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| Oilrigs of the Vietnam Oil and Gas Group at the White Tiger oilfield__Photo: Huy Hung/VNA |
To promptly guide the novel and progressive provisions of the 2022 Law on Oil and Gas (the Law), on July 1, the effective date of the Law, the Government promulgated the Law-guiding text, Decree 45/2023/ND-CP in replacement of Decree 95 of 2015 detailing a number of articles of the 1993 Petroleum Law and Decree 33 of 2013 issuing the model product sharing contract.
Decree 45 details a number of articles of the Law regarding selection of contractors for signing oil and gas contracts; safety of oil and gas activities; oil and gas projects; and incentives for oil and gas activities, among others. The text applies to Vietnamese and foreign agencies, organizations and individuals involved in oil and gas activities in Vietnam.
Selection of contractors for signing oil and gas contracts
As stated in Article 20 of the Decree, the Vietnam Oil and Gas Group may base itself on Article 24.1.a of the Law to make plans on selection of contractors for signing oil and gas contracts. For each contractor selection plan, the Group has to hand-deliver or send by post two dossiers (one dossier with original papers and the other with copied papers) to the Ministry of Industry and Trade for appraisal.
Such a dossier must comprise a request for approval of the plan on selection of a contractor for signing the oil and gas contract; the plan on selection of a contractor for signing the oil and gas contract (which must have the contents specified in Article 17.2 of the Law and reason(s) for proposing the form of contractor selection corresponding to each oil and gas block to be opened); the list of contractors proposed to be invited to the bidding, in case of restricted bidding or competitive offers; the type of oil and gas contract to be applied and reason(s) for proposing such contract type; a paper expressing conditions on the financial and technical capacity and experience of contractors for participation in bidding; the drafts of bidding dossier, competitive offer dossier and contractor appointment request dossier as specified in Article 21.1 of the Law; and other related documents.
Within five working days after receiving a valid dossier, the Ministry of Industry and Trade shall send a request to the Ministries of Planning and Investment; Finance; Justice; National Defense; Foreign Affairs; and Public Security, and related ministries and sectors, for opinion.
Within 15 days after receiving the request from the Ministry of Industry and Trade, the consulted ministries and sectors will have to give their written opinions on contents falling under their state management to the Ministry of Industry and Trade.
Subsequently, within 45 days after receiving a valid dossier, the Ministry of Industry and Trade must completely appraise the plan on selection of a contractor for signing an oil and gas contract and submit a dossier for approval of the contractor selection plan to the Prime Minister.
The dossier must comprise a report on contractor selection plan appraisal results to the Prime Minister, requesting approval of the plan on selection of a contractor for signing an oil and gas contract; the documents on the contractor selection plan prepared by the Vietnam Oil and Gas Group; and a sum-up report on making of replies, and explanation about replies, to opinions of the above ministries and sectors, and copies of papers showing such opinions.
However, the Decree does not apply to the case of contractor appointment specified in Article 40.2 of the Law.
According to Nguyen Quoc Thap, Chairman of the Vietnam Petroleum Association, the current procedures for selection of contractors for signing oil and gas contracts are fairly complicated and the period of contract negotiation is usually prolonged, which is a disadvantage of the host country and likely to cause waste of financial and natural resources and directly affect the exploitable oil and gas output. He said the Government’s enactment of the Decree is hoped to help ensure the consistency of the legal framework on oil and gas and create favorable conditions for all entities and individuals to carry out constant and stable oil and gas activities.
Incentives for oil and gas activities
The Decree specifies criteria for identifying oil and gas blocks in deep-water offshore areas and areas with extremely difficult geographical conditions and complex geological conditions; and marginal oil and gas fields.
It also guides dossiers, order and procedures for appraisal and approval of the list of oil and gas blocks and fields eligible for investment incentives or special investment incentives.
Based on subjects eligible for incentives specified in Article 53 of the Law, the Vietnam Oil and Gas Group will draw up the list of oil and gas blocks and fields eligible for investment incentives or special investment incentives. Then it will hand-deliver or send by post two dossiers (one dossier with original papers and the other with copied papers) for approval of such list to the Ministry of Industry and Trade for appraisal.
Such a dossier must comprise a request for approval of the list of oil and gas blocks and fields eligible for investment incentives or special investment incentives; a paper showing the evaluation of satisfaction of the criteria specified in Article 53 of the Law, accompanied by specific calculations for each oil and gas block or field in the list (including evaluation of the project’s economic efficiency); and other related documents.
Within five working days after receiving a valid dossier, the Ministry of Industry and Trade will send a request to the Ministries of Planning and Investment; Finance; Justice; Natural Resources and Environment; National Defense; and Public Security, and related ministries and sectors, for opinion.
Within 15 days after receiving the request from the Ministry of Industry and Trade, the consulted ministries and sectors will have to give their written opinions on contents falling under their state management to the Ministry of Industry and Trade.
Within 45 days after receiving a valid dossier, the Ministry of Industry and Trade must completely appraise the list of oil and gas blocks and fields eligible for investment incentives or special investment incentives and submit a dossier for approval of such list to the Prime Minister for consideration and approval.
The dossier must comprise a report on appraisal results to the Prime Minister, requesting approval of the list of oil and gas blocks and fields eligible for investment incentives or special investment incentives; and a sum-up report on making of replies, and explanation about replies, to the opinions of the above ministries and sectors, and copies of papers showing such opinions.
As evaluated by expert Doan Van Thuan, the Decree fails to specify the incentives to be given to contractors under Article 58.1.a of the Law. He suggests addition of provisions guiding procedures for requesting the application of measures to secure investment incentives in case of revision of relevant regulations.
It is still controversial about the bidding for selection of contractors to provide goods and services for oil and gas activities. Article 59.12 of the Law requires adherence to the principles of competition, equity, transparency, efficiency, and conformity with the terms of product sharing contracts. With this provision, it is impossible to specifically determine the compulsory regulations upon selection of contractors to provide goods and services for petroleum activities.
Moreover, the Law has no provisions on procedures for selection of contractors to provide services and goods serving oil and gas activities. Therefore, it is proposed that the future revision of the Bidding Law cover the amendment of the regulation requiring the selection of contractors to provide services and goods for oil and gas activities to comply with the Bidding Law, especially for enterprises using state capital or using funds originating from state capital like PetroVietnam and its member units[1].-
Vu Van Anh
[1] The Decree has no guidance on this issue for the reason that the Government is not assigned to provide in detail the issue.
