Petroleum Contract (after fulfilling all obligations to the state budget as required by law - if applicable):

- Revenue from extracted oil and gas, which may be used to offset development costs;

- Revenues from insurance or compensation directly related to development activities;

- Income from leasing or using assets directly related to development activities to third parties;

- Proceeds from the liquidation of assets directly related to development activities;

- Other revenues directly related to development activities.

If the revenues mentioned above relate to multiple activities and cannot be separately allocated to specific activities such as exploration, appraisal, evaluation, development activities, and extraction activities, the Operator shall allocate the proceeds and record reductions (including exploration, appraisal, evaluation costs, development costs, and extraction costs) according to the most appropriate method for each Petroleum Contract and the characteristics of the Operator's operations.

c) Upon expiration of the term of the Petroleum Contract, the Operator must settle the total development costs and the actual recovery of costs. The difference between the development costs incurred and the actual recovery costs shall be recorded as a reduction in the capital contributions of the parties.

d) The Operator must aggregate and track in detail the recoverable and non-recoverable development costs according to each Petroleum Contract. The Operator may open detailed sub-accounts under Account 247 - Development Costs in accordance with its management requirements.

3. Content, structure, and accounting methods for Account 247 - Development Costs

Debit Side: Development costs related to Petroleum Contract activities incurred during the period.

Credit Side:

- Transfer of development costs at the end of the Petroleum Contract;

- Other revenues recorded as reductions in development costs.

Debit Balance: Accumulated development costs at the reporting date.

4. Accounting Method for Development Costs

a) When development-related costs occur, record:

Debit Account 247 - Development Costs

Debit Account 133 - Deductible VAT

Credit accounts 111, 112, 331.

b) In cases where, according to the provisions of the Petroleum Contract, purchased raw materials, tools, and equipment are not immediately included in development costs but only recognized when put into use, upon purchase, they must be stored in inventory and accounted for according to current regulations. When raw materials, tools, and equipment are withdrawn for use in development activities, record:

Debit Account 247 - Development Costs

Credit Accounts 152, 153.

c) Periodically allocate general administrative management costs to development costs, record:

Debit Account 247 - Development Costs

Credit Account 642 - General Administrative Management Costs.

d) Account for revenues from insurance or claims related to petroleum activities, proceeds from leasing or using ownership rights of assets, adjustments received from suppliers due to poor quality or incorrect specifications of materials previously recorded as costs, proceeds from the liquidation of materials and assets previously recorded as costs but no longer needed for petroleum activities, and other revenues directly related to development activities (after fulfilling tax obligations as required by law - if applicable), record as reductions in development costs, record:

Debit Accounts 111, 112

Credit Account 247 - Development Costs (if the recovery cost is reduced)

Credit Account 338 - Other Payables, Receivables (If payable to PVN)

Credit Account 33311 - VAT Output Tax Due (if applicable)

e) Upon termination of the Petroleum Contract, the Operator shall transfer the recovered development costs, record:

Debit Account 251 - Recovered Costs

Credit Account 247 - Development Costs.

f) Upon termination of the Petroleum Contract, if the development costs incurred exceed the amount of such costs that have been recovered, the difference shall be recorded as a reduction in the capital contributions of the parties, record:

Debit Accounts 3411, 4111

Credit Account 247 - Development Costs.

Article 8. Accounting for the Exploitation Phase

1. Account 248 - Exploration and Production Costs shall be used to reflect all costs incurred during the exploitation phase of oil and gas.

2. Accounting Principles

a) Exploration and production costs include all direct and indirect costs allocated and incurred during the process of exploiting crude oil and natural gas under each Oil and Gas Contract, including common costs and administrative costs that can be allocated to exploration and production costs according to the provisions of the Oil and Gas Contract. Exploration and production costs may include:

- Costs for operating and maintaining necessary equipment and scheduling, controlling;

- Measurement, testing, flow testing, and collection costs;

- Processing, storage, and transportation costs of crude oil and natural gas from the oil and gas reservoir to the delivery point;

- Common administrative management costs allocated to exploitation activities;

- Mine decommissioning costs;

- Other costs directly related to exploitation activities.

b) In cases where the Oil and Gas Contract stipulates that certain items below can be deducted from exploration and production costs, the Operator shall record such deductions according to the provisions of the Oil and Gas Contract (after fulfilling all obligations to the state budget as required by law - if applicable):

- Revenue from extracted oil and gas that is allowed to offset exploration and production costs;

- Revenues from insurance or compensation directly related to exploitation activities;

- Income from leasing or using assets directly related to exploitation activities to third parties;

- Proceeds from the liquidation of assets directly related to exploitation activities;

- Other revenues directly related to exploitation activities.

If the revenues mentioned above relate to multiple activities and cannot be separately allocated to each activity, such as exploration, appraisal, evaluation; development activities and exploitation activities, the Operator shall allocate the proceeds and record reductions in costs (including exploration, appraisal, evaluation costs, field development costs, and exploitation costs) according to the most appropriate method for each Oil and Gas Contract and the characteristics of the Operator's operations.

c) Periodically, the Operator must deposit a security deposit with the host country (represented by Vietnam Oil and Gas Group - PVN) to establish a fund to ensure financial obligations for mine decommissioning and land restoration, which will be included in exploration and production costs. If the amount set aside in the fund exceeds the actual costs incurred for mine decommissioning, the unused portion of the fund shall be recorded as a reduction in exploration and production costs (if not fully recovered) or reflected as a liability to the parties in the Oil and Gas Contract.

d) Upon expiration of the Oil and Gas Contract, the Operator must settle the total exploration and production costs and the costs already recovered. The difference between the exploration and production costs exceeding the actual recovered costs shall be recorded as a reduction in the capital contribution of the parties.

đ) The Operator must collect and monitor in detail the exploration and production costs that can be recovered under each Oil and Gas Contract. The Operator may open detailed Sub-Accounts 2 and 3 of Account 248 - Exploration and Production Costs in accordance with their management requirements. The Operator may open Sub-Account 2 to separately track capitalized costs and costs incurred during the exploitation period.

3. Content, structure, and accounting methods for Account 248 - Exploration and Production Costs

Debit Side: All costs related to exploitation activities under the Oil and Gas Contract incurred during the period.

Credit Side:

- Transfer of exploration and production costs at the end of the Oil and Gas Contract;

- Other revenues recorded as reductions in exploration and production costs.

Debit Balance: Accumulated exploration and production costs at the reporting date.

4. Accounting Method for Exploration and Production Costs

a) When direct costs related to exploitation activities occur, record:

Debit Account 248 - Exploration and Production Costs

Debit Account 133 - Deductible VAT

Credit accounts 111, 112, 331.

b) In cases where, according to the provisions of the Oil and Gas Contract, raw materials, tools, and equipment purchased are not immediately included in exploration and production costs but only recorded when put into use, upon purchase, inventory procedures must be followed and recorded according to current regulations. When raw materials, tools, and equipment are issued for exploitation activities, record:

Debit Account 248 - Exploration and Production Costs

Credit Accounts 152, 153.

c) Periodically allocate common administrative management costs to exploration and production costs, record:

Debit Account 248 - Exploration and Production Costs

Credit Account 642 - General Administrative Management Costs.

d) Record revenues from insurance or claims related to oil and gas activities, proceeds from leasing rights to third parties, adjustments received from suppliers due to substandard or incorrectly specified materials previously recorded as costs, proceeds from the liquidation of materials and assets previously recorded as costs but no longer needed for oil and gas activities, and other revenues directly related to exploitation activities (after fulfilling tax obligations as required by law - if applicable), as reductions in exploration and production costs, record:

Debit Accounts 111, 112

Credit Account 248 - Exploration and Production Costs (If cost recovery is recorded)

Credit Account 338 - Other Payables (if payable to PVN)

Credit Account 33311 - VAT Output Tax Due (if applicable)

e) When establishing a fund to ensure financial obligations for the decommissioning of fixed assets, equipment, and facilities, record:

Debit Account 248 - Exploration and Production Costs

Credit Account 335 - Expenses Payable.

f) At the end of the decommissioning process, if the fund to ensure financial obligations is not fully utilized, the remaining fund will be handled as follows:

- In cases where contractors have not fully recovered their costs, the remaining fund shall be recorded as a reduction in exploration and production costs, record:

Debit Account 335 - Expenses Payable

Credit Account 248 - Exploration and Production Costs.

- In cases where contractors have fully recovered their costs, the remaining fund after paying interest to the host country shall be reflected as other liabilities to the parties, as follows:

+ If the Operator on behalf of the parties pays the state budget the interest earned by the host country, record:

Debit Account 335 - Expenses Payable

Credit Account 333 - Taxes and Other Payments to the State (interest earned by the host country)

Credit Account 338 - Other Payables.

+ If PVN retains the interest earned by the host country, record:

Debit Account 335 - Expenses Payable

Credit Account 244 - Deposits and Bails (Interest earned by the host country)

Credit Account 338 - Other Payables.

g) Upon termination of the Oil and Gas Contract, the Operator shall transfer the settled exploration and production costs that have been recovered, record:

Debit Account 251 - Recovered Costs

Credit Account 248 - Exploration and Production Costs.

h) Upon termination of the oil and gas contract, if the exploration and production costs incurred exceed the recovered costs, the difference shall be recorded as a reduction in the capital contribution of the parties, recorded as follows:

Debit Accounts 3411, 4111

Credit Account 248 - Exploration and Production Costs.

Article 9. Accounting for unrecoverable costs

1. Account 249 - Unrecoverable Costs is used to reflect the amount of unrecoverable costs as stipulated in the Oil and Gas Contract and costs that are suspended or excluded during the audit process according to the Audit Report of the Vietnam Oil and Gas Group.

2. Accounting Principles

The oil and gas operator must aggregate and monitor in detail the unrecoverable costs at each stage of exploration, appraisal, development, and production. The oil and gas operator may open detailed sub-accounts of Account 249 - Unrecoverable Costs consistent with their management requirements.

3. Content, structure, and accounting method for Account 249 - Unrecoverable Costs

Debit: Unrecoverable costs of the exploration, appraisal, and development stages, and the production stage incurred during the period.

Credit Side:

- Unrecoverable costs that meet the conditions prescribed by law and the Oil and Gas Contract and are reclassified as recoverable costs;

- Record a reduction in unrecoverable costs upon termination of the oil and gas contract.

Debit Balance: Accumulated unrecoverable costs at the reporting date.

4. Method of accounting for unrecoverable costs

a) When costs in the exploration, appraisal, and development stages, and the production stage are determined to be unrecoverable costs, record:

Debit Account 249 - Unrecoverable Costs

Credit Accounts 246, 247, 248.

b) When unrecoverable costs that meet the conditions prescribed by law and the Oil and Gas Contract are reclassified as recoverable costs, record:

Debit Accounts 246, 247, 248

Credit Account 249 - Unrecoverable Costs.

c) Upon termination of the Oil and Gas Contract, the accountant records a reduction in unrecoverable costs and the capital contributions of the parties, recorded as follows:

Debit Accounts 3411, 4111

Credit Account 249 - Unrecoverable Costs.

d) When liquidating remaining raw materials, tools, and equipment not yet used for oil and gas activities:

- In the case where the proceeds from the liquidation are less than the book value of the raw materials, tools, and equipment, record:

Debit Accounts 111, 112, 131... Proceeds from the liquidation

Debit Account 249 - Unrecoverable Costs (The difference between the proceeds from the liquidation and the book value of the raw materials, tools, and equipment being liquidated)

Credit Accounts 152, 153 (Book value of the raw materials, tools, and equipment being liquidated)

Credit Account 3331 - VAT Payable (if applicable)

- In the case where the proceeds from the liquidation are greater than the book value of the raw materials, tools, and equipment, record:

Debit Accounts 111, 112, 131... Proceeds from the liquidation

Credit Accounts 152, 153 (Book value of the raw materials, tools, and equipment being liquidated)

Credit Account 249 - Unrecoverable Costs (The difference between the proceeds from the liquidation and the book value of the raw materials, tools, and equipment being liquidated)

Credit Account 3331 - VAT Payable (if applicable)

Article 10. Accounting for Recovered Costs

1. Account 251 - Recovered Costs is used to reflect the costs of the exploration, appraisal, and development stages, and the production stage that have been recovered through cost recovery oil allocated from actual production (excluding profit oil) in each quarter. Oil and gas activity costs are recovered on a "costs first - recovery first" basis.

2. Accounting Principles

The oil and gas operator must aggregate and monitor in detail the recovered costs at each stage of exploration, appraisal, and development, and the production stage. The oil and gas operator may open detailed sub-accounts of Account 251 - Recovered Costs consistent with their management requirements.

3. Content, structure, and accounting method for Account 251 - Recovered Costs

Debit: Transfer of recovered costs of the exploration, appraisal, and development stages, and the production stage upon termination of the Oil and Gas Contract.

Credit: Recovered costs of the exploration, appraisal, and development stages, and the production stage incurred during the period.

Credit Balance: Amount of recovered costs at the reporting date.

4. Method of accounting for recovered costs

a) When the Contractor recovers oil and gas activity costs through cost recovery oil, record:

Debit Account 3412 - Recovery of Capital Contributions of the Contractor Parties

Debit Account 4112 - Recovery of Parent Company's Capital Contribution - Operator

Credit Account 251 - Recovered Costs.

b) Upon termination of the Oil and Gas Contract, the Operator transfers the recovered costs, recorded as follows:

Debit Account 251 - Recovered Costs

Credit Accounts 246, 247, 248.

Article 11. Accounting for Corporate Income Tax

1. Accounting Principles

a) The Oil and Gas Operator must fully fulfill its corporate income tax obligations on income or expenses recorded as deductions during the period as prescribed by current laws.

b) Corporate Income Tax (CIT) payable shall be accounted for as a deduction from the income generated during the period. For amounts recorded as deductions for exploration, appraisal, development, and production costs according to the Petroleum Contract, the Oil and Gas Operator shall only record such deductions after paying the corporate income tax (if the tax law stipulates that those amounts are taxable).

2. Methods of Accounting for Corporate Income Tax

- When there is a generation of taxable income subject to CIT, the Oil and Gas Operator reflects the CIT payable, recording:

Debit accounts 515, 711

Credit account 3334 - CIT Payable.

- For amounts recorded as deductions for exploration, appraisal, development, and production costs, after paying corporate income tax as prescribed by law (if applicable), record:

Debit accounts 111, 112, 131, 138

Credit accounts 246, 247, 248

Credit account 3334 - CIT Payable (if applicable).

- When making payments to the State Budget, record:

Debit account 3334 - CIT Payable

Credit Accounts 111, 112.

Article 12. Accounting for Value Added Tax (VAT) Deduction During the Production Phase

1. During the production phase, when there is revenue from selling oil and gas and VAT input tax can be deducted, the Oil and Gas Operator may deduct it from the VAT output tax payable. In cases where the Oil and Gas Operator only declares taxes for Contractors but does not directly pay the VAT output tax, based on the Tax Declaration, record:

Debit account 138 - Other Receivables

Credit account 133 - Input VAT Deductible.

2. When there is a decision by the Contractors regarding the reduction of their capital contribution proportionally to the amount of deductible VAT, record:

Debit account 4111 - Capital Contribution of Parent Company - Operator

Debit account 3411 - Capital Contribution of Other Contractors

Credit account 138 - Other Receivables.

3. Other provisions related to accounting for VAT shall be implemented in accordance with the current enterprise accounting regulations.

Article 13. Accounting for Capital Contributions of Contractors

1. Recognition Principles for Capital Contributions

a) The Oil and Gas Operator must track each Contractor's detailed capital contributions for each Petroleum Contract based on actual contributions.

b) In cases where the Oil and Gas Operator operates as a Joint Operating Company (POC) or is hired as an Operator without participating in the capital contribution under the Petroleum Contract, the Operator records the Contractors' capital contributions in Account 341 - Capital Contributions of Other Contractors.

c) In cases where the Oil and Gas Operator operates under the terms of the Petroleum Contract in the form of JOA and PSC, the recognition of capital contributions follows the principle:

- The parent company's capital contribution is recognized as owner's investment and recorded in Account 411 - Capital Contribution of Parent Company - Operator.

- The capital contributions received from other parties within the Contract are recognized as liabilities and recorded in Account 341 - Capital Contributions of Other Contractors.

d) Upon termination of the Petroleum Contract, the Operator must reduce the capital contributions of the parties by the amount of recovered costs and unrecovered costs.

2. Structure and Content of Account 341 - Capital Contributions of Other Contractors

a) Structure and Content of Account 3411 - Capital Contributions of Other Contractors

Debit Side: Reduction in capital contributions of other Contractors due to recovery of capital upon termination of the Petroleum Contract.

Credit Side: Actual capital contributions of other Contractors generated during the period.

Credit Balance: Actual capital contributions of other Contractors at the reporting date.

b) Structure and Content of Account 3412 - Recovery of Capital Contributions of Other Contractors

Debit Side: Capital contributions of other Contractors recovered through cost-recovery oil generated during the period.

Credit Side: Transfer of recovered capital contributions through cost-recovery oil to reduce capital contributions of other Contractors upon termination of the Petroleum Contract.

Debit Balance: Accumulated capital contributions of other Contractors recovered through cost-recovery oil up to the reporting date.

3. Structure and Content of Account 411 - Capital Contribution of Parent Company - Operator

a) Structure and Content of Account 4111 - Capital Contribution of Parent Company - Operator

Debit Side: Reduction in capital contribution of the parent company - Operator due to recovery of capital upon termination of the Petroleum Contract.

Credit Side: Actual capital contribution of the parent company - Operator generated during the period.

Credit Balance: Actual capital contribution of the parent company - Operator at the reporting date.

b) Structure and Content of Account 3412 - Recovery of Capital Contributions of Other Contractors

Debit Side: Capital contribution of the parent company - Operator recovered through cost-recovery oil generated during the period.

Credit Side: Transfer of recovered capital contributions through cost-recovery oil to reduce capital contribution of the parent company - Operator upon termination of the Petroleum Contract.

Debit Balance: Accumulated capital contribution of the parent company - Operator recovered through cost-recovery oil up to the reporting date.

4. Accounting Method for Capital Contributions of Contractors

a) When the Oil and Gas Operator receives capital contributions from parties in the Petroleum Contract:

- In cases where a party designated and approved to act as the Operator on behalf of the Contractors to perform work and obligations as stipulated in the contract, when receiving capital contributions from Contractors, record:

Debit accounts 111, 112

Credit account 3411 - Capital Contributions of Other Contractors (Corresponding capital contributions of Contractors participating in the contract - Detailed for each Contractor)

Credit account 4111 - Capital Contribution of Parent Company - Operator (Corresponding capital contribution of the parent company - Operator as stipulated in the Petroleum Contract).

- In case the Operator of Petroleum is a Joint Operating Company established to represent the participating parties and the participating parties jointly appoint individuals to manage together, or the Operator of Petroleum is hired by the participating parties to manage exploration, appraisal, development, and production activities, when receiving contributions from the participating Contractors, record:

Debit Account 112 - Bank Deposits

Credit Account 3411 - Contributions from other participating Contractors.

b) Revenue from interest on deposits (after fulfilling obligations to the State Budget) if recorded as an increase in contributions from the participating parties, record:

Debit account 515 - Financial operation revenue

Credit Account 3411 - Contributions from other participating Contractors (Portion enjoyed by other parties)

Credit Account 4111 - Contributions from the parent company - Operator

Credit Account 333 - Taxes and other payments to the State.

c) In case other revenues (other than those recorded as reductions in costs) according to the Petroleum Contract, after fulfilling obligations to the State Budget, are recorded as increases in contributions from the participating parties, record:

Debit Accounts 711 - Other income

Credit Account 3411 - Contributions from other participating Contractors

Credit Account 4111 - Contributions from the parent company - Operator

Credit Account 333 - Taxes and other payments to the State.

d) Periodically record the amount of contributions recovered through cost recovery oil, record:

Debit Account 3412 - Recovery of contributions from other participating Contractors

Debit Account 4112 - Recovery of Parent Company's Capital Contribution - Operator

Credit Account 251 - Recovered Costs.

đ) During the production phase, if there is revenue from selling oil and gas and VAT input tax is deductible, the Operator of Petroleum may deduct it from the VAT output tax payable. When determining the VAT payable for the period, the Operator of Petroleum bases on the Tax Return to reduce the portion of contributions from the participating Contractors according to their contribution ratio for the deductible VAT, record:

Debit account 4111 - Capital Contribution of Parent Company - Operator

Debit account 3411 - Capital Contribution of Other Contractors

Credit account 133 - Input VAT Deductible.

e) Upon termination of the Petroleum Contract, accounting records a reduction in the contributions from the participating parties corresponding to the amount of contributions already recovered, record:

Debit Account 3411 - Contributions from other participating Contractors (Corresponding contributions of participating Contractors involved in the contract - Detailed for each Contractor)

Debit Account 4111 - Contributions from the parent company - Operator

Credit Account 3412 - Recovery of contributions from other participating Contractors

Credit Account 4112 - Recovery of contributions from the parent company - Operator.

f) Upon termination of the Petroleum Contract, if the petroleum activity costs have not been fully recovered, the Operator of Petroleum records a reduction in contributions from the participating parties corresponding to the unrecovered costs, record:

Debit account 4111 - Capital Contribution of Parent Company - Operator

Debit account 3411 - Capital Contribution of Other Contractors

Credit Accounts 246, 247, 248.

g) Upon termination of the Petroleum Contract, the accounting shall debit the unrecoverable costs and the capital contributions of the parties, recorded as:

Debit Accounts 3411, 4111

Credit Account 249 - Unrecoverable Costs.

Upon termination of the Petroleum Contract, accounting records a reduction in unrecovered costs and contributions from the participating parties, record:

Debit Account 3411 - Contributions from other participating Contractors

Debit Account 4111 - Contributions from the parent company - Operator

Credit Account 112 - Bank Deposits.

Article 14. Accounting for Liquidation of Assets

1. Accounting Principles

a) The Operator of Petroleum is responsible for transferring assets to Vietnam Oil and Gas Group (PVN) after recovering all costs and no longer needed for petroleum activities. If PVN does not accept these assets, the Operator of Petroleum may liquidate them, and the entire proceeds from selling these assets will be paid to PVN.

b) In case petroleum activity costs have not been fully recovered but the assets are no longer necessary for petroleum activities, depending on PVN's approval, the Operator of Petroleum may decide to liquidate these assets. Proceeds from liquidation and sale of these assets will be recorded as a reduction in recovered costs of petroleum activities (after fulfilling tax obligations as prescribed by tax laws - if applicable).

c) In case the Petroleum Contract stipulates that raw materials and tools can only be included in recoverable costs when used for petroleum activities, if raw materials and tools remain in inventory and are no longer needed for petroleum activities, the Operator may liquidate them (at the request of the Contractors). The difference between the proceeds from liquidation and the book value of raw materials and tools will be recorded as unrecovered costs.

2. Accounting Methods

a) In case unrecovered costs exist, proceeds from asset liquidation after deducting expenses incurred for liquidation, sale, and fulfilling obligations to the State Budget (if applicable), record:

Debit Accounts 111, 112

Credit Accounts 331, 333

Credit Accounts 246, 247, 248.

b) In case petroleum activity costs have been fully recovered as prescribed, proceeds from asset liquidation after deducting expenses incurred for liquidation, sale, and fulfilling tax obligations as prescribed by tax laws (if applicable) will be transferred to PVN, record:

Debit Accounts 111, 112

Credit Accounts 331, 333

Credit Account 338 - Other Payables (Detailed payables to PVN).

c) When liquidating remaining raw materials and tools in inventory that have not been used for petroleum activities:

- In the case where the proceeds from the liquidation are less than the book value of the raw materials, tools, and equipment, record:

Debit Accounts 111, 112, 131... Proceeds from the liquidation

Debit Account 249 - Unrecoverable Costs (The difference between the proceeds from the liquidation and the book value of the raw materials, tools, and equipment being liquidated)

Credit Accounts 152, 153 (Book value of the raw materials, tools, and equipment being liquidated)

Credit Account 3331 - VAT output tax payable (if applicable).

- In the case where the proceeds from the liquidation are greater than the book value of the raw materials, tools, and equipment, record:

Debit Accounts 111, 112, 131... Proceeds from the liquidation

Credit Accounts 152, 153 (Book value of the raw materials, tools, and equipment being liquidated)

Credit Account 249 - Unrecoverable Costs (The difference between the proceeds from the liquidation and the book value of the raw materials, tools, and equipment being liquidated)

Credit Account 3331 - VAT output tax payable (if applicable).

- In case the participating Contractors decide to use the difference between proceeds from liquidation and the book value of raw materials and tools to adjust the contributions, record:

+ In case the proceeds from liquidation exceed the book value of raw materials and tools, accounting transfers the difference currently recorded in unrecovered costs to increase contributions from the participating parties:

Debit Account 249 - Unrecoverable Costs

Credit Accounts 3411, 4111.

+ In case the proceeds from liquidation are less than the book value of raw materials and tools, accounting transfers the difference currently recorded in unrecovered costs to increase contributions from the participating parties:

Debit Accounts 3411, 4111

Credit Account 249 - Unrecoverable Costs.

Article 15. Accounting for Other Revenue Items

1. Accounting Principles

a) Other revenue items outside the provisions of the contract may include:

- Interest income from deposits;

- Income from gifts and donations from individuals and organizations;

- Other income.

b) Other revenue items shall be recorded as other income or financial activity revenue. After deducting related expenses and fulfilling obligations to the State Budget (if applicable), these revenues shall increase the capital contributions of the parties involved in the oil and gas contract, except where the oil and gas contract specifies that they can reduce oil and gas operation costs.

2. Accounting Methods

a) Interest on bank deposits

- When interest on bank deposits arises, record:

Debit accounts 112, 138

Credit Account 515 - Financial Revenue.

- Reflect the amount of corporate income tax payable (if any), record:

Debit account 515 - Financial operation revenue

Credit account 3334 - CIT Payable.

- Recognize the corresponding increase in the capital contributions of the parties with the amount of interest on bank deposits, record:

Debit account 515 - Financial operation revenue

Credit Account 4111 - Contributions from the parent company - Operator

Credit Account 3411 - Contributions from other participating Contractors.

- In cases where the oil and gas contract stipulates that interest on bank deposits can reduce oil and gas operation costs, record:

Debit account 515 - Financial operation revenue

Credit Accounts 246, 247, 248.

b) Accounting for other revenue items

- When other revenue items arise outside the provisions of the oil and gas contract, such as income from gifts and donations in cash or kind from organizations and individuals, other income, record:

Debit accounts 112, 131

Credit account 711 - Other income.

- Reflect the expenses incurred related to the income, record:

Debit account 811 - Other expenses

Credit accounts 112, 331.

- Transfer other expenses and income to determine net income, record:

Debit account 711 - Other Income

Credit account 811 - Other Expenses.

- Reflect the amount of corporate income tax payable, record:

Debit account 711 - Other Income

Credit account 3334 - CIT Payable.

- Recognize the corresponding increase in the capital contributions of the parties with the amount of other income, record:

Debit account 711 - Other Income

Credit Account 4111 - Contributions from the parent company - Operator

Credit account 3411 - Capital Contributions of Other Contractors.

- In cases where the oil and gas contract stipulates that other income can reduce oil and gas operation costs, record:

Debit account 711 - Other Income

Credit Accounts 246, 247, 248.

Article 16. Accounting for Foreign Exchange Rate Differences

1. Foreign Exchange Rates

a) If the oil and gas contract specifically provides for the application of foreign exchange rates, the Oil and Gas Operator shall implement according to the provisions of the oil and gas contract. If the oil and gas contract does not provide specific provisions regarding the application of foreign exchange rates, the Oil and Gas Operator shall apply the actual transaction rate at the date of the transaction.

b) The actual transaction rate in various cases is determined as follows:

- Actual transaction rate when buying or selling foreign currency (spot foreign exchange contracts, forward contracts, futures contracts, swap contracts): Is the rate agreed upon in the foreign currency purchase or sale contract between the enterprise and the commercial bank.

- Actual transaction rate when receiving capital contributions: Is the foreign currency purchase rate of the bank where the investor transfers contribution funds on the contribution date.

- In cases where the contract does not specify the payment exchange rate, the accounting unit records according to the principle:

+ Actual transaction rate when recognizing receivables: Is the purchase rate of the commercial bank designated by the unit for the customer to make payments at the time of the transaction.

+ Actual transaction rate when recognizing payables: Is the sale rate of the commercial bank where the unit expects to conduct transactions at the time of the transaction.

+ For purchases of assets or expenses paid immediately in foreign currency (without going through payable accounts), the actual transaction rate is the purchase rate of the commercial bank where the unit makes the payment.

- Actual transaction rate when revaluing foreign currency monetary items at the time of preparing financial statements: Is the published rate of the commercial bank where the unit frequently conducts transactions (selected by the unit) according to the principle:

+ Actual transaction rate when revaluing foreign currency monetary items classified as assets: Is the foreign currency purchase rate of the commercial bank at the time of preparing financial statements. For foreign currency deposits in banks, the actual rate when revaluing is the purchase rate of the same bank where the unit has opened a foreign currency account.

+ Actual transaction rate when revaluing foreign currency monetary items classified as payables: Is the foreign currency sale rate of the commercial bank at the time of preparing financial statements.

- Actual transaction rate when changing the reporting currency in accounting and converting assets and liabilities from foreign currency financial statements to Vietnamese Dong: Is the average buy-sell rate of a selected commercial bank at the time of changing the reporting currency in accounting.

c) Bookkeeping rate (specific bookkeeping rate or weighted average bookkeeping rate) in various cases is determined as follows:

- Specific bookkeeping rate: Is the rate when recovering receivables, pledges, or paying payables in foreign currency, determined based on the rate at the time of each transaction.

- Weighted average bookkeeping rate is the rate used on the credit side of the money account when paying in foreign currency, calculated by dividing the total value reflected on the debit side of the money account by the quantity of foreign currency actually available at the time of payment.

2. Foreign Currency Monetary Items

Are assets recovered in foreign currency or payables in foreign currency. Foreign currency monetary items may include:

a) Cash, equivalents, and bank deposits (with or without term) in foreign currency;

b) Receivables and payables in foreign currency, excluding:

- Advance payments to suppliers and prepayment expenses in foreign currency. In cases where there is clear evidence at the time of reporting that the supplier cannot provide goods or services and the unit will have to recover advance payments in foreign currency, these amounts are considered foreign currency monetary items.

- Advance payments received from customers and prepaid revenues in foreign currency. In cases where there is clear evidence at the time of reporting that the unit cannot provide goods or services and will have to refund advance payments in foreign currency to customers, these amounts are considered foreign currency monetary items.

c) Deposits, pledges, and guarantees in money or equivalent money in foreign currency that are entitled to be recovered; Deposits, pledges, and guarantees in money or equivalent money in foreign currency that must be refunded.

3. Apply exchange rates for recording in accounting books, preparing and presenting financial statements.

a) When foreign currency transactions occur, the actual transaction exchange rate at the time of the transaction shall be used to convert to the accounting currency for accounts reflecting assets, liabilities, equity, expenses, and other income. Other specific cases are provided as follows:

- In the case of receiving advance payment from a buyer, the corresponding income from the advance payment shall be applied using the exchange rate at the time of receipt of the advance payment.

- In the case of allocating prepaid expenses to related period expenses, the expense shall be recorded using the exchange rate at the time of prepayment.

- In the case where an asset or expense is purchased in relation to a prepayment to a seller, the value of the asset corresponding to the prepayment amount shall be applied using the exchange rate at the time of prepayment to the seller.

b) When foreign currency transactions occur, the actual individual bookkeeping exchange rate shall be used to convert to the accounting currency for the following types of accounts:

- The Credit side of receivable accounts (excluding advance payments from buyers), and the Credit side of accounts reflecting deposits, collateral, and prepaid expenses;

- The Debit side of payable accounts (excluding prepayments to sellers).

c) When making payments in foreign currency, the weighted average exchange rate shall be used to convert to the accounting currency on the Credit side of cash accounts.

4. Accounting principles

a) Exchange differences arising from payments within the period and revaluation of monetary items with foreign currency origins at the end of the period shall be recognized in financial income (if profit) or financial expenses (if loss) and transferred to adjust increases or decreases in oil and gas operation costs (if recoverable as costs) or recorded as exchange differences (on account 413) in the Balance Sheet (if not included in recoverable costs).

b) Based on the decision of the contractor or competent authority, the accountant shall transfer the exchange difference (on account 413) to adjust the increase or decrease in the contribution capital of the parties or unrecoverable costs.

5. Method of accounting for exchange differences

a) Accounting for exchange differences arising from payments within the period

- When exchange gains or losses occur, record:

+ Recording exchange gain:

Debit relevant accounts

Credit Account 515 - Financial Revenue.

+ Recording exchange loss:

Debit Account 635 - Financial Expenses

Credit relevant accounts.

- In the case where exchange gains or losses are considered as recoverable costs, the accountant immediately transfers the exchange gains or losses to adjust oil and gas operation costs at the time of occurrence:

+ Transfer exchange gain and reduce oil and gas operation costs, record:

Debit account 515 - Financial operation revenue

Credit accounts 246, 247, 248, 642.

+ Transfer exchange loss and increase oil and gas operation costs, record:

Debit accounts 246, 247, 248, 642

Credit account 635 - Financial expenses.

- In the case where exchange gains or losses are not considered as recoverable costs, at the end of the period, the accountant transfers the exchange gains or losses to account 413 - Exchange Differences, record:

+ Transfer exchange gain, record:

Debit account 515 - Financial operation revenue

Credit Account 413 - Exchange Rate Differences.

+ Transfer exchange loss, record:

Debit account 413 - Exchange Differences.

Credit account 635 - Financial expenses.

- In the case where the Oil and Gas Contract provides otherwise, it shall be implemented according to the provisions of the Oil and Gas Contract.

b) Accounting for revaluation of monetary items with foreign currency origins at the end of the period

- At the end of the period, when revaluing monetary items with foreign currency origins:

+ In the case of generating a gain, record:

Debit relevant accounts

Credit Account 515 - Financial Revenue.

+ In the case of generating a loss, record:

Debit Account 635 - Financial Expenses

Credit relevant accounts.

- Depending on whether the exchange difference is considered as a recoverable cost or not, the accountant handles the exchange difference as provided in point a, Clause 5 of this Article. In the case where the Oil and Gas Contract provides otherwise, it shall be implemented according to the provisions of the Oil and Gas Contract.

c) When the contractors or competent authorities make decisions to handle accumulated exchange differences that are not considered as recoverable costs, based on the decision, the accountant records:

- In the case where the exchange difference is adjusted to the contribution capital of the parties:

+ Transfer exchange gain, record:

Debit Account 413 - Exchange Rate Differences

Credit Accounts 3411, 4111.

+ Transfer exchange loss, record:

Debit Accounts 3411, 4111

Credit Account 413 - Exchange Rate Differences.

- In the case where the exchange difference is directly adjusted to unrecoverable costs:

+ Transfer exchange gain, record:

Debit Account 413 - Exchange Rate Differences

Credit account 249 - Unrecoverable Costs.

+ Transfer exchange loss, record:

Debit account 249 - Unrecoverable Costs.

Credit Account 413 - Exchange Rate Differences.

Article 17. Accounting for Decommissioning Costs

Accounting Principles

a) The Oil and Gas Operator, on behalf of the Contract Parties under the Petroleum Contract, shall be responsible for decommissioning the field and restoring the surface area in accordance with the law after the termination of the Petroleum Contract.

b) Periodically, from the start of commercial production, the Oil and Gas Operator must deposit a security deposit with the host country (represented by Vietnam Oil and Gas Group - PVN) to ensure financial obligations for the decommissioning of fixed installations, equipment, and means of operation for oil and gas activities in Vietnam.

c) When depositing money into PVN's security account, the Oil and Gas Operator simultaneously establishes a Financial Obligation Assurance Fund and includes it in the costs of the exploitation phase.

d) The establishment, use, and settlement of the Decommissioning Fund must be meticulously recorded for each Petroleum Contract.

đ) In cases where the amount contributed to the Financial Obligation Assurance Fund exceeds the actual cost of decommissioning, the remaining balance of the fund shall be handled as follows:

- If all costs have been recovered, the remaining balance of the Fund after fulfilling obligations to the State Budget shall be redistributed among the parties according to the principle of profit oil sharing;

- If not all costs have been recovered, the remaining balance of the Fund shall be recorded as a reduction in the exploitation phase costs.

2. Accounting Methods for Certain Main Transactions

a) When establishing the Financial Obligation Assurance Fund (decommissioning costs), record:

Debit Account 248 - Exploration and Production Costs

Credit Account 335 - Expenses Payable.

b) When the Oil and Gas Operator deposits a security deposit managed by PVN to ensure financial obligations, record:

Debit Account 244 - Security Deposit, Guarantee

Credit Account 112 - Bank Deposits.

c) When actual decommissioning costs occur, record:

Debit Account 335 - Prepaid Expenses

Credit Account 331 - Payable to Supplier

d) When receiving back the security deposit from PVN to pay for actual decommissioning costs, record:

Debit Account 112 - Bank Deposits

Credit Account 244 - Security Deposit, Guarantee

đ) Paying for actual decommissioning costs incurred, record:

Debit Account 331 - Payable to Supplier

Credit Account 112 - Bank Deposits.

e) Upon completion of decommissioning, if the Financial Obligation Assurance Fund is not fully utilized, the remaining balance of the Fund shall be handled as follows:

- In cases where all operating costs have not been recovered, the Oil and Gas Operator records a reduction in exploitation costs corresponding to the remaining unused Fund, record:

Debit Account 335 - Expenses Payable

Credit Account 248 - Exploration and Production Costs.

- In cases where all operating costs have been recovered, the Oil and Gas Operator reflects the remaining unused Fund as a payable to the parties, as follows:

+ In cases where the Oil and Gas Operator must represent the Contractor Parties to deposit money into the State Budget for the host country's share of profits:

When receiving back the security deposit from PVN, record:

Debit Account 112 - Bank Deposits (the amount of security deposit received from PVN before deducting the amount payable to the State Budget)

Credit Account 244 - Security Deposit, Guarantee

When determining the amount payable to the State Budget, record:

Debit Account 335 - Expenses Payable

Credit Account 333 - Taxes and other payments to the State.

When actually paying money into the State Budget, record:

Debit Account 333 - Taxes and Other Payments to the State (3339)

Credit Account 112 - Bank Deposits.

+ In cases where PVN has paid on behalf of the Oil and Gas Operator the host country's share of profits, when receiving back the security deposit from PVN, record:

Debit Account 112 - Bank Deposits (the amount of security deposit received from PVN after deducting the amount payable to the State Budget)

Debit Account 335 - Expenses Payable

Credit Account 244 - Security Deposit, Guarantee

- The remaining balance of the Financial Obligation Assurance Fund that has not been used is recorded as other payables and payments due to the Contractor Parties after deducting the amount of the host country's share of profits, record:

Debit Account 335 - Expenses Payable

Credit Account 338 - Other Payables and Payments Due (Details for each Contractor Party)

- When settling the distributed amount from the Financial Obligation Assurance Fund to the Contractor Parties or the Parent Company - Operator, record:

Debit Account 338 - Other Payables and Payments Due (Details for each Contractor Party)

Credit Account 112 - Bank Deposits.

Article 18. Accounting for General Administrative Management Costs

1. Accounting Principles

a) General administrative management costs are the operating expenses of the Office of the Petroleum Operator for each Petroleum Contract. General administrative management costs include indirect costs related to exploration, appraisal, development, and production activities. These costs are periodically allocated to exploration, development, and production costs in accordance with the provisions of each Petroleum Contract and the characteristics of the Petroleum Operator. General administrative management costs may include:

- Salaries of the Office staff of the Petroleum Operator;

- Rental costs of assets of the Office of the Petroleum Operator;

- External service costs of the Office of the Petroleum Operator;

- Other administrative costs of the Office of the Petroleum Operator.

b) The Petroleum Operator must collect and track general administrative costs in detail for each Petroleum Contract to serve budget settlement with the Contractor Parties under the Contract. In cases where the Petroleum Operator implements multiple Petroleum Contracts and cannot separately allocate general administrative management costs for each Contract, such costs shall be allocated according to criteria consistent with the provisions of the Petroleum Contract and the participating Contractor Parties.

2. Accounting Methods

- When calculating salaries and allowances payable to the Petroleum Operator's employees, record:

Debit Account 642 - General Administrative Management Costs

Credit Account 334 - Payable to Employees.

- When recording social insurance, health insurance, unemployment insurance contributions included in general administrative management costs, record:

Debit Account 642 - General Administrative Management Costs

Credit Account 338 - Other Payables and Taxes Payable.

- When purchasing materials, tools, and equipment for immediate use in the Petroleum Operator's office operations without going through inventory, record:

Debit Account 642 - General Administrative Management Costs

Debit Account 133 - Deductible VAT

Credit accounts 111, 112, 331.

- When issuing materials, tools, and equipment for use in the Petroleum Operator's operations, record:

Debit Account 642 - General Administrative Management Costs

Credit Accounts 152, 153.

- When purchasing materials, tools, and equipment for Petroleum Operator's use with advance payments to employees, record:

Debit Account 642 - General Administrative Management Costs

Debit Account 133 - Deductible VAT

Credit Account 141 - Advances.

Credit Accounts 111, 112.

- Other external service costs for the Petroleum Operator such as electricity, water, telephone, rental of office space, transportation, and other costs, record:

Debit Account 642 - General Administrative Management Costs

Debit Account 133 - Deductible VAT

Credit accounts 111, 112, 331.

- Periodically, the Petroleum Operator allocates general administrative management costs to exploration, development, and production costs, record:

Debit Accounts 246, 247, 248.

Credit Account 642 - General Administrative Management Costs.

Article 19. Provisions on the Preparation and Submission of Financial Reports

1. General Provisions on the Preparation and Presentation of Financial Reports

a) The Petroleum Operator prepares and presents financial reports in accordance with the provisions of the Petroleum Contract.

b) When preparing and presenting the Balance Sheet, the Petroleum Operator follows the form prescribed in Appendix 2 of this Circular and supplements additional indicators specified in the Corporate Accounting System when necessary without requiring approval from the Ministry of Finance. The content and method of preparing indicators in the Balance Sheet comply with the current Corporate Accounting System regulations and supplementary guidance provided in Clause 2 of this Article. The Petroleum Operator can assign appropriate codes to the indicators that match its characteristics and operational conditions.

c) In cases where the Petroleum Contract does not specify detailed reporting requirements for revenues and expenditures during the period, the Petroleum Operator applies the reporting of business results from the current Corporate Accounting System to report revenues and expenditures during the period. The methods of preparing indicators in the revenue and expenditure report must comply with the current Corporate Accounting System regulations.

d) The Petroleum Operator applies the Notes to Financial Statements of the Corporate Accounting System to prepare and present its own Notes to Financial Statements. In the Notes to Financial Statements, the Petroleum Operator must detail the audited exploration, appraisal, development, and production costs approved by PVN as recoverable costs and those not approved as recoverable costs. The content and method of preparing indicators in the Notes to Financial Statements must comply with the guidance provided in the current Corporate Accounting System.

2. Guidance on the Content and Method of Preparing Indicators in the Balance Sheet

Supplementing and guiding the content and method of preparing certain specific indicators in the Balance Sheet compared to the current Corporate Accounting System. For indicators not covered in this Circular, the Petroleum Operator shall follow the regulations of the current Corporate Accounting System.

a) Exploration, Appraisal, and Evaluation Costs

This indicator reflects accumulated costs incurred during the exploration, appraisal, and evaluation process up to the end of the reporting period. The figures recorded in the "Exploration, Appraisal, and Evaluation Costs" indicator are based on the debit balance of Account 246 "Exploration, Appraisal, and Evaluation Costs" in the General Ledger or Journal-General Ledger.

b) Development Costs

This indicator reflects accumulated costs incurred during the development process of oil and gas fields up to the end of the reporting period. The figures recorded in the "Development Costs" indicator are based on the debit balance of Account 247 "Development Costs" in the General Ledger or Journal-General Ledger.

c) Production Costs

This indicator reflects accumulated costs incurred during the production process of oil and gas up to the end of the reporting period. The figures recorded in the "Production Costs" indicator are based on the debit balance of Account 248 "Production Costs" in the General Ledger or Journal-General Ledger.

d) Non-Recoverable Costs

This indicator reflects the amount of non-recoverable costs as stipulated in the Petroleum Contract and costs suspended or excluded during the audit process according to the Audit Report of the Vietnam Oil and Gas Group up to the end of the reporting period. The figures recorded in the "Non-Recoverable Costs" indicator are based on the debit balance of Account 249 "Non-Recoverable Costs" in the General Ledger or Journal-General Ledger.

đ) Recovered Costs

This indicator is used to reflect the amount of costs that have been recovered from the exploration, appraisal, and evaluation stages; the development stage of the oil field; and the oil and gas extraction stage through cost recovery oil up to the end of the reporting period. The data for this indicator is recorded as a negative number in parentheses (...). The figures to be entered into the "Cost Recovery" indicator are based on the credit balance of Account 251 "Cost Recovery" in the General Ledger or Journal-General Ledger.

e) Capital contribution of other Contractors

This indicator is used to reflect the capital contribution of other Contractors that are not the Parent Company - Operator at the reporting date. The figures to be entered into the "Capital Contribution of Other Contractors" indicator are the credit balance details of Account 3411 "Capital Contribution of Other Contractors" in the detailed accounting ledger of Account 3411.

g) Recovery of capital contribution of other Contractors

This indicator is used to reflect the capital contribution of other Contractors that has been recovered through cost recovery oil at the reporting date. The data for this indicator is recorded as a negative number in parentheses (...). The figures to be entered into the "Recovery of Capital Contribution of Other Contractors" indicator are the debit balance details of Account 3412 "Recovery of Capital Contribution of Other Contractors" in the detailed accounting ledger of Account 3412.

h) Capital contribution of the Parent Company - Operator

This indicator is used to reflect the capital of the Parent Company - Operator at the reporting date. The figures to be entered into the "Capital Contribution of the Parent Company - Operator" indicator are the credit balance details of Account 4111 "Capital Contribution of the Parent Company - Operator" in the detailed accounting ledger of Account 4111.

k) Recovery of capital contribution of the Parent Company - Operator

This indicator is used to reflect the capital contribution of the Parent Company - Operator that has been recovered through cost recovery oil at the reporting date. The data for this indicator is recorded as a negative number in parentheses (...). The figures to be entered into the "Recovery of Capital Contribution of the Parent Company - Operator" indicator are the debit balance details of Account 4112 "Recovery of Capital Contribution of the Parent Company - Operator" in the detailed accounting ledger of Account 4112.

3. Place of submission of reports

Financial reports of the Oil and Gas Operator must be submitted to the local tax authority, the investment license issuing agency, the local statistics office, and other agencies as prescribed.

Chapter III
IMPLEMENTATION

Article 20. Implementation Provisions

1. This Circular takes effect from January 1, 2015. Oil and Gas Operators who were approved by the Ministry of Finance to apply Accounting Regulations before this Circular takes effect must switch to implementing the provisions of this Circular. For Oil and Gas Contracts that expired before December 31, 2016, the Oil and Gas Operator may continue to apply the Accounting Regulations previously approved by the Ministry of Finance.

2. Oil and Gas Operators, related organizations, and individuals are responsible for implementing this Circular. In case of difficulties or obstacles during implementation, they are advised to report to the Ministry of Finance for prompt resolution ./.

 

ANNEX NO. 01

ACCOUNTING ACCOUNT SYSTEM APPLICABLE TO OIL AND GAS OPERATORS
(Annexed to Circular No. 107/2014/TT-BTC dated August 8, 2014 issued by the Ministry of Finance)

 

APPENDIX NO. 02

BALANCE SHEET

As of...month...year...

(Annexed to Circular No. 107/2014/TT-BTC dated August 8, 2014 issued by the Ministry of Finance)