Tiếng Việt| THE GOVERNMENT | SOCIALIST REPUBLIC OF VIET NAM |
| No. 84-CP | Hanoi , December 17, 1996 |
DETAILING THE IMPLEMENTATION OF THE PETROLEUM LAW
THE GOVERNMENT
Pursuant to the Law on Organization of the Government of September 30, 1992;
Pursuant to the Petroleum Law of July 6, 1993,
DECREES:
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1. State enterprises.
2. Enterprises established under the Corporate Law.
3. Private enterprises established under the Law on Private Enterprises.
4. Cooperatives.
5. Foreign organizations and individuals directly investing in Vietnam.
6. Foreign-invested enterprises.
1. "Fixed works" are works constructed and installed firmly for use in service of oil and gas activities.
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3. "Place of delivery" is the place accepted by the Vietnam Oil and Gas Corporation where crude oil or natural gas shall be delivered from oil containers or other containing means into vessels and other oil receiving means or to oil and gas pipelines.
4. "Disposal of oil and gas" is the transfer of the ownership right over oil and gas, including the sale and exchange of oil and gas.
5. "Fair transaction contract" is a transaction contract between the buyer and the seller in the common market relationship, excluding purchase and sale contracts within a company, between governments, between governmental organizations or any type of transaction or exchange affected by irregular commercial relations.
6. "Associated gas" is the natural gas separated during the exploitation and processing of crude oil.
7. "Contractual year" is a period of 12 solar months counting from the date when the petroleum contract takes effect or from the completion of a full year.
8. "Development of oil and gas fields" is the process of preparing for and investing in project construction, drilling and installing equipment for the exploitation of oil and gas fields since such fields are declared to have commercial value.
9. "Net oil and gas output" is the remaining output of the oil and gas exploited from the contractual area and measured at the place of delivery.
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If the approved plan or annual working program is changed, there must be consent from the Vietnam Oil and Gas Corporation.
The time limit for consideration and approval shall not exceed 90 days for the master plan, and 30 days for the detailed plan and the annual working program counting from the date of receipt of the dossier.
In cases where such criteria of Vietnam are not available, organizations and/or individuals conducting oil and gas activities shall be entitled to apply criteria defined in the international treaties which Vietnam has signed or acceded to.
The application of other criteria must be permitted by the Ministry of Science, Technology and Environment.
- A report on the evaluation of environmental impacts;
- A program on safety management and risk evaluation together with measures to minimize the risk.
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1. To set up a safety zone for oil and gas projects, machinery and equipment in accordance with the provisions of Article 12 of this Decree.
2. To take measures to ensure safety in accordance with the ratified safety management program.
3. To carry out program on the observation of environmental changes, the environment protection plan and measures to prevent pollution and overcome consequences of environmental pollution in accordance with the provisions of the Law on Environmental Protection.
4. To minimize the impacts that adversely affect or cause bad consequences for the environment, such as the pollution of land, water, forests and air or harm the floral and fauna or cause ecological imbalance or badly affect the people�s living environment.
5. To update data and complete reports on the evaluation of risks as well as the implementation of the plan for emergency cases.
6. To record all incidents and accidents.
7. To issue emergency notices and immediately apply measures to overcome consequences of such incidents or accidents.
8. To apply measures to ensure labor safety, working conditions and safe environment for laborers.
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The distance of the safety zone for a sea construction shall be 500 m from the outermost margin of the construction outwards or from the anchorage of other floating means, except for special cases specified by the oil and gas State management agency. Within two nautical miles from the outermost margin of the construction, means and vessels are not allowed to anchor.
Except for special cases specified by the oil and gas State management agency, nobody without related responsibility shall be allowed to enter and operate in the safety zone.
1. Drilling must comply with the design or the amended design which has been approved.
2. Refraining from drilling outside the petroleum contractual area.
3. Keeping all documents and specimen collected in the process of drilling and submit them to the Vietnam Oil and Gas Corporation.
4. Promptly informing the Vietnam Oil and Gas Corporation of other resources discovered in the process of drilling.
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Article 14.- An organizations and/or individual conducting oil and gas exploitation shall have to abide by the stipulations of the Exploitation Regulation currently in force and strictly comply with the contents of the approved overall plans and plans for the development of oil and gas fields; apply technical measures and use advanced equipment to recover oil and gas at the maximum level but must not harm the earth�s substrata, ecological environment and the safety of the field.
The measuring equipment must be lawful and up to the standards specified by the measurement State management agency.
An organizations and/or individual conducting oil and gas exploitation shall have a survey program for the well or wells and periodically take specimen for the analysis of characteristics and composition of oil, gas and water of each specific object; to make monthly, quarterly and annual reports on the analysis of the oil and gas exploitation from each well, each separate seam as well as the whole field and on other norms to the Vietnam Oil and Gas Corporation.
In cases where the Vietnam Oil and Gas Corporation conducts oil and gas activities by itself, it shall have to work out programs and plans for the dismantlement of the immovable works and submit them to the State management agency for approval.
The competent State management agency may request the concerned organization and/or individual to dismantle the whole or part of the immovable works.
Priority shall be given to the purchase of insurance of Vietnamese insurance companies but insurance can also be bought from other insurance companies.
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1. Projects and long-term and annual plans on oil and gas activities.
2. Annual and quarterly sum-ups of the implementation of such projects and plans and results of oil and gas activities.
3. Details of the economic and technical projects for oil and gas activities.
4. Important events and incidents relating to oil and gas activities which have been addressed or need to be addressed immediately.
5. Other reports as requested by the oil and gas State management agency.
The time limit and contents of each kind of report shall be specified by the oil and gas State management agency.
The competent agencies may request the Contractor to provide information and reports when necessary and in accordance with their State management functions.
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In cases where the petroleum contract is signed in the form of a joint venture contract, the joint venture enterprise shall be entitled to the same rights and interests and subject to the same obligations as the Contractor.
The contents of a petroleum contract may include all activities relating to the prospection, exploration and development of oil and gas fields and exploitation of oil and gas or only one or several specific activities.
With permission from the Vietnamese Government, the Vietnam Oil and Gas Corporation may sign petroleum contracts under a selected form or according to a bilateral agreement.
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2. Bidding conditions.
3. Bidding fee.
4. Other details on the bidding procedures.
In cases where an organization is a consortium or joint venture, it must submit a detailed report on the relations, responsibilities, capital contributions or shares of its members.
The Vietnam Oil and Gas Corporation shall have the responsibility to inform the organization and/or individual that won the bid or the selected partner(s) of the time and place for the signing of the petroleum contract. If the organization and/or individual that won the bid or the selected partner(s) fail to come for signing the petroleum contract on schedule, the decision on the bid winning or the decision on the selection of partner(s) may be canceled.
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2. All the remaining contractual area after the completion of the prospection and exploration period, excluding the areas reserved for the development of oil and gas fields, exploitation of oil and gas and areas which are being assessed.
The contractor may of his own free will return the area at any time in the prospection and exploration period. The areas which have been returned voluntarily shall be deducted from those to be obligatorily returned. However, the voluntary return of areas shall not reduce the contractor�s obligations written in the petroleum contract.
The returned areas must form simple geometrical figures.
Fixed works must be dismantled from the returned areas in accordance with provisions of Article 16 of this Decree.
The estimated cost for the fulfillment of the minimum work mentioned above shall be considered the minimum financial commitment. The contractor shall be considered having completed the minimum financial commitment only when the minimum work commitments have been fulfilled.
In cases where the contractor requests for the termination of the contract before the minimum commitments are fulfilled, he/she shall have to pay the Vietnam Oil and Gas Corporation a sum of money corresponding to the workload pledged but not yet done.
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The contractor shall have to inform the assessment results to the Vietnam Oil and Gas Corporation. If the assessment results show that the fields have commercial value, the Contractor shall have to announce such commercial discovery.
The Contractor shall have to submit to the competent State management agency and the Vietnam Oil and Gas Corporation a report on oil and gas reserves, the general plan and plan for the development of oil and gas fields.
The Vietnam Oil and Gas Corporation and the Contractor shall have to reach an agreement in the petroleum contract on the terms regarding the basis for determining commercial oil and gas fields, the time limit for the submission of the field assessment program, the general plan and plan for development of the oil and gas field.
The project on the development and exploitation of the oil and gas field shall be carried out only when it has been ratified by the competent State management agency.
After the project has been ratified by the competent State management agency, if the Contractor fails to deploy work at the oil and gas field and to exploit oil and gas on schedule as specified in the approved document, the competent State management agency shall have the right to recover the field.
Such reports must include information on the volume of oil and gas used for the exploitation as well as the volume of the lost or burnt oil and gas.
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The associated gas shall be burnt only when it is so permitted by the oil and gas State management agency.
All commitments between the contractors and joint venture partners on the development of oil and gas fields and the joint exploitation shall have to be submitted to the Vietnamese Government for consideration and approval.
Managing agencies of the State of Vietnam shall within their managerial functions exercise the right to inspect, examine and supervise the Vietnam Oil and Gas Corporation and the Contractors.
RIGHTS AND OBLIGATIONS OF ORGANIZATIONS AND INDIVIDUALS CONDUCTING OIL AND GAS ACTIVITIES
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The contractor and sub-contractor(s) shall have to give priority to the purchase of materials and equipment manufactured or supplied by Vietnam; as well as to the signing of service contracts, including services for geological surveys, drilling, diving, hiring of vessels and land bases with enterprises of corresponding fields on Vietnamese territory on the principle of ensuring the competitiveness of the price and quality.
The said-above documents must be examined by the Vietnam Oil and Gas Corporation before the registration in accordance with the provisions of the Labor Code.
The recruitment of Vietnamese laborers must be conducted through employment service organizations as prescribed in Articles 18 and 132 of the Labor Code. The recruitment of foreign laborers must be permitted by the Ministry of Labor, War Invalids and Social Affairs in accordance with the stipulations of Item 1, Article 132 of the Labor Code.
A foreign organization and/or individual conducting oil and gas activities shall be entitled to directly recruit and sign labor contracts with laborers who have work permits. With regard to technicians and managers, the recruitment must be adopted by the Vietnam Oil and Gas Corporation.
The Vietnam Oil and Gas Corporation shall assume the main responsibility in managing the number of Vietnamese laborers working for foreign organizations and/or individuals and in supervising the implementation of the signed labor contracts.
In cases where such materials and equipment are transferred or sold in Vietnam not for the purpose of servicing oil and gas activities, permission from the Ministry of Trade must be obtained and import and other taxes must be paid as prescribed by the Vietnamese law.
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A contractor that transfers the ownership of such materials and equipment to the Vietnam Oil and Gas Corporation under the agreements in the petroleum contract, shall be exempt from import tax and other taxes. The Vietnam Oil and Gas Corporation shall have to report to the Ministry of Finance such transfer so as to complete procedures for receiving additional capital and paying taxes relating to the transfer of the property ownership.
The Ministry of Trade, The Ministry of Finance, the General Department of Customs and the Vietnam Oil and Gas Corporation shall coordinate with each other in determining a list of materials and equipment to be exempt from import tax, temporary import tax and re-export tax.
Exploited Inland and At a depth
output at a depth of of more up to 200m than 200m
- Below 50,000
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- From 50,001
to 75,000 barrels/day: 10% 8%
- From 75,001
to 100,000 barrels/day: 15% 10%
- From 100,001
to 150,000 barrels/day: 20% 15%
- Over 150,000
barrels/day: 25% 0%
In special cases, depending on geographical, economic and technical conditions of the field, the natural resources tax rates for crude oil may be higher or equivalent to a fixed tax rate decided by the Vietnamese Government.
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The natural resources tax imposed on natural gas shall be calculated on a partial progressive basis from the total net output exploited in each tax payment period, depending on the average daily output of gas exploited in the whole contractual area at the following tax rates:
Exploited Inland and At a depth
output at a depth of of more up to 200m than 200m
- Below 5 million m3/day: 0% 0%
- From 5 to 10 million m3/day: 5% 3%
- Over 10 million m3/day: 10% 6%
In special cases, depending on specific geographical, economic and technical conditions of the field, the natural resource tax rate for natural gas may be equivalent to a fixed tax rate decided by the Vietnamese Government.
If the contractor conducts oil and gas activities by itself, such contractor shall be the tax payer.
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The tax agency shall have to inform the organization and/or individual conducting oil and gas activities of their tax payment in oil or gas or money 6 months in advance.
If the natural resources tax is collected in money, the pecuniary tax payment shall be made in US dollar or any other convertible currencies accepted by the Ministry of Finance. In cases where oil and gas are sold in Vietnamese Dong, the natural resources tax shall be paid in Vietnamese Dong.
In cases where the price announcement is not available, the price for calculating natural resources tax for crude oil shall be the geometric mean of the FOB prices of crude oil sold at the place of delivery in accordance with the fair buy-and-sell contract in the tax payment period.
In cases where there is no FOB price in the fair transaction contract, the price for calculating natural resources tax on crude oil shall be based on the FOB price in the fair market of international trade applied to that type of crude oil in the tax payment period, taking into account the selling price of a suitable combination of 3 similar types of oil from South-East Asian countries with reasonable readjustments according to the quality, place and other related factors.
The price for calculating natural resources tax on natural gas shall be the price at the place of delivery according to the price announcement issued by the agency mandated by the Vietnamese Government with account taken of international prices.
In cases where the tax agency requests the tax payment at other places, the tax payer shall be entitled to deduct from the to-be-paid tax amount the transportation and other direct costs arising from the change of places.
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PROFIT TAX, OTHER TAXES AND FEES
If the Vietnam Oil and Gas Corporation conducts oil and gas activities by itself, it shall be the tax payer.
If oil and gas activities are conducted by the contractor, such contractor shall be the tax payer.
The total taxable interest is the difference between the total income and the value of oil and gas after the payment of natural resources tax, other taxes and fees outside the profit tax and other regular expenditures allowed to be retrieved in the tax payment period.
The value of the sold oil and gas is the value of oil and gas sold under fair contracts at the FOB price at the place of delivery.
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Article 54.- Expenses not allowed to be included in the to-be retrieved expenditures:
1. The expenses arising before the petroleum contract takes effect, except in cases already agreed upon in the petroleum contract or accepted by the oil and gas State management agency.
2. Different types of oil and gas commission and commitments on non-retrieval of expenditures agreed upon in the petroleum contract.
3. The interest of the borrowed capital for investment in oil and gas prospection, exploration and exploitation.
4. Fines, damage compensations and losses caused by those organizations and/or individuals themselves.
5. Profit tax payment in Vietnam and abroad.
6. Damage already compensated for by the insurance service.
7. Donations for social and charity purposes and expenses on gifts.
8. The unreasonable, inappropriate expenses detected by the Vietnam Oil and Gas Corporation and competent Vietnamese organizations in the process of auditing, tax accounts settlement and inspection.
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STATE MANAGEMENT OVER OIL AND GAS ACTIVITIES
Basing itself on policies for the development of oil and gas industry, the oil and gas State management agency shall propose to the Vietnamese Government for decision the national reserve areas; areas to be prospected, explored and exploited by the Vietnam Oil and Gas Corporation; areas for cooperation with contractors; and areas encouraged for investment under preferential treatment conditions.
The oil and gas State management agency shall submit to the Vietnamese Government projects on international cooperation in oil and gas prospection, exploration and exploitation.
With regard to petroleum contracts signed between the Vietnam Oil and Gas Corporation and foreign contractors, the Vietnamese Government shall assign to the Ministry of Planning and Investment the competence to grant investment licenses in accordance with the provisions of the Law on Foreign Investment in Vietnam.
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Article 61.- The oil and gas State management agency shall decide the following issues:
1. Examining and inspecting oil and gas activities.
2. Submitting to the Vietnamese Government recommendations for promotion or restriction of oil and gas export.
3. Requesting the contractors to sell part of the exploited oil and gas to Vietnam.
4. Other important issues related to oil and gas activities.
Article 63.- To ensure oil and gas activities, the concerned Ministries, branches and People�s Committees of the provinces and cities directly under the Central Government shall have to closely coordinate with each other in the allotment of land, rational use of water areas, especially those related to national security, aquacultural areas, vacation resorts or tourist spots.
INSPECTION OF OIL AND GAS ACTIVITIES
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An inspection decision shall include the following major contents:
1. The composition of the inspection team.
2. Objects of the inspection.
3. Contents of the inspection.
4. Place of inspection.
5. Time limit of the inspection.
6. Requirements for the organization and/or individual conducting oil and gas activities and subject to the inspection.
Article 65.- To perform its tasks, the inspection team shall have the following powers:
1. To be given favorable conditions to conduct the inspection.
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3. To request the persons under inspection to provide necessary documents within a certain time limit.
Upon the expiry of such time limit, if the request of the inspection team is not met, the inspection team shall decide the application of other necessary measures to gather documents in accordance with the provisions of Vietnamese law.
4. To issue decisions on the temporary suspension of oil and gas activities likely to cause accidents and serious losses to the population, properties and environment.
The time limit for the temporary suspension shall not exceed 15 days. Within 24 hours from the moment when the decision is issued, the inspection shall have to make the decision known to the competent State management agency and propose measures of settlement. Within 15 days, the competent State agency shall have to issue a relevant decision.
5. To coordinate with the Ministry of Planning and Investment in inspecting foreign invested units that conduct oil and gas activities.
6. To propose the competent State management agencies to handle acts of violation of the oil and gas legislation.
If the objects of the inspection disagree with the decision of the inspection team, they shall within 15 days be entitled to complain with the competent State management agency.
Within 30 days from the date of receiving the complaint, the competent State management agency shall have to reply.
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1. Unlawful oil and gas activities shall be fined up to 100,000 USD or equivalent.
2. Failure to observe the regulations prescribed in Article 60 of this Decree, thus causing damage to the oil and gas resources or the environment or damaging the State�s or individuals� properties shall be subjected to compensation and be fined up to 100,000 USD or equivalent.
3. Conducting oil and gas prospection, exploration and exploitation beyond the contractual area without permission from the competent State agency shall be fined up to 50,000 USD.
4. Making false statement, evading natural resources tax, profit tax and other taxes shall, in addition to the full payment of the taxes due, be fined for false statement and tax evasion as prescribed by the Vietnamese law.
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6. Acts of obstructing inspection activities shall be fined up to 10,000 USD or equivalent.
In addition to the said-above sanctions, an organization or individual committing other administrative violations shall be handled in accordance with the provisions of the Ordinance on the Handling of Administrative Violations.
Article 71.- Competence to handle the above-said violations:
1. The competent oil and gas State management agency shall handle violations and decide the levels of fine in accordance with the provisions of Points 1, 2, 3, 4 and 5 of Article 69 of this Decree.
2. The Head of the inspection team shall handle violations and decide the levels of fine in accordance with the provisions of Point 6, Article 69 of this Decree.
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ON BEHALF OF THE GOVERNMENT
THE PRIME MINISTER
Vo Van Kiet