Amended law should ensure interests of nation and investors in oil exploration

This morning, at the National Assembly House’s Dien Hong Hall, the National Assembly conducted a discussion in the hall about the revised Oil and Gas Law under the chairmanship of Vice Chairman of the National Assembly Nguyen Duc Hai. NA deputies discussed issues such as the name, scope of regulation of the law project, regulations on law application, basic investigation, oil and gas contracts, incentives in oil and gas, state management of oil and gas...

Deputy Dao Hong Van from the Northern Province of Hung Yen and other deputies all agreed on the necessity of promulgating the amended Petroleum Law in order to contribute to the establishment of a complete and synchronous legal framework to promote the development of oil and gas activities, especially restoring the attractiveness of the investment environment in the oil and gas sector, making full use of the national fossil resources, and at the same time ensuring the full institutionalization of the Party's and the government's major policies.

Additionally, the country will develop the oil and gas industry for economic development in close association with the protection of Vietnam's sovereignty and legitimate interests at sea, especially sovereignty over seas and islands following international law.

Deputy Tran Hong Nguyen from the South-Central Province of Binh Thuan said that amending the law must meet the requirements of putting the interests of the nation and nation first, associated with building an independent and self-reliant economy and ensuring macroeconomic stability. Last but not least, the amended law must take heed of major balances of the economy, especially in terms of energy and protection and exploitation of natural resources and national sovereignty as well as state management capacity and decentralization promotion.

The draft law needs to resolve conflicts and overlaps in the Law on Investment, the Law on Construction, and the Law on management and use of state capital. In particular, it is necessary to specify which laws are applied to the contents of oil and gas activities, because of the basic investigation of oil and gas, about oil and gas projects in a synchronous chain within the scope of the law.

Furthermore, according to deputies, it is necessary to supplement regulations related to the selection of contractors to provide goods and services for petroleum activities similar to the provisions of the current Petroleum Law, the Bidding Law but ensuring the transparency, fair competitiveness and clearly defined laws for the sake of both foreign contractor, the Vietnam Oil and Gas Group (PVN) and PVN's enterprises.

Deputy Phan Duc Hieu in Thai Binh Province expressed high agreement with the Government on the goal of amending the Petroleum Law this time to increase the attraction of foreign and private investment in the exploration and production of oil and gas in the region while searching and drilling oil and gas is increasingly difficult and complicated, and especially in deep-water areas in the East Sea. Therefore, it is necessary to amend the law to ensure investment attraction policies, ensure regional and international competitiveness, basing on the harmony between the interests of the nation and investors.

According to Deputy Phan Duc Hieu, this draft Law on Petroleum should include a lot of regulations to promote basic oil and gas exploitation. At the same time, it is very clear that the State aims to encourage Vietnamese and foreign organizations and individuals to invest in conducting basic surveys on oil and gas and oil and gas activities.

However, he realized that the draft law does not specify the incentive mechanism. Even the newly implemented incentive policy only applies to oil and gas activities which do not include basic investigation activities. Therefore, it is recommended to study and consider the application of investment incentives to basic investigation activities or not. In case it is not applicable, design mechanisms and policies right in this law apply to basic investigation activities. He also noted that when designing this policy, policy-makers should pay special attention to the global minimum corporate income tax policy.

Deputy Phan Duc Hieu announced that the preferential policies for oil and gas activities in the current draft law only stimulate preferential rates of corporate income tax and export tax rates. However, the government and policy-makers should study and consider many other preferential policies such as a cost-reduction mechanism when calculating corporate income tax or cost-based tax deductions to diversify preferential policies and attract foreign investors. These policies both create incentives for investors and encourage them to invest in several fields that the government is expecting.

Deputy Hoang Duc Thang from the Central Province of Quang Tri said that it is necessary to design a separate chapter on attracting investment and international cooperation in the oil and gas field in this amended Petroleum Law to attract foreign and private investment in the oil and gas sector.

Deputy Hoang Duc Thang analyzed that in fact, Vietnam has already cooperated with foreign countries, attracting private sector investment into exploiting oil and gas including overseas investment in the field of oil and gas and establishing joint venture companies for the production and processing of oil and gas. However, the draft law has not clearly showed these policies and some of its contents are not showing the international cooperation relations and social contributions in the field of oil and gas exploitation.