Decree 45/2023/ND-CP elaborating the law on petroleum

On July 1, 2023, the Government issued Decree 45/2023/ND-CP detailing a number of articles of the Law on Petroleum in 2022.

Full text of Decree 45/2023/ND-CP elaborating the law on petroleum promulgated by the Government

Basic information of Decree 45/2023/ND-CP

Basic information about Decree 45/2023/ND-CP promulgated by the Government detailing a number of articles of the Petroleum Law in 2022, including:

Contents of Decree 45/2023/ND-CP detailing a number of articles of the Law on Petroleum in 2022

Decree 45/2023/ND-CP includes 10 chapters and 64 articles detailing a number of articles of the Petroleum Law on basic investigation of petroleum; list of petroleum lots; selection of contractors to sign petroleum contracts; petroleum contract; safety in petroleum activities; dossiers, order and procedures for implementing petroleum activities, petroleum projects; incentives in petroleum activities; fully exploiting petroleum mines, clusters and lots; settlement of expenses for petroleum activities, within the mainland, islands and waters of Vietnam.

Provision of a separate chapter on petroleum fundamental investigation

According to the guidance of Decree 45/2023/ND-CP, the detailed outline and cost estimate of the basic petroleum survey project include the following main contents:

• Legal basis and scientific arguments of the project formulation;
• The investigation area (geographical location, coordinates, investigation area);
• Natural geographical, socio-economic characteristics of the investigation area;
• Technical documentation basis for project formulation;
• Objects, objectives and tasks of the project;
• Technical methods and expected workload; standards, technical regulations, economic and technical norms (if any) to be applied in the implementation of the project.

In addition, the following contents are included:

• Expected results to be achieved and products after the end of the project;
• Implementation plan and schedule;
• Funding sources and cost estimates;
• Coordination plan for implementation with relevant organizations and individuals in case the petroleum basic investigation project is proposed to be implemented in the assigned area or is undergoing geological basic investigation. on minerals, exploration and exploitation of minerals in accordance with the law on minerals;
• Other contents (if any).

Regulations on order and procedures for basic petroleum investigation

Point a, Clause 7, Article 3 of Decree 45/2023/ND-CP provides guidance within 60 days from the date of receipt of the notice from the Ministry of Industry and Trade as prescribed. Based on the detailed outline and cost estimate of project on basic investigation on petroleum is prepared by the organization in charge of implementing the project and consulted by the Vietnam Oil and Gas Group (Petrovietnam), this organization submit 2 dossiers (including 1 original and 1 copy, sent directly or by post) for approval of detailed outline and project cost estimate.

The application requires the following documents:

• A written request for approval of the detailed outline and cost estimate of the petroleum fundamental investigation project;
• Detailed outline and cost estimate of the project as prescribed in Clause 1 of this Article; appendices, drawings, attached documents (if any);
• Written notice of the Ministry of Industry and Trade to the organization in charge of implementing the project on basic investigation on petroleum;
• The document determining the capital source for the project in case the funding for the implementation of the petroleum fundamental investigation project is funded with the state budget in accordance with the principles, criteria, and norms for allocation in each period approved by competent authority;
• The dossier also requires the opinion of the Petrovietnam on the detailed outline and cost estimate of the petroleum fundamental investigation project prepared by the organization in charge of implementing the scheme;
• Documents received and explained by the organization in charge of implementing the project (if any);
• The draft agreement between the Vietnam Petroleum Group and the organization outside the agency or state-owned enterprise in charge of the implementation of the project if it falls into the case specified (at point b, clause 3, Article 10 of the Petroleum Law), including: investigation area; rights and obligations of the Vietnam Petroleum Group and the organization during the implementation of the project; the organization’s commitment to keeping and preserving specimens, documents, information and data during the implementation of the project; general terms of the agreement;
• Other relevant documents and documents.

Decree 45/2023/ND-CP stipulating the appraisal of detailed outlines and cost estimates of petroleum fundamental investigation projects shall be carried out in the form of an appraisal council. The Minister of Industry and Trade shall promulgate the decision on establishment and operation regulations of the appraisal council (including representatives of relevant ministries and branches) and the expert group assisting the appraisal council.

Time limit for completing the appraisal: 50 days from the date of receiving the valid application, of which 45 days for the council to complete the assessment, 5 days submit to the Minister of Industry and Trade for consideration and approval.

Regulations on risk assurance

Decree 43/2023/ND-CP specifically stipulates that contractors must ensure that all risks are identified, analyzed and assessed for all petroleum works, machinery, equipment, chemicals, and dangerous materials. The results of the risk assessment are used as input data for the organization to carry out the emergency response.

Risk management includes:

• Qualitative and quantitative risk assessment for the phases of petroleum activities as a basis for implementing measures to control and reduce risks and demonstrate that risks are within acceptable levels according to national technical regulations;
• The risk assessment report must be updated every 5 years or when there is a major change or change in operating technology and organization, in order to create a basis for making safety-related decisions in the future. petroleum activities;
• The Contractor must identify specific high-risk locations and conditions that need to be considered in terms of safety when conducting operations in order to take mitigating measures.

The Contractor must build and maintain an emergency response system to effectively conduct rescue operations when incidents or accidents that cause harm to people, the environment or property occur. Depending on the severity of the incident or accident, the contractor must notify the competent authority according to regulations. Exercises and drills to handle emergency situations at petroleum works must be conducted regularly to ensure that workers understand and master the procedures for responding to specific emergency situations. Based on the results of the risk assessment to determine the form and frequency of exercise. The results of drills and drills must be evaluated and recorded to complete the emergency response plan.

From the scope of regulation, new policies in the Petroleum Law 2022 and Decree 45/2023/ND-CP guiding the implementation of the Petroleum Law 2022, in the coming time, there will be many key petroleum projects and offshore exploitation will be developed synchronously, with the expectation of creating a favorable environment and conditions to increase investment attraction in petroleum activities, contributing to increasing State budget revenue, ensuring energy security and protecting Vietnam’s sovereignty over sea and islands.

New regulations on incentives in petroleum activities (chapter VII)

Decree 45/2023/ND-CP supplementing articles 56 and 57 new regulations on incentives in petroleum activities. Decree 45 provides for:

• Criteria for determining petroleum blocks in deep water, far from shore, areas with particularly difficult geographical conditions and complicated geology; marginal petroleum fields (Article 56);
• Prepare and approve the list of petroleum blocks entitled to investment incentives and special investment incentives (Article 57).

Compared with Decree No. 95/2015/ND-CP, these contents are newly added in accordance with the provisions of the Petroleum Law in 2022.

Basically, compared to Decree 95/2015/ND-CP, the new added regulation are suitable and compatible with other legal regulations on tax, without changing or adjusting regulations on relevant investment incentives such as: forms of investment incentives, principles of application of investment incentives, principles of adjustment of investment incentives in accordance with the provisions of the Petroleum Law in 2022 and the Law on Investment in 2020; preferential policies on land rent, water surface rent, sea surface rent implemented in accordance with Decree No. 11/2021/ND-CP.

The addition of objects, investment incentive policies, and special investment incentives for petroleum projects according to petroleum lots through petroleum contracts is appropriate, compatible with the objects and preferential policies. Investment Law of 2022 and the Law of Investment 2020, taking into account specific factors in petroleum activities (many risks, many stages, long petroleum contract term).

Specific regulations on fully exploiting petroleum fields, clusters and lots

Decree 45/2023/ND-CP supplementing articles 58, 59, 60, 61 compared to Decree 95/2015/ND-CP stipulating the full exploitation of specific petroleum fields, clusters and lots:

• Principles of fully exploiting petroleum fields, clusters and lots (Article 58);
• Main contents of the operating mechanism for the full exploitation of petroleum fields, clusters and lots (Article 59);
• Dossiers, order and procedures for approving the operating mechanism for salvage exploitation of petroleum fields, clusters and lots (Article 60);
• Mechanism for management, accounting, and use of assets received from contractors to fully exploit petroleum (Article 61);

Compared to Decree No. 95/2015/ND-CP, these contents are new added in accordance with the provisions of the Petroleum Law in 2022 and the reality of petroleum activities in Vietnam. This is a necessary policy for petroleum exploitation activities, especially with fields that have been exploited for 20-30 years in Vietnam in order to take advantage of petroleum resources to contribute to the state budget instead of ending the project.

The Prime Minister assigned the Petrovietnam to directly manage, operate and fully exploit petroleum fields, clusters and lots. The provisions of the Decree are suitable to actual and specific activities in petroleum activities, whereby the Petrovietnam has been assigned by the Government to sign and manage petroleum contracts.

In petroleum exploitation, it is necessary to specify: the main content of the operating mechanism, work program, budget for the exploitation and exploitation, and the mechanism of management, accounting and use of assets  received from the contractor for full exploitation. Regulations on petroleum exploitation of Decree 45/2023/ND-CP do not conflict with relevant law provisions, in accordance with the characteristics of petroleum activities and international petroleum industrial practices.

New regulations on settlement for petroleum activities under petroleum contracts

Decree 45/2023/ND-CP supplements Article 62 new regulations on settlement for petroleum activities under petroleum contracts compared to Decree 95/2015/ND-CP.

The pre-acceptance test for petroleum activities is the pre-acceptance test for petroleum projects and activities suitable to the characteristics of petroleum activities and international petroleum industry practices, whereby there are many risks, real implemented in many stages with a long petroleum contract implementation time.

Article 62 new regulations on settlement of costs of petroleum activities under the petroleum contract by each stage in the project’s contract. The final settlement of the petroleum project will reflect the characteristics of the petroleum industry with many risks, many stages, and a long time to perform petroleum contracts.

The new regulation inherits legal documents related to petroleum activities (Decree No. 33/2013/ND-CP), has ensured stability, inherits petroleum contracts and actual petroleum activities is taking place, in accordance with the characteristics of petroleum activities, not in conflict with other laws and in accordance with international petroleum industry practices.

Add some appendices

The contents of the Petroleum Product Distribution Model Contract are enclosed with Appendix I of Decree 45 and are updated and supplemented in accordance with the provisions of the Petroleum Law 2022 such as regulations on competence approval, regulations on policies, forms of incentives. Model contract of petroleum product sharing contract inherits Decree No. 33/2013/ND-CP and legal documents related to petroleum activities, ensures stability, inherits contracts petroleum operations and actual petroleum activities are taking place, in accordance with the characteristics of petroleum activities, not in conflict with other laws and in accordance with international petroleum industry practices.

If you need advice on administrative law, civil law, corporate law, Government organization law and Petroleum Law, please contact Viet An Law Firm for the best support.