Chapter I
GENERAL PROVISIONS
Article 1. Scope
This Law provides for fundamental investigation of petroleum and petroleum operations within the mainland, islands and territorial waters of the Socialist Republic of Vietnam.
Article 2. Regulated entities
This Law applies to Vietnamese and foreign agencies, organizations and individuals related to fundamental investigation of petroleum and petroleum operations.
Article 3. Definitions
For the purposes of this Law, the terms below shall be construed as follows:
1. “petroleum” means crude oil, natural gas and solid or semi-solid hydrocarbons in the natural state, unconventional oil. Unconventional oil refers to coal gas, oil shales, shale gas, natural gas hydrates, bitumen, or other possible forms.
2. “fundamental investigation of petroleum” includes research, survey and investigation of geological formations and material composition, conditions and laws of petroleum generation in order to assess the petroleum potential as a basis for orientation of hydrocarbon exploration.
3. “petroleum operation” includes hydrocarbon exploration, oil and gas field development, extraction of petroleum, decommissioning of petroleum installations.
4. “petroleum contract" is a written agreement between Vietnam Oil and Gas Group (PetroVietnam - PVN) with a contractor for carrying out petroleum operations.
5. “Oil and gas production sharing agreement” means a petroleum contract, including regulations on the production sharing among parties on the basis of oil production obtained from petroleum operations within a respective contract area; the contractor is entitled to recover costs from the oil production and is responsible for all financial and technical aspects and at its own risk.
6. “natural gas hydrates” are ice-like crystalline solids naturally formed by the interaction of hydrocarbon gas and water .
7. “petroleum installations” include drilling rigs, extraction rigs, auxiliary rigs, storage facilities, floating storage facilities, pipeline systems, mooring buoys, wells and a combination of related vehicles, machinery and equipment, work structures fabricated, constructed, buried and installed permanently or temporarily to serve petroleum operations.
8. “shale oil” is a liquid hydrocarbon naturally formed in fine-grained sedimentary rocks.
9. “oil initially in place (OIIP)” refers to the initial oil in natural accumulations which has been or not been discovered by drilling, and is calculated or estimated.
10. “crude oil” means a naturally liquid hydrocarbon, asphalt, ozokerite and condensate. Condensate is a liquid hydrocarbon obtained from condensed or extracted natural gas.
11. “petroleum services” mean trading, technical and technological services provided for the fundamental investigation of petroleum and petroleum operations.
12. “petroleum project” refers to a separate project or a project combined from multiple component projects set up to carry out petroleum operations.
13. “petroleum recovery factor” is the proportion of recoverable oil and gas to the oil initially in place (OIIP) of a field or reservoir.
14. “an outline field development plan (ODP)” means a document presenting outlines of a research on the necessity, feasibility and preliminary effectiveness of a field development project in order to select an appropriate field development plan of which the expansion potential of the field or area (if any) in the future is taken into account.
15. “an early field development plan (EDP)”means a document presenting contents of a research on the necessity, feasibility and effectiveness of an early field development project to carry out the petroleum extraction and addition of information on fields, reservoirs or extraction operations in order to optimize the oil and gas field development.
16. “a field development plan (FDP)” means a document presenting contents of a research on the necessity, feasibility and effectiveness of a field development project which has been selected as the basis for oil and gas field development.
17. “a decommissioning plan" means a document presenting contents of a research on projects, technical solutions, technologies, environment, costs and progress of decommissioning of petroleum installations.
18. “petroleum extraction” refers to an operation which is carried out to recover petroleum from oil and gas fields.
19. “shale gas” is a gaseous hydrocarbon formed in organic-rich fine-grained sedimentary rocks.
20. “associated petroleum gas (APG)”means a gaseous hydrocarbon fractured in the process of extraction and processing of crude oil.
21. “coal gas” means a hydrocarbon of which the primary component is methane which exits in a gaseous state and is found in coal seams.
22. “natural gas” means a gaseous hydrocarbon in the natural state, extracted from a dug well, including APG.
23. “oil block” means an area limited by points with defined geographical coordinates, delimited to conduct petroleum operations.
24. “available oil block” means an oil block which is currently not controlled under any petroleum contract.
25. “oil and gas field” refers to a combination of geological formations in the ground that have been identified with one or more reservoirs or aquifers that are assessed to have petroleum.
26. “marginal field” means an oil and gas field that cannot be developed and extracted because the investment efficiency is close to the minimum level with the normal technological level and economic and technical conditions at the time of assessment.
27. “operator” is a representative organization of contractors who enters into a petroleum contract to perform petroleum operations within the authorization of contractors under the petroleum contract.
28. “contractor/bidder” is an investor who is eligible for petroleum operations on the basis of a petroleum contract.
29. “petroleum discovery” refers to a petroleum accumulation discovered by well drilling.
30. “oil and gas field development” includes plan formulation, design, procurement, manufacturing and construction of petroleum installations for extraction of petroleum.
31. “participating interest” refer to rights, interests, obligation and responsibilities of contractors under petroleum contracts. The participating interests of each contracting party in each period shall be expressed as a percentage, recorded in the petroleum contractors and investment registration certificates.
32. “Vietnam Oil and Gas Group", which is the international trading name of “Tập đoàn Dầu khí Việt Nam”, is referred to as "PETROVIETNAM” and is abbreviated to PVN, is a state-owned enterprise of Vietnam.
33. “hydrocarbon exploration” is the prospecting and exploration of oil and gas deposits and quantification of such oil and gas deposits.
34. “international petroleum industry practices” mean standards, methods, and procedures that have been widely accepted and used by oil and gas investors, countries conducting fundamental investigations and petroleum operations in the world.
35. “decommissioning of petroleum installations” means an operation carried out for demolishment, dismantlement, destruction, conversion, temporarily and long-term preservation or other technical measures in accordance with the provisions of law and international petroleum industry practices for petroleum installations that are no longer necessary for petroleum operations.
36. “cost recovery” is the recovery of the amounts spent on petroleum operations from oil production obtained from the extraction of petroleum in a petroleum contract area in which the recovery is allowed according to the provisions of a petroleum contract.
37. “oil and gas reserve" means an expected amount of commercially recoverable oil and gas obtained from oil initially in place (OIIP) of a field with certain economic and technical conditions.
38. “declaration of commercial discovery” means a written notice from a contractor to PVN about the discovery of exploitable petroleum that brings economic efficiency.
Article 4. Application of the Petroleum Law, relative laws, foreign laws and international petroleum industry practices
1. In case there are different regulations between the Petroleum Law and other laws on the same specific issue related to fundamental investigation of petroleum and petroleum operations, the Petroleum Law shall apply, including:
a) Jurisdiction over and procedures for investment in petroleum projects;
b) Jurisdiction to grant approval of the Members’ Council of PVN and responsibilities of the Committee for Management of State Capital at Enterprises to make enquiries about the use of capitals of PVN and wholly state-owned subsidiaries of PVN when exercising the right to participate in petroleum contracts, priority over purchase of the participating interest in petroleum contracts and when performing petroleum operations in different phases of petroleum contracts and petroleum projects; participation of PVN and partially state-owned subsidiaries of PVN in petroleum contracts; rules for handling of costs; management and use of information, data, documents, samples and petroleum installations and other property that have been installed and invested of petroleum contracts which has ended to continue to perform petroleum operations and decommission petroleum installations which have been received and handle the decommissioning of petroleum installations;
c) Selection of petroleum contractors.
2. If another law, promulgated after the date on which this Law comes into force, provides jurisdiction of, procedures and requirements for conducting fundamental investigations of petroleum and its operations different to the Petroleum Law, contents of which the Petroleum Law shall apply or not and contents of which such another law shall apply shall be specifically determined.
3. In case Vietnamese applicable Law does not apply, contracting parties may reach an agreement on the application of foreign laws or international petroleum industry practices if this application does not cause consequences contrary to the fundamental rules of Vietnamese law.
Article 5. State’s policies on petroleum
1. The State encourages Vietnamese and foreign investors in conducting fundamental investigations of petroleum and its operations in Vietnam in order to increase reserves and oil production obtained in potential areas, deep-waters and offshore areas, contribute to ensure national energy security, develop national economy, and protect Vietnam's legitimate rights and interests in accordance with international law.
2. The State of Vietnam ensures the ownership of investment capitals, property and other legitimate rights and interests of Vietnamese and foreign entities conducting fundamental investigations of petroleum and its operations in Vietnam.
3. The State of Vietnam does not collect fees for the use of sea areas for conducting fundamental investigations of petroleum and its operations, possessing and transporting petroleum resources obtained from territorial waters of Vietnam to the shore by pipelines under petroleum contracts.
4. The State of Vietnam has investment incentives for oil field-/block-based petroleum projects to encourage exploration, development and extraction of unconventional oil, oil blocks and fields located in deep water, offshore, areas with extremely difficult geographical conditions, complex geology and marginal fields; improve petroleum recovery factor.
5. The State of Vietnam encourages Vietnamese and foreign organizations and individuals to share, access and use petroleum infrastructures and installations to carry out fundamental investigations of petroleum and its operations according to their agreements.
Article 6. Rules for conducting fundamental investigations of petroleum and its operations
1. Petroleum resources of Vietnam must be owned by the whole people and represented by the State of Vietnam and uniformly managed.
2. Organizations and individuals must conduct fundamental investigations of petroleum and its operations on the basis of respecting the independence, sovereignty, territorial integrity, sovereign rights and jurisdiction, ensuring the national interests and security of Vietnam, complying with Vietnamese laws and international treaties to which the Socialist Republic of Vietnam is a signatory.
3. Organizations and individuals conducting fundamental investigations of petroleum and its operations must comply with regulations of Vietnamese laws on national defense, security, social order and safety, community health, environmental protection, response to climate change, response to oil spills, protection of natural resources and cultural heritages and preservation of historical - cultural relics and scenic spots.
4. Organizations and individuals conducting fundamental investigations of petroleum and its operations must use modern technologies, comply with the national technical regulations and apply standards in conformity with regulations of Vietnamese laws and international petroleum industry practices.
5. Organizations and individuals carrying out petroleum operations must take out insurance policies for installations, equipment and vehicles serving petroleum operations, environmental liability insurance (ELI), civil third party liability insurance, personal insurance and other insurance according to regulations of Vietnamese laws and international petroleum industry practices.
6. All samples, documents, information and data collected during the process of fundamental investigation of petroleum and its operations must be managed by the State of Vietnam. The collection, transfer, management, use and security of samples, documents, information and data collected during the process of fundamental investigation of petroleum and its operations must comply with regulations of Vietnamese laws, investigators’ agreements and petroleum contracts.
Article 7. Grounds for carrying out petroleum operations
1. Petroleum operations shall be performed under a concluded petroleum contract in respect of oil blocks according to the list approved by the Prime Minister, except for salvage of oil fields, groups of oil fields and oil blocks in accordance with regulations at Point c Clause 2 and Point b Clause 3 Article 41 hereof.
2. The Prime Minister shall approve the list of oil blocks and the list of oil blocks adjusted according to the proposal of PVN, appraisal results and reports of the Ministry of Industry and Trade.
3. The Government of Vietnam shall issue regulations on documents and procedures for appraisal and approval of the list of oil blocks and the adjusted list of oil blocks.
Article 8. Requirements for petroleum security
1. Organizations and individuals performing petroleum operations must establish safety zones around petroleum installations.
2. Safety zones around offshore petroleum installations include:
a) Petroleum reserved blocks (no-go zones) of offshore petroleum installations, except for subsea installations, refer to areas with a radius of 500 meters measured from the outermost edges of the installations in all directions including anchorages of floating vehicles and mobile structures, except for special cases decided by the Government;
b) No-anchoring areas or areas under prohibition on deep seabed operations refer to areas with a radius of 02 nautical miles measured from the outermost edges of the petroleum installations including subsea installations; vehicles and vessels shall not be permitted to anchor or perform deep seabed operations, except for special cases approved by the contractors or decided by the Prime Minister.
3. Safety zones around onshore petroleum installations refer to safety areas surrounding installations and equipment serving onshore petroleum operations, depending on geographical and social conditions of places where petroleum operations are carried out, for the purpose of ensuring security for the people and vehicles during the process of performance of petroleum operations.
4. Organizations and individuals performing petroleum operations must carry out the following tasks for ensuring petroleum security:
a) Formulate documents on security management, including security management programs, risk assessment reports and emergency response plans and submit them to competent authorities for approval thereof;
b) Establish, maintain and develop security management systems, thereby ensuring control of risks incurring during the entire process of petroleum operation;
c) Establish and maintain emergency response systems in a manner of ensuring the efficiency and minimizing losses of people and assets or damage to environment due to incidents or accidents;
d) Equip with warning systems that are able to detect possible bad circumstances causing harm for installations and environment and automatically give notices of normally unmanned offshore petroleum installations to operation centers ;
dd) Prepare emergency vessels for ensuring timely rescue in cases of emergency in respect of normally manned offshore petroleum installations. Operators working in oil neighboring oil fields or blocks use the same emergency vessel but availability of emergency vessels must be ensured.
5. The Government of Vietnam shall elaborate this Article.
Article 9. Prohibited acts in the process of performance of fundamental investigations of petroleum and its operations
1. Carry out fundamental investigations of petroleum and its operations without permission of competent authorities.
2. Take advantage of fundamental investigations of petroleum and its operations to affect national defense, security, national interests and legal interests of organizations and individuals; cause environmental pollution.
3. Take advantage of fundamental investigations of petroleum and its operations to exploit other natural resources and minerals.
4. Obstruct lawful activities in the process of performance of fundamental investigations of petroleum and its operations.
5. Deliberately destroy assets, equipment and petroleum installations; destroy samples, information and data collected during the process of performance of fundamental investigations of petroleum and its operations.
6. Illegally provide samples, information and data collected during the process of performance of fundamental investigations of petroleum and its operations.
7. Be involved in corruption, cause losses and waste during the process of performance of fundamental investigations of petroleum and its operations.
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