Circular No. 17/2011/TT-BTC guiding certain contents of the Regulation on the establishment, management, and use of the Oil Exploration Fund.

CIRCULAR

Guidelines for certain contents of the Regulation on the establishment, management, and utilization of the Oil and Gas Exploration Fund

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 The Minister of Finance promulgates this Circular amending and supplementing Clause 1, Article 15 and the attached forms of Circular No. 86/2013/TT-BTC dated June 27, 2013 of the Ministry of Finance concerning the application of preferential treatment regimes in customs administration for enterprises meeting the required conditions as follows:

Pursuant to Decree No. 142/2007/NĐ-CP dated September 5, 2007 of the Government promulgating the Financial Regulations of the Parent Company - Vietnam Oil and Gas Corporation; Decree No. 44/2010/NĐ-CP amending and supplementing some articles of the Management Financial Regulations of the Parent Company - Vietnam Oil and Gas Corporation issued together with Decree No. 142/2007/NĐ-CP dated September 5, 2007 of the Government;

Pursuant to Decree No. 115/2009/NĐ-CP dated December 24, 2009 of the Government amending and supplementing some Articles of Decree No. 48/2000/NĐ-CP detailing the implementation of the Petroleum Law and the Bidding Regulations for oil and gas exploration and exploitation projects issued together with Decree No. 34/2001/NĐ-CP;

Pursuant to Decision No. 143/2008/QĐ-TTg dated October 29, 2008 of the Prime Minister promulgating the Regulation on the establishment, management, and utilization of the Oil and Gas Exploration Fund;

The Ministry of Finance provides guidelines for certain contents regarding the establishment, management, and utilization of the Oil and Gas Exploration Fund as follows:

Article 1. Scope and objects of application:

This Circular applies to basic investigation projects, oil and gas exploration projects meeting the conditions stipulated in Article 4 of the Regulation on the establishment, management, and utilization of the Oil and Gas Exploration Fund issued together with Decision No. 143/2008/QĐ-TTg dated October 29, 2008 of

1. Projects where the parent company is the principal investor and directly implements or assigns to a subsidiary through a service contract;

2. Projects where the parent company or subsidiaries directly manage or participate in capital contribution under a Petroleum Contract.

Article 2. For projects where the parent company is the principal investor and directly implements or assigns to a subsidiary through a service contract:

Advance payments, acceptance, and settlement shall be carried out in accordance with the provisions of Article 8 of the Regulation on the establishment, management, and utilization of the Oil and Gas Exploration Fund issued together with Decision No. 143/2008/QĐ-TTg dated October 29, 2008 of

1. Advance payment: Based on the approved fund usage plan approved by the Board of Members of the Group; the volume of work performed and the detailed budget of the project approved; the service contract signed with the subsidiary (in case assigned to a subsidiary to implement), the General Director of the Group decides the amount of advance payment for each time but the total value of all advance payments must not exceed 90% of the approved project budget.

2. Acceptance: When the phase ends, the project ends, or the construction stops according to the decision of the competent authority, the General Director of the Group directs the preparation of an acceptance report submitted to the Group's Acceptance Council. The members of the Acceptance Council are decided by the Chairman of the Board of Members of the Group and are responsible before the Board of Members of the Group and the law for the truthfulness and accuracy of the acceptance results.

Article 3. For projects where the parent company or subsidiaries directly manage or participate in capital contribution under a Petroleum Contract:

1. Based on the signed Petroleum Contract; the committed capital contribution schedule; the request for capital contribution from the Operator; the letter requesting the Group to propose the Fund for capital contribution (in case subsidiaries directly manage or participate in capital contribution), the General Director of the Group examines and decides to allocate the Fund up to the maximum level not exceeding the committed capital contribution schedule to the project.

2. When the project ends or construction stops according to the decision of the competent authority, the Group must establish an Acceptance Council to determine the completed workload, actual costs, and results achieved by the project in accordance with Clause 2 of Article 8 of the Regulation on the establishment, management, and utilization of the Oil and Gas Exploration Fund issued together with Decision No. 143/2008/QĐ-TTg dated October 29, 2008 of

a) In cases where projects are managed by the parent company or subsidiaries participating in capital contribution, if it is not possible to organize an Acceptance Council, the Board of Members of the Group assigns a Member of the Management Committee representing the parent company or subsidiaries participating in capital contribution to report on the project's implementation results, costs, and allocation among participants for consideration and decision. If the contributed capital is insufficient, additional funding will be provided from the Oil and Gas Exploration Fund; if there is excess, it must be immediately returned to the Oil and Gas Exploration Fund.

b) The acceptance and settlement must comply with the work program and approved budget according to the Petroleum Contract and general operating agreements. Among which, salaries and allowances of staff directly participating in Petroleum Contracts from the parent company or subsidiaries are calculated based on the actual salary paid by the parent company or subsidiaries to these staff.

Article 4. Handling of improper or unauthorized use of advance payments from the Oil and Gas Exploration Fund.

Advance funds from the Oil and Gas Exploration Fund must be used for their intended purpose; in cases of improper or unauthorized use or unused funds, they must be returned to the Fund within a maximum period of 15 working days from the date of the decision of the Chairman of the Board of Members of the Group or the competent state agency conducting inspection, audit, or state audit. Beyond the return period, in addition to recovering improperly used or unused funds back to the Fund, the entity using the funds must pay additional late payment interest calculated at the corresponding commercial bank's interest rate for the overdue period. In case of loss, the relevant organizations and individuals are responsible for full compensation (including overdue loan interest penalties) and bear legal consequences as prescribed by law. Interest generated from the Fund deposited in commercial banks is recorded as an increase in the Oil and Gas Exploration Fund.

Article 5. Reporting at the end of the year and upon completion of the project.

1. Within ninety days after the end of the year, the Group is responsible for preparing a report on the establishment, use, and final settlement of the Oil and Gas Exploration Fund expenses to be sent to the Ministry of Finance and the Ministry of Industry and Trade for monitoring and supervision according to the forms specified in Appendix 1 and 2 attached to this Circular.

2. Within six months from the date the exploration project ends or must be terminated prematurely, the Board of Members of the Group shall organize the review and approve the final settlement of the funds provided by the Exploration Fund to the project, and simultaneously send it to the Ministry of Finance and the Ministry of Industry and Trade according to the form specified in Appendix No. 3 attached to this Circular.

Article 6. Provisions for handling certain projects before Decision No. 143/2008/QĐ-TTg takes effect:

For projects that continue to be implemented within the scope and meet the conditions for using the Fund but have used other sources of capital to implement the project before Decision No. 143/2008/QĐ-TTg of

1. The General Director of the Group reports to the competent authority to adjust the decision approving the project, allowing the transfer of other sources of capital to the Exploration Fund capital.

2. Upon completion of the project, based on the results achieved by the project, the Board of Members of the Group decides to handle the Exploration Fund capital provided to the project according to the provisions of Article 10 of the Regulation on the Establishment, Management, and Use of the Exploration Fund issued together with Decision No. 143/2008/QĐ-TTg of

Article 7. Establishing expenditure standards, detailed files and forms to manage the project and the fund:

The Board of Members of the Vietnam Oil and Gas Group instructs the General Director of the Group to establish expenditure standards for projects stipulated in Article 2 of this Circular and the procedures, formalities, detailed files, forms for advance payment, acceptance, and settlement for projects stipulated in Articles 2 and 3 of this Circular, to be sent to the Ministry of Finance for comments in writing before issuance.

Article 8. Accounting for the establishment, use, and final settlement of the Exploration Fund expenses:

1. The Parent Company - Vietnam Oil and Gas Group opens a second-level account under Account 418 - Other Funds belonging to the owner's equity (Account 4181 - Exploration Fund). This account is used to reflect the current balance and the situation of establishing, using the exploration fund. The Exploration Fund is established from the annual retained oil profits of the parent company - Vietnam Oil and Gas Group, from the annual post-tax profit of the parent company - Vietnam Oil and Gas Group, and from other sources of capital (if any). Structure and content reflected in Account 4181 - Exploration Fund. The value of the final settlement of the exploration project increases due to the establishment from the annual retained oil profits of the parent company - Vietnam Oil and Gas Group, from the annual post-tax profit of the parent company - Vietnam Oil and Gas Group, and from other sources of capital. Debit balance: Remaining Exploration Fund:

2. Accounting methods for some main economic transactions:

2. 1. When establishing the Exploration Fund from post-tax profit, record: Debit Account 421 - Undistributed Profit Credit Account 4181 - Exploration Fund.

2. 2. When establishing the Exploration Fund from the annual retained oil profits of the parent company - Vietnam Oil and Gas Group and from other sources of capital (if any), record: Debit related accounts Credit Account 4181 - Exploration Fund.

2. 3. When expenses for exploration occur to carry out basic investigation projects, exploration projects based on approved plans, schedules, and detailed projects, record: Debit Account 246 - Exploration Expenses Debit Account 133 - Value Added Tax Deductible (if any) Credit Accounts 111, 112 ...

2. 4. When the phase or project ends according to the decision of the competent authority, based on the report of the project completion volume, implementation costs, and results approved by the competent authority, if the project has commercial discoveries, record:

a) If there are commercial oil and gas discoveries and the competent authority decides to convert the project into a development project, after the final settlement of the fund usage, reduce the Fund while increasing the business capital of the Group, record: Debit Account 4181 - Exploration Fund Credit Account 411 - Business Capital.

b) If the exploration project is risky and unable to recover costs, after the final settlement of the project: - For basic investigation projects and projects specified in points a and b, Clause 2, Article 4 of the Regulation on the Establishment, Management, and Use of the Exploration Fund issued together with Decision No. 143/2008/QĐ-TTg dated October 29, 2008 of

Article 9. This Circular takes effect 45 days from the date of signature. During the implementation process, if there are difficulties or obstacles, units are requested to promptly report to the Ministry of Finance for consideration and resolution./.