The Ministry of Industry and Trade is working on a draft decree to replace Government Decree 124 of 2017, aiming to further facilitate offshore investment in the oil and gas industry.
A salient point of the draft which differentiates it from Decree 124 is the provision on competence to decide on offshore oil and gas projects of state-owned enterprises (SOEs).
|Oil production platforms of Vietsovpetrol in the White Tiger oilfield__Photo: VNA|
Particularly for a wholly SOE, if its offshore oil and gas project is subject to investment policy approval under the Investment Law, the owner-representing agency would issue a document permitting the enterprise to carry out offshore investment activities after considering the report of the Members’ Council or company president and appraising the investment proposal by itself.
In case the project is subject to the National Assembly’s approval of investment policy, the Prime Minister would decide on the investment after the National Assembly approves investment policy. If the competence to approve investment policy rests with the Prime Minister, the owner-representing agency would be empowered to make investment decision after obtaining approval from the cabinet head.
In case the project is not required to seek investment policy approval, the Members’ Council or president of the company would make investment decision after the owner-representing agency gives the nod on the project.
As for a SOE which is a multi-member limited liability company or joint-stock company, the Members’ Council or General Meeting of Shareholders would decide on overseas oil and gas projects.
The draft decree also has other noteworthy contents on capital for offshore investment in oil and gas activities.
As provided in the draft, offshore investment capital in oil and gas activities comprises investors’ money and other lawful assets, including equity and loans borrowed in Vietnam and transferred abroad for investment, and recovery costs, profits and dividends earned from offshore investment projects and allowed to be retained for offshore investment.
In order to implement one or more than one offshore investment project, investors may establish or jointly establish an operating company in Vietnam, the host country or a third country would use offshore investment capital to contribute capital or provide loans to such operating company and overseas economic institutions established to carry out petroleum activities overseas. Such capital would be used to purchase shares or capital contributions at overseas economic institutions or fulfill guarantee obligations and other financial obligations, if any.
Vietnamese investors would be allowed to use their shares, capital contributions or investment projects in Vietnam to make payment or swap for shares, capital contributions or oil and gas projects of overseas economic institutions. In this case, the Vietnamese investors would have to apply for an offshore investment registration certificate first and the foreign investors would carry out procedures for investment in Vietnam afterward.
Regarding transfer of capital abroad for investment in oil and gas projects, under Decree 124, before obtaining an offshore investment registration certificate, an investor may transfer abroad a maximum amount of USD 500,000 to cover expenses related to the formulation of its overseas petroleum project. The draft decree now proposes abolishing such limit and just requires investors to comply with regulations on capital transfer procedures and take responsibility for the use of the capital amounts they transferred abroad.- (VLLF)