Petrovietnam to Introduce Petroleum Law 2022 to Oil and Gas Contractors

Source: 3/29/2023, Location: Asia

On 9th March, in Ho Chi Minh City, the Ministry of Industry and Trade and Petrovietnam jointly organized a Workshop to introduce the Petroleum Law 2022 to oil and gas contractors

Attending the workshop were Mr. Tran Thanh Tung - Deputy Director General of Oil, Gas and Coal Department under Ministry of Industry and Trade; representatives of the Government Office, Ministry of Industry and Trade; Committee for Management of State Capital at Enterprises and related ministries and branches.

On the side of Petrovietnam, there are members of the Board of Directors: Bui Minh Tien, Tran Binh Minh, Nguyen Van Mau; Vice Presidents: Duong Manh Son, Le Ngoc Son, Pham Tien Dzung; and representative leaders of Divisions/ Administration Office and the Group’s subsidiaries.

On the side of Vietnam Petroleum Association, there were Dr. Nguyen Quoc Thap – Chairman of the Association; and representative leaders of the Association’s Divisions/ Administration Office.

The workshop was chaired by Mr. Tran Thanh Tung - Deputy Director General of Oil, Gas and Coal Department under the Ministry of Industry and Trade; Mr. Le Ngoc Son – Petrovietnam Vice President.

As emphasized at the opening of the workshop by Mr. Le Ngoc Son - Petrovietnam Vice President and Mr. Tran Thanh Tung - Deputy Director General of Oil, Gas and Coal Department under the Ministry of Industry and Trade, the Petroleum Law 2022 has many new and breakthrough points, therefore, through the workshop, it is hoped to widely disseminate the Petroleum Law 2022 to those directly affected, especially oil and gas contractors; it is also an opportunity to listen to and record more opinions, exchange objectively and multi-dimensionally to help the drafting agency perfect the main features of the Decree detailing a number of articles of the Petroleum Law 2022, contributing to the realization and putting the Law into effect from 1st July 2023.

At the workshop, the representative of Petrovietnam briefly introduced the content of the Petroleum Law 2022. Accordingly, on 14th November 2022, the 15th National Assembly voted to approve the new Petroleum Law (Petroleum Law 2022). For the first time, the Law on Petroleum of our country has been revised comprehensively since it was first promulgated in 1993. The Petroleum Law 2022 includes 11 Chapters, 69 Articles, takes effect from 1st July 2023, and provides for issues related to basic investigation activities on oil and gas as well as oil and gas activities.

Petroleum Law 2022 is assessed to have many new, progressive and breakthrough contents: The scope of regulation is expanded; new concepts are added to match the scope of the Law; some concepts are adjusted to suit reality; Specifically, Basic Investigation of Oil and Gas is a new content, aiming to establish a legal framework for the implementation and state management of this activity. The State’s policy on oil and gas is clearly expressed with many incentives: no fee for using the sea are for basic investigation of oil and gas and oil and gas activities; investment promotion policy; sharing and access encouragement, and joint use of existing oil and gas infrastructure and works.

In the oil and gas activities, the basis for the implementation of oil and gas activities is the oil and gas contract signed with the Prime Minister's approval or the Prime Minister’s specific decision for the case of full production projects (this is a new content reflecting the actual demand of many oil and gas fields being produced in the final stage).

At the workshop, the participants were also informed about the program to finalize the Decree detailing a number of articles of the Petroleum Law 2022. The formulation of the Decree aims to concretize a number of provisions of the Law in order to unify the implementation method and coordination among stakeholders (organizations, individuals, contractors, Petrovietnam, authorities). The Template Contract for Distribution of Oil and Gas Products (PSC Template Contract) will be the Appendix to the Decree. The Decree must be issued no later than June 2023 to take effect on 1st July 2023.

Currently, the Draft Decree (Version 1 has been submitted for comments in Official Letter No. 274/BCT-DKT dated 18th January 2023) includes 68 Articles and 01 Appendix (PSC Template Contract). In which, the main content of the Decree is divided into groups of issues such as: Basic investigation of oil and gas; Process of selecting contractors to sign oil and gas contracts; Oil and gas contract; Regulations on incentives for oil and gas activities; Policy on full production of oil and gas fields, field clusters and blocks; Settlement of expenses for oil and gas activities; Template of Contract for Distribution of Oil and Gas Products.

After listening to the overview of the Law and the draft Decree, the participants in the workshop discussed and contributed ideas on related issues, in order to contribute to supplementing and completing the Decree, soon put the new Petroleum Law into practice.

The participants expressed their agreement with the view that formulation of the Decree detailing a number of articles of the Petroleum Law can be replaced both Decree No. 95/2015/ND-CP dated 16th October 2015 on guiding the implementation of the Petroleum Law and Decree 33/2013/ND-CP dated 22nd April 2013 promulgating the Template Contract for Distribution of Oil and Gas Products. This way of regulation will be comprehensive: Fill the contents of the Petroleum Law that have not been regulated or detailed, at the same time, it is also convenient for practitioners to easily learn, refer to and apply.

The participants also agreed with the basic contents of the Draft Decree. However, the majority of opinions were that detailed content of the provisions of the Decree and the Appendix should be reviewed and considered in accordance with the provisions of the Petroleum Law, ensuring consistency, feasibility and suitability with the status of oil and gas activities. In particular, the specific issues of the participants’ interest focused on the provisions regarding approval of oil and gas contracts, preferential policies, contract extension, the process of selecting oil and gas contractors, basic investigation, approval of field development plan, full use, full production, financial regulations, field clearance.

Mr. Vu Minh Duc - Deputy General Director of Petrovietnam Exploration and Production Corporation (PVEP) expected that procedures guiding the implementation of the Law should be clear, simple, and shorten the steps to submit for authority’s approval. Currently, in selection of oil and gas contractors, it is required to follow 3 steps to submit for the Prime Minister’s approval, it may take 3 years or more; therefore, it is necessary to consider shortening, combining to 1-2 steps and specifying time frames in order to get a new oil and gas contract as soon as possible, promote field investment and development, as well as remove existing obstacles so that projects can go on schedule to bring the best economic benefits and efficiency.

Mr. Tran Ho Bac - Deputy General Director of PTSC said that previous Petroleum Law mentioned the priority of using the domestic contractors’ services. However, it was not mentioned in the Petroleum Law 2022 as well as draft Decree. PTSC hoped the Decree would supplement regulations on prioritizing the use of human resources, vehicles and equipment of Vietnam; it is also consistent with the strong protectionism taking place in the countries around the world and promoting the development of oil and gas services, especially high quality domestic oil and gas technical services.

Dr. Nguyen Quoc Thap - Chairman of Vietnam Petroleum Association emphasized the tool to bring the Law to life is the Decree; therefore, the Decree should be more specific and detailed in order to put the provisions of the Law into practice. Mr. Nguyen Quoc Thap hoped the guiding Decree would be detailed, highly feasible, enough to attract investment, help management agencies and investors perform their tasks and have common language, help facilitate the smooth implementation of work in practice.

Perenco and SK Innovation, two contractors that contributed capital to PVEP in Block 15-1, expressed their interest in the legal validity of the previous oil and gas contract to the new one when Block 15 -1 has been approaching the contract expiration time. The contractors also proposed solutions to simplify some approval processes and procedures in the Oil and Gas Contract to get specific agreements soon to speed up the project’s progress after the signature of new oil and gas contract. In addition, the contractors suggested clarifying the procedures for approving the coordination of the parties in the implementation of the basic investigation, some regulations on the financial mechanism, the method of fee calculation, certification of tax authorities in dossiers sent to competent authorities.

During the program, Petrovietnam introduced the Plan to select contractors to sign oil and gas contracts in accordance with the provisions of the Petroleum Law 2022 for a number of open blocks expected to be held in 2023.

According to Petrovietnam Vice President Le Ngoc Son, it is expected that Petrovietnam open bids for a number of open blocks with different priority levels, according to the provisions of the new Petroleum Law. This is the first time Petrovietnam has reopened bids since 2011. On this occasion, Petrovietnam briefly introduces to contractors about a number of open blocks that are expected to be put into the bidding with more attractive incentives according to the new Petroleum Law, so that interested contractors can soon research, access information, learn and participate in bidding in the near future.

As concluded in the Workshop by Mr. Tran Thanh Tung - Deputy Director General of Oil, Gas and Coal Department under the Ministry of Industry and Trade, along with noting the comments at today’s workshop, with learning attitude, the agency in charge of drafting Decree wishes to continue receiving comments from contractors with practical experience, suggestions to complete the Decree to submit to the Government for promulgation, contributing to putting the Petroleum Law into practice, minimizing problems in the implementation process.

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