Oil & Gas

Introduction

The country of Vietnam, like the majority of the world, relies heavily on energy generated by oil & gas to power its growing industrial sector. The oil and gas industry meets about 40 percent of the Vietnam’s primary energy demand and plays a crucial role in the country’s growth and national energy security. Much of the oil is exploited offshore, with the Bạch Hổ, Đại Hùng, and Tê Giác Trắng oilfields constituting three of the main production areas. According to statistics, the country held 4,400,000,000 barrels of proven oil reserves as of 2016, ranking 25th in the world and accounted for about 0.3% of the world’s total oil reserves. Between 2012 and 2017 Vietnam was a net exporter of oil and gas. However, since then there has been a downward trend in production with Vietnam imported 5.17 tons while only exporting 3.96 million tons in 2018. Currently, the sector is facing challenges due to a number or factors including overexploitation of existing fields, lack of capital and investment, falling oil prices, and outdated regulations.

Oil & gas in Vietnam is governed by the 1993 Petroleum Law which was an important landmark in the formation of a system for petroleum development. Although the law was amended in 2000 and 2008, it currently requires an overhaul and integration with other laws and agencies. This fact has been recognized by many industry sources as well as the government of Vietnam which stated “the policies on investment, development, and the management of energy resources are still lacking and inconsistent” (Resolution No.55-NQ/TW dated February 11, 2020). For example, according to the Law on Water Resources Tax, companies have to pay tax worth VND100 million for each square kilometer of sea surface under which they drill oil and gas, a high rate that discourages investors. As a result, in 2016-2020, even though numerous foreign companies sought investment opportunities, PetroVietnam (the state-owned oil company) signed only eight new oil and gas contracts, only one of which was with a foreign partner. Other issues include the fact that too many agencies are involved in the policymaking and approval process. However, it appears that change is coming. In September, 2021, the revised Draft Petroleum Law was posted for comments on the Government’s website. The draft law contains numerous proposed improvements including changes in the procedure for approval of oil and gas projects, accounting and taxation, and the rights and obligations of oil and gas contractors.

Description

Businesses involved in Vietnam’s oil and gas industry often face extremely complex legal challenges concerning the exploration, production, development, transportation, trade, storage, marketing, refining and processing of natural gas, oil and other petroleum products. With the Petroleum law in the process of being amended and implemented, it is critical that any operator, investor or governmental agency proceed cautiously as well as obtain competent and trustworthy legal advice. Corporate Counsels has over a decade of experience in the field and have been retained by foreign and domestic oil and gas and energy companies, traders, investors, insurers, financial institutions and governmental entities to assist in all facets of their procedure and operations.

Corporate Counsels is skilled at handling all aspects of our clients’ oil and gas business, from pre-exploration to production, licensing, transport and storage to downstream refining. On the cutting edge of legal developments, our team of attorneys also utilize their commercial knowledge to advise on a wide array of issues from corporate, banking and finance, capital markets to employment, regulatory and intellectual property matters. At its core, Corporate Counsels is committed to enabling our clients to reach their business goals, seize opportunities, and avoid risks whether its expansion, acquisition or divestiture.