Circular No. 36/2016/TT-BLDTBXH guiding remuneration for managers of the Oil and Gas Exploration and Production Corporation when performing expert and technical advisory work in oil and gas exploration and production projects.

CIRCULAR

GUIDELINES ON COMPENSATION FOR MANAGEMENT PERSONNEL OF THE OIL AND GAS EXPLORATION AND PRODUCTION CORPORATION PERFORMING EXPERT, SPECIAL ADVISORY, AND TECHNICAL WORK IN OIL AND GAS EXPLORATION AND PRODUCTION PROJECTS

Pursuant to Decree No. 106/2012/NĐ-CP dated December 20, 2012, of the Government, stipulating the functions, tasks, powers, and organizational structure of the Ministry of Labor, Invalids, and Social Affairs;

Pursuant to Decree No. 52/2016/NĐ-CP dated June 13, 2016 of the Government on salaries, compensation, and bonuses for management personnel of state-owned limited liability companies with 100% state capital contribution;

At the proposal of the Director of the Department of Labor and Wages;

Implementing Decision No. 9453/VPCP-KTTH dated November 16, 2015 of the Government Office regarding salaries for management officials of the Oil and Gas Exploration and Production Corporation, the Minister of Labor, Invalids, and Social Affairs issues this Circular guiding compensation for management personnel of the Oil and Gas Exploration and Production Corporation performing expert, advisory, and technical work in oil and gas exploration and production projects.

Section 1. GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides the determination of planned compensation fund, actual compensation fund, and payment of compensation for management personnel of the Oil and Gas Exploration and Production Corporation performing expert, advisory, and technical work in oil and gas exploration and production projects managed and operated by the Oil and Gas Exploration and Production Corporation both domestically and internationally (hereinafter referred to as the project).

Article 2. Applicability

1. Management personnel of the Oil and Gas Exploration and Production Corporation include: Chairman of the Board of Members, Members of the Board of Members, Head of Supervisory Board, Supervisors, General Director, Deputy General Directors, Chief Accountant (excluding the General Director, Deputy General Directors, and Chief Accountant of the Oil and Gas Exploration and Production Corporation working under labor contracts) performing expert, advisory, and technical work as follows:

a) Evaluating potential for oil and gas exploration and exploitation, implementing geological and geophysical works, deciding on optimal well locations, applying appropriate drilling and production technologies;

b) Assessing and analyzing commercial procedures, economic parameters, financial data, technical factors, and legal risks of the project;

c) Monitoring and reviewing the project implementation process, identifying causes, proposing timely solutions to minimize risks, ensuring project economic efficiency.

2. Other relevant agencies, organizations, and individuals related to the implementation of this Circular.

Article 3. Principles for Determining Compensation

1. Management personnel of the Oil and Gas Exploration and Production Corporation performing expert, advisory, and technical work must be appointed by the Board of Members of the Oil and Gas Exploration and Production Corporation and recorded in the Resolution of the Board of Members of the Oil and Gas Exploration and Production Corporation.

2. The compensation of management personnel performing expert, advisory, and technical work shall be determined and paid based on the workload and time spent on such activities.

3. The compensation fund for management personnel performing expert, advisory, and technical work shall be determined annually based on the number of management personnel performing such work and the compensation level linked to the number of projects. The compensation fund for management personnel performing expert, advisory, and technical work shall be separate from the salary fund for employees and the salary fund for management personnel and shall not exceed one time the salary fund for management personnel enjoyed in the year as stipulated in Decree No. 52/2016/NĐ-CP dated June 13, 2016 of the Government on salaries, compensation, and bonuses for management personnel of state-owned limited liability companies with 100% state capital contribution (hereinafter referred to as Decree No. 52/2016/NĐ-CP).

4. The compensation fund for management personnel performing expert, advisory, and technical work shall be accounted for as part of the production and business expenses of the Oil and Gas Exploration and Production Corporation.

Section 2. PLANNED REMUNERATION FUND, IMPLEMENTATION REMUNERATION FUND, PAYMENT OF REMUNERATION

Article 4. Planned remuneration fund

1. The planned remuneration fund for managers performing expert and technical advisory work shall be determined based on the average number of managers performing such work planned for the year and the average planned remuneration level of managers performing such work in accordance with Clause 2 of this Article.

The average number of managers performing expert and technical advisory work planned for the year shall be determined according to the following formula:

                       (1)

Where:

N |||_kh : Average number of managers performing expert and technical advisory work planned for the year.

N |||_kh(i) : Average number of managers performing expert and technical advisory work planned for the month i of the year.

2. The average planned remuneration level of managers performing expert and technical advisory work shall be determined based on the number of projects managed by such managers planned for the year as follows:

The number of projects planned for the year shall be determined according to the following formula:

                        (2)

Where:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_kh : Number of projects managed by managers performing expert and technical advisory work planned for the year.

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_kh(i): Number of projects managed by managers performing expert and technical advisory work planned for the month i of the year.

Article 5. Advance payment of remuneration

Based on the planned remuneration fund and the anticipated average implementation salary level of managers in the year as stipulated in Decree No. 52/2016/NĐ-CP (linked to the degree of achievement of production and business plan targets for the year), the Vietnam Oil and Gas Corporation shall advance the remuneration fund to pay managers performing expert and technical advisory work. The amount of advance remuneration fund shall be decided by the Vietnam Oil and Gas Corporation but shall not exceed 80% of the planned remuneration fund for the year.

Article 6. Implementation remuneration fund

1. The implementation remuneration fund for managers performing expert and technical advisory work shall be determined based on the average number of managers performing such work implemented during the year and the average implementation remuneration level of managers performing such work during the year.

The average number of managers performing expert and technical advisory work implemented during the year shall be determined according to the following formula:

                        (3)

Where:

N |||_ENVIRONMENT : Average number of managers performing expert and technical advisory work implemented during the year.

N |||_th(i) : Average number of managers performing expert and technical advisory work implemented during the month i of the year.

2. The average implementation remuneration level of managers performing expert and technical advisory work shall be determined based on the number of projects managed by such managers implemented during the year as follows:

a) If the average number of projects implemented during the year equals the average number of projects planned, the maximum average implementation remuneration level shall be equal to the average planned remuneration level.

b) If the average number of projects implemented during the year increases (or decreases) compared to the average number of projects planned but still falls within the range of project numbers with the same maximum average planned remuneration level determined when building the plan, the maximum average implementation remuneration level shall be equal to the average planned remuneration level.

c) If the average number of projects implemented during the year increases (or decreases) compared to the average number of projects planned but does not fall within the range of project numbers with the same maximum average planned remuneration level determined when building the plan, the average implementation remuneration level must be adjusted accordingly with the average number of projects implemented during the year compared to the plan, and the average implementation remuneration level shall not exceed the maximum average remuneration level corresponding to the average number of projects implemented during the year as stipulated in Clause 2 of Article 4 of this Circular.

The average number of projects implemented during the year shall be determined according to the following formula:

                         (4)

Where:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_ENVIRONMENT : Average number of projects managed by managers performing expert and technical advisory work implemented during the year.

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_th(i): Average number of projects managed by managers performing expert and technical advisory work implemented during the month i of the year.

3. Based on the implementation remuneration fund received and the remuneration already advanced to managers performing expert and technical advisory work, the Vietnam Oil and Gas Corporation shall determine the remaining remuneration of managers performing expert and technical advisory work; in cases where the advanced remuneration exceeds the implementation remuneration fund received, the manager must immediately repay the excess advanced remuneration within the year.

Article 7. Payment of Remuneration

1. The payment of remuneration to managers performing expert and technical advisory work shall be carried out in accordance with the remuneration payment regulations of the Oil and Gas Exploration and Production Joint Stock Corporation.

2. The remuneration payment regulations established by the Oil and Gas Exploration and Production Joint Stock Corporation must be linked to the workload and time spent by managers performing expert and technical advisory work; ensuring compliance with legal provisions, democracy, transparency, and openness, and obtaining approval from the Vietnam Oil and Gas Group before implementation.

Section 3. IMPLEMENTATION ORGANIZATION

Article 8. Responsibilities of the Board of Members and Supervisors of the Oil and Gas Exploration and Production Joint Stock Corporation

1. The Board of Members of the Oil and Gas Exploration and Production Joint Stock Corporation:

a) In the first quarter of each year, approve the list of managers performing expert and technical advisory work in oil and gas exploration and production projects for that year; establish the planned remuneration fund and the actual remuneration fund of the previous year for managers performing expert and technical advisory work (along with establishing the salary fund and planned remuneration fund; the salary fund and actual remuneration fund of the previous year for managers as stipulated in Decree No. 52/2016/NĐ-CP), and submit them for approval by the Vietnam Oil and Gas Group.

b) Establish the remuneration payment regulations for managers performing expert and technical advisory work, report to the Vietnam Oil and Gas Group for comments before implementation. After issuance, the remuneration payment regulations shall be sent to the Vietnam Oil and Gas Group, the Ministry of Industry and Trade, and the Ministry of Labor, Invalids and Social Affairs for monitoring.

c) Advance and pay remuneration to managers performing expert and technical advisory work according to this Circular and the remuneration payment regulations for managers performing expert and technical advisory work of the Oil and Gas Exploration and Production Joint Stock Corporation.

d) In the second quarter of each year, compile the situation of remuneration payments made in the previous year for each manager performing expert and technical advisory work to report to the Vietnam Oil and Gas Group, and simultaneously send to the Ministry of Industry and Trade and the Ministry of Labor, Invalids and Social Affairs for consolidation.

2. The Supervisor of the Oil and Gas Exploration and Production Joint Stock Corporation:

a) Inspect and supervise the implementation of the Board of Members and General Director of the Oil and Gas Exploration and Production Joint Stock Corporation according to this Circular.

b) Advise the Board of Members and General Director of the Oil and Gas Exploration and Production Joint Stock Corporation or the Vietnam Oil and Gas Group when discovering that the corporation is not complying with the provisions of this Circular.

Article 9. Responsibilities of the Vietnam Oil and Gas Group

1. Organize the implementation and guide the execution of regulations on remuneration for managers of the Oil and Gas Exploration and Production Joint Stock Corporation performing expert and technical advisory work as stipulated in this Circular.

2. Provide comments on the remuneration payment regulations of the Oil and Gas Exploration and Production Joint Stock Corporation for managers performing expert and technical advisory work.

3. In the first quarter of each year, receive and review and approve the actual remuneration fund of the previous year and the planned remuneration fund of the Oil and Gas Exploration and Production Joint Stock Corporation for managers performing expert and technical advisory work; send to the Ministry of Industry and Trade and the Ministry of Labor, Invalids and Social Affairs for monitoring.

4. Inspect and supervise the Oil and Gas Exploration and Production Joint Stock Corporation's implementation of regulations on remuneration for managers performing expert and technical advisory work.

Article 10. Responsibilities of the Ministry of Industry and Trade

1. Receive reports from the Vietnam Oil and Gas Group on the approval of the planned remuneration fund, the actual remuneration fund, and the payment regulations for remuneration of the Oil and Gas Exploration and Production Corporation for managers performing expert and technical advisory work.

2. Coordinate with the Ministry of Labor, Invalids and Social Affairs and related units to inspect and supervise the implementation of regulations on remuneration for managers of the Oil and Gas Exploration and Production Corporation performing expert and technical advisory work as stipulated in this Circular.

Article 11. Responsibilities of the Ministry of Labor, Invalids and Social Affairs

1. Receive reports from the Vietnam Oil and Gas Group on the approval of the planned remuneration fund, the actual remuneration fund, and the payment regulations for remuneration of the Oil and Gas Exploration and Production Corporation for managers performing expert and technical advisory work.

2. Take the lead and coordinate with the Ministry of Industry and Trade and related units to inspect and supervise the implementation of regulations on remuneration for managers of the Oil and Gas Exploration and Production Corporation performing expert and technical advisory work as stipulated in this Circular.

Section 4. IMPLEMENTATION PROVISIONS

Article 12. Effective Date

1. This Circular takes effect from December 10, 2016. The provisions set forth in this Circular shall be implemented from January 1, 2016.

2. In case of any difficulties during implementation, agencies, organizations, and the Oil and Gas Exploration and Production Corporation are requested to report to the Ministry of Labor, Invalids and Social Affairs for timely guidance and supplementation./.