Decree No. 34/2001/NĐ-CP on Tendering Rules for Oil Exploration, Development, and Extraction Projects

DECREE OF THE GOVERNMENT

Issuing the Tendering Regulation for Oil and Gas Exploration, Development, and Exploitation Projects

__________________

THE GOVERNMENT

Pursuant to the Government Organization Law dated September 30, 1992;

Based on the Petroleum Law dated July 6, 1993, and the Law Amending and Supplementing Certain Provisions of the Petroleum Law dated June 9, 2000;

At the proposal of the Minister of Planning and Investment;

DECREE:

Article 1. The Tendering Regulation for Oil and Gas Exploration, Development, and Exploitation Projects is hereby promulgated together with this Decree.

Article 2. This Decree shall take effect fifteen days from the date of signature.

Article 3. The Ministry of Planning and Investment shall take the lead and coordinate with the Ministry of Finance and relevant ministries and sectors to guide the implementation of this Decree.

Article 4. Ministers, Heads of ministerial-level agencies, Heads of government agencies, Chairmen Within 10 working days from the date of receipt of the dossier as mentioned in Sub-clause b, Clause 1, Article 3 above, the Ministry of Foreign Affairs will review and submit to the competent authority for decision (Issues exceeding the Ministry of Foreign Affairs' jurisdiction will be referred to the Prime Minister for consideration and decision).Provincial People's Committees, the Vietnam National Oil and Gas Group, and related organizations are responsible for implementing this Decree./.

REGULATIONS

TENDERING FOR OIL AND GAS EXPLORATION, DEVELOPMENT, AND EXPLOITATION PROJECTS

(Issued together with Decree No. 34/2001/NĐ-CP dated July 6, 2001 of the Government)

Chapter I

GENERAL PROVISIONS

Article 1. Scope of application

This Regulation stipulates the tendering process for oil and gas exploration, development, and exploitation projects to select partners to sign oil contracts in accordance with Clause 4, Article 1 of the Law Amending and Supplementing Certain Provisions of the Petroleum Law.

Article 2. Applicability

This Regulation applies to the tendering of oil and gas exploration, development, and exploitation projects in areas on land and offshore blocks that have not yet selected partners or signed oil contracts, including areas returned according to Article 19 of the Petroleum Law.

Organizations and individuals wishing to sign oil contracts under the forms prescribed in Article 15 of the Petroleum Law must comply with the provisions of this Regulation.

Article 3. Definitions 1. Foreign motor vehicle means vehicles:

In this Regulation, the following terms shall be understood as follows:

1. "Bidder" refers to organizations, individuals, or oil consortia registering to participate in the tendering of oil and gas exploration, development, and exploitation projects.

2. "Inviting Authority" is the entity organizing the tendering process as stipulated in Article 21 of this Regulation.

3. "Minimum Work Commitment and Minimum Financial Commitment" refers to the minimum volume of work and corresponding minimum financial expenditure that the bidder estimates and commits to implement during the initial phase of the exploration period in the oil contract.

4. "Oil Consortium" is a combination of two or more organizations or individuals, at least one of which has at least two oil exploration and exploitation contracts anywhere, established based on an agreement to participate in the tendering of oil and gas exploration, development, and exploitation projects in Vietnam.

5. "Host Country's Share of Oil Profits" refers to the portion of profit shared with the State, excluding the share allocated according to the capital contribution ratio for the Vietnam National Oil and Gas Corporation or authorized subsidiaries acting as contractors.

Article 4. Forms of Auction

The tendering form is applied on the principle of broad international competition without prequalification. All organizations and individuals meeting the conditions set out in Article 5 of this Regulation may participate in the bidding.

Article 5. Bidding Conditions

The bidder must meet the following conditions:

Possess financial capability, technical capacity, and professional experience in the oil and gas sector.

Have at least two oil exploration and exploitation contracts anywhere.

Organizations and individuals not meeting these conditions, wishing to engage in oil activities in Vietnam, must link up with organizations and individuals meeting the conditions to form an oil consortium as stipulated in Clause 4, Article 3 of this Regulation. In this case, the organization or individual meeting the conditions will represent all parties within the oil consortium to participate in the bidding.

Article 6. Bidding Indicators

The bidding indicators listed in the tender invitation documents include:

Host Country's Share of Oil Profits;

Minimum Work Commitment and Minimum Financial Commitment.

Depending on the specific potential of each area or block, the Prime Minister may decide to supplement one or several additional bidding indicators such as the participation portion of the Vietnam National Oil and Gas Corporation, the oil cost recovery rate, signature bonus, production bonus, reference document fees, and training costs.

The resource tax rate, corporate income tax, and other taxes payable shall be implemented in accordance with the law, not subject to tendering, and shall be announced in advance in the tender invitation documents.

Chapter 2

TENDERING PROCEDURE

Article 7. Tendering Procedure

The tendering procedure includes the following steps:

Establishing and approving the tender plan;

Bid invitation notice;

Registering to bid;

Issuing the tender invitation documents;

Receiving bid documents, opening bids, and evaluating bid documents;

Reviewing, approving, and announcing the tender results;

Negotiating oil and gas contracts;

Approving and signing oil and gas contracts.

Article 8. Tender Plan

The tender inviter establishes a tender plan for areas or blocks, sends it to the Ministry of Planning and Investment for review, and submits it to the Prime Minister for approval.

The tender plan includes the following contents:

Preliminary assessment of the oil and gas potential of each area or block;

Time to conduct the tender;

Tender criteria;

Bid evaluation methods.

Article 9. Tender Invitation Notice

Based on the approved tender plan, the tender inviter issues a tender invitation notice. The tender invitation notice is published continuously for 10 days in two daily newspapers and on the information network in Vietnamese and English. The tender invitation notice may also be sent directly to organizations and individuals interested in the tendered blocks.

The tender invitation notice includes a list of areas or blocks being tendered, their boundary coordinates, maps of the tendered areas or blocks, a schedule for reviewing documents, and other details about the tender procedures.

Article 10. Registering to Bid

The bidder sends a registration to bid to the tender inviter according to the form prescribed by the tender inviter. The deadline for registering to bid does not exceed 60 days from the last day of publishing the tender invitation notice.

When registering to bid, the bidder must explain their financial and technical capabilities and provide documentation regarding the formation of the oil and gas consortium if participating as a consortium.

After registering to bid, the bidder is entitled to receive the tender invitation documents and access the listed materials in the tender invitation documents.

Article 11. INVITATION FOR BID DOCUMENTS

Based on the approved tender plan, the tender inviter prepares the tender invitation documents and issues them to the bidders.

The contents of the tender invitation documents include:

1. Tender criteria as stipulated in Article 6 of this Regulation;

2. Bid evaluation methods as stipulated in Article 16 of this Regulation;

3. Schedule of the tender process and other details about the tender procedures;

4. List of basic information documents about the tendered areas or blocks.

Article 12. Tender Documents

The bid documents are prepared by the bidder based on the requirements set forth in the tender invitation documents. The contents of the bid documents include:

1. Proposals of the bidder concerning the tender criteria specified in Article 6 of this Regulation;

2. Commitments to fulfill fixed criteria, including the obligation to pay resource taxes and other types of taxes as prescribed by law.

The bid documents are prepared in two copies in Vietnamese or English. The currency used in the bid documents is US dollars.

The bidder submits the bid documents to the tender inviter within 60 days from the date of issuance of the tender invitation documents. The bid documents are considered valid when they fully meet the requirements of the tender invitation documents and are submitted within the prescribed time frame. In cases where the bid documents are submitted late without prior notification of at least 15 days and without acceptance by the tender inviter, they are deemed invalid.

Article 13. Opening Bids

The tender inviter must organize the bid opening at the time specified in the tender invitation documents. The participants in the bid opening include representatives of the tender inviter and members of the bid evaluation team as stipulated in Article 15 of this Regulation. Representatives of the bidders may attend the bid opening.

Article 14. Confidentiality of Bidding Documents

The Inviting Party and the Bid Evaluation Committee must manage bidding documents under a confidential file management system and ensure that all information contained within the bidding documents remains secret throughout the entire bidding process. Any supplementary materials submitted by the Bidder for an already opened bidding document shall be invalid and will not be considered.

Article 15. Bid Evaluation Organization

The Inviting Party establishes a Bid Evaluation Committee, consisting of experts from the Inviting Party. If deemed necessary, the Inviting Party may invite experts from various Ministries and sectors to join the Bid Evaluation Committee. The operational regulations of the Bid Evaluation Committee are stipulated by the Inviting Party. The bid evaluation process must be completed within twenty working days from the date of opening the bids.

Article 16. Bid Evaluation

The bid evaluation process is based on the bidding evaluation method approved by the Prime Minister in the bidding plan. The bidding evaluation method is communicated to the Bidders in the bidding invitation document and shall not be changed during the bid evaluation process.

Bidding documents are ranked according to the bid evaluation results. The Bidder ranked first will win the bid and negotiate the oil and gas contract with Vietnam Oil and Gas Corporation. In cases where both parties fail to agree on the oil and gas contract within the time limit specified in Article 19 of this Regulation, or if the winning bidder unilaterally withdraws, the Bidder ranked second will be invited to negotiate the oil and gas contract based on the conditions offered by the Bidder themselves.

Article 17. Reviewing the Bidding Results

The Ministry of Planning and Investment leads the review of the bidding results. The inter-ministerial working group, including representatives from the Ministries of Planning and Investment, Finance, Justice, Industry, Science and Technology, Environment, Construction, State Bank of Vietnam, and the Government Office, conducts the review of the bidding results. The operational regulations of the inter-ministerial working group are stipulated by the Ministry of Planning and Investment. The review of the bidding results must be completed within fifteen working days from the receipt of all relevant documents related to the bidding results.

The Ministry of Planning and Investment reports the review of the bidding results to the Prime Minister.

Article 18. Notification of tender results

The Inviting Party informs the Bidders about the bidding results and notifies the winning bidder about the negotiation plan for the oil and gas contract as prescribed by the Petroleum Law.

Article 19. Negotiation of Oil and Gas Contracts

Vietnam Oil and Gas Corporation is responsible for negotiating with the winning bidder regarding the oil and gas contract based on the bidding criteria in the bidding document that have been reviewed and approved as stipulated in Article 17 of this Regulation. The negotiation of the oil and gas contract must be completed within ninety days from the date of announcing the bidding results. If negotiations with the winning bidder have not concluded beyond this period, Vietnam Oil and Gas Corporation will report to the Prime Minister to request permission to negotiate with the Bidder ranked second or cancel the bidding results and conduct a new bidding process. In special circumstances, the Inviting Party may request the Prime Minister's approval to extend the negotiation period. The extended negotiation period shall not exceed sixty days from the date of the Prime Minister's approval.

Chapter 3

DIRECT ASSIGNMENT

Article 20. Tender designation procedure

The tender designation shall be carried out in the following steps:

The tender inviter shall submit to the Prime Minister for tender designation, specifying the area or lot for tender designation, reasons for requesting the tender designation, the anticipated designated partner, and tendering criteria and conditions.

The Prime Minister shall examine and decide on the tender designation based on the appraisal report of the Ministry of Planning and Investment and the written opinions of relevant agencies.

Negotiation of oil and gas contracts.

 Chapter 4

IMPLEMENTING PROVISIONS

Article 21. Tender Inviter

The tender inviter is the agency organizing the tender, responsible for preparing the tender plan, preparing and issuing the tender invitation documents, providing information about the tender block to organizations and individuals participating in the tender, receiving and managing tender submission documents, organizing the evaluation of tenders, and negotiating oil and gas contracts after the tender results have been approved. Currently, the tender inviter is Vietnam Oil and Gas Corporation until the Prime Minister issues a different decision.

Article 22. Tender Bid Guarantee

Tender bidders are not required to submit a tender bid guarantee.

Article 23. Effectiveness

This regulation applies to the selection of partners to sign oil and gas contracts for implementing exploration and production projects.

The tender regulations issued together with Decree No. 88/1999/ND-CP dated September 1, 1999, and Decree No. 14/2000/ND-CP dated May 5, 2000, do not apply to tenders for exploration and production projects.

Article 24. Inspection and Handling of Violations

The tender inviter is responsible for complying with this regulation. The agency reviewing the tender results is responsible for checking compliance through the tender result review process to report to the Prime Minister for consideration and handling. Compliance with the regulation is reported separately in the tender result review report. All violations of the regulation will be handled according to current laws./.