Order No. 05/2008/L-CTN on the promulgation of the Law Amending and Supplementing a Number of Articles of the Petroleum Law

16 OFFICIAL GAZETTE Issuo nos 09.10/August 2008 (GOng Bao""fiWlOlSef"'r"'er", mJ) PROMULGATES: the Law Amending and Supplementing a Number of Articles of the Petroleum Law, which waspassed onJune3,2008, by theXIJ'h National Assembly of the Socialist Republic of VletnaIn at its 3 rd session. President of the Socialist Republic of Vlelnom NGUYEN MINH TRIET LAW AMEND1NGANDSUl'PLE~mNTlNG A NUMBER OF ARTICLES OF THE PETROLEUM LAW (No. 1012008lQH12) ORDER No. 05!2008IL-CTN OF JUNE 12, Pursuant to the 1992 Constitution of the 2008, ON THE PROMVLGATION OF LAW Socialist Republic of Vietnam, which was amended and supplemented under Resolution THE P\lESIDENT OF THE SOCIALIST No, 5l1200l/QHiO; REPUBLIC OF VIETNAM The Nationnl Assembly prumulguies the Luw Pursuasu to Articles 103 and 106 ofthe 1992 Amending and Supplementing a Number of Constitution of the Socialist Republic of Articles of 1993 the Petroleum Law, which was Vietnam, which was amendedand supplemented amended and supplemented under Law No. 19/ under Resolution No. 5112001lQHIO of 2000IQHIO Amending and Supplementing a December 25, 2001, of the X 1h National Number ofArticles of the Petroleum Law. Assembly, the io« session; Article 1.- Toamendandsupplement a number Pursuant to Article 91 of the Law on of articles of the PetroleumLaw: Organization of the National Assembly; Pursuant to Article 50 of the Law on 1. To amend and supplement Clause 1, Promulgation of Legal Documents, Article 3 as follows: © VIETNAM LAW & LEGAL FORUM Issue nos 09-10/August 2008 OFFICIAL GAZETTE 17 (C6ng 88000< fi1J.51rYSep1emberll, 2(08) "1. Gil and gas comprisecrude oil, natural gas "Article 8,- and natural hydrocarbon in thegaseous, liquid solid The area for exploration and prosJ1f':C'.1ine nnder or semi-solidform, includingcoal gas, sulfur and an oil and gas contract shall be determined based similar substances associated with hydrocarbon, on the lots decided by the Prime Minister." butexcluding coal, shale, bitumen orotherminerals from which oil can be extracted." 7. To amend and supplement Article 13 as follows: 2. To amend and supplement Clause 12, Article 3 a" follows: "Article 13.- In the course of carrying out oil and gas "12. Encouraged oil and gas investment activities, after completing a work step, a work project means a project which carries out oil and phase or an entireoiland gascontract, organizations gas activities in deepwater and offshore areas, and individualscarrying out oil and gas.activities areas with especially difficult geographical shall clear up fixed works, equipment and means conditions and complicatedgeologicalconditions foroilandgasactivities no longerin useandrestore .:mn orher areas on thP licr of Jot,<; m-.citren hy thE- the envirorunentaccording to law." PrimeMinister; or a project on coalgasexploration, prospecting andexploitation." 8. To amend and supplement Article 14 as follows: 3. To supplement Clause 13, Article 3 as "Anicle 14.- follows: VietnamOil and Gas Group istheinternational "13.Coalgas means hydrocarbon whose main uansacnou uarue uf Tup dour: Duu /l.lttViet Hum element is methane in the gaseous or liquid form, - Cong ty me, referred to as Petrovietnam and contained in coal seamsor other adjacent seams." abbreviatedto PVN. VietnamOil and Oas Group 4. To suppkment Clouse 14, Article.3 as is a state cornJmny which may carr)' out oil and follows: gas activities and conclude oil and gaeeontracts withorganizations and individuals carryingoutoil "14. Fixed work means a work which is built and gas activities according to law." or installed perrnanenny for use in uil alii] gas activities." 9. To amend and supplement Artide 17 as follows: 5. To supplement Clause IS, Article 3 as follows: "Article 17.- "15.Equipment meID1S a complexof mechanic, 1.The term of an oil and gas contractmust not electric, electronicandother componentswhichis exceedtwentyfiveyears,of whichtheexploration installedand used for oil and gas activities." andprospecting periodmustnotexceedfiveyears. Forencouragedoiland gasinvestmentprojects 6. To amend and supplement Article 8 as andprojects on natural gasexploration, prospecting follows: andexploitation, the termofan oiland gascontract © VIETNAM LAW & LEGAL FORUM

18 OFFICIAL GAZETTE Issue nos 09-10/August 200S (GOng Bao",; 5:JJ.5101&Jpiemb« 11, 2(08) must not exceed thirty years, of which the cases or other special cases is not included in the explorationandprospecting periodmustnotexceed term of an oil and gas contract. seven years. 6. An oil and gas contract may terminate ahead 2. The term of an oil and gas contract may be of its term provided that the contractor must extended. hut for no more than five years: the rerrn complete its committed obligations and such of the exploration and prospecting period may be termination is agreed upon by the contractual extended but for no more than two years. parties. In special cases. the Prime Minister may 7. The Government shan prescribe conditions consider anddecide topermit the extension of me for suspending the execution of a number ofrights exploration and prospecting period or the term of and obligations under an oil and gas contract in an oil and gas contract. special cases; and conditions and procedures for extending exploration and prospecting period or 3. A contractor, who has announced a the term of an oil and gas contract." commercial discovery, buthasneither found sale outlets nor had suitable pipelines and processing 10. To amend and supplement Artidc 2J equipment may retain its discovered gas area.The as follows: rime Iimitforretaining such area isfive years and may be extended for two subsequent years in "Article 23.- special cases. Pending the time to find out sale An oil and gas contract must be approved by outlets andsecure suitable pipelines and processing the Prime Minister and takes effect as prescribed equipment the contractor shall perform its jobs as in the investment certificate." committed under the oil and gas contract. 11. To amend and supplement Article 24 4. In fvrce majeure circumstances or other as follows: special cases, parties to an oil and gas contract "Artick 24.- may negotiate to suspend theexccution ofa number of rights and obligations under the contract. The 1, The transfer of part or whole of an oil and suspension caused by force majeure events may gas contract by the contractual parties must satisfy last until the force majeure event ends. The the following conditions: suspension time limit in other special cases shall aJ The transferee undertakes to implement be decided by the Prime Minister, but must not contents of the oil and gas contract concluded-by e)\,.uxU three years. the transferor, 5. The extended time of the exploration and b/To satisfy the conditions on transfer ofcapital prospecting period, the period of retaining the and projects according to the investment law. discovered gas area which has been announced The transfer of part or whole of an oil and gas commercially viable, and the period of suspending contract must be approved by the Prime Minister the execution ofa number ofrights and obligations and takes effect as prescribed in the modified unuer an oil anu gas CUI1LTal:L inJorce majeure tnvesunem cernncate. @ VIETNAM L.AW & L.EGAI. FORUM Issue nos 09-10/August 2008 OFFICIAL GAZETTE 19 (COn.Q Baooos500-51CJ1SeiJteml;er11. 2008) 2. Vietnam Oil and Gas Group has the pre- as follows: emptive right to buy part or whole of an oil and gas "A,tid~ 29.- contract to be transferred, Subcontractors enjoy the rights specified at 3. The transferor shall pay taxes and fees Points a, c and e, Clause 1, Article 28 of this Law. accordinz to the law on taxes. fees and charges." A subcontractor that is a foreign organization 12. To amend and supplement Article 26 or individual may transfer abroad expenses as follows: recovered andprofits earned from its oil and. gas service operations." "Article 26.- Contractors may conclude oil and gas service 16. To amend and supplement Clause 9, contracts, but must give priority to Vietnamese Article 30 as follows: organizations andindividualsin concluding these "9.At the Government's request, to sell on the contracts. Vietnamese market: The biddingandconclusion ofoilandgas service aJ Natural gas under its uw uerslup OIl Ll~ basis provision contracts directly related to oil and gas of agreements under gas exploitation and exploration, prospecting, field development and development projects; exploitation comply with separate regulations lJl C! uue ott under iLS ownerstitp at promulgated by the Government. internationally competitive prices." Vietnam shall take responsibility for providing flight operation services on its own or conclude 17. To amend and supplement Article 32 joint venture contracts with foreign parties to provide as follows: flight operation services for oil and gas activities." "Article 32.- 13. To amend amI su....Iement Puiut e, 1. Organtzattons and individuals carrying out Clause I, Article 28 as follows: oil and gas activities, foreigners and Vietnamese "e/ To be exempted from import and export working for oil and gas contractors, oil and gas joint venture enterprises and subcontraerors shall taxes under the Law on Import' lax and Export Tax." pay taxes according to the tax law. 2. A reasonable part of Vietnam Oil and Gas 14. To amend and supplement Point g, GIUUjJ'~ poa-enrcrprise iULUllIC tax rcvenues Irom Clause I, Article 2S as follows: its oil and gas activities shall be allocated from the "g/To export its oil and gas share as agreed in state budget to the Group for investment in the the nil ::mn B:l"rontr:lct withollt having to apply for development of oil and g:l~ projects according to an export permit, except the case specified in law." Clause 9, Article 30 of this Law." 18. Th amend and supplement Article 38 15. To amend and supplement Article 29 as follows: © VIETNAM LAW & LEGAL FORUM

20 OFFICIAL GAZETTE Issue nos 09-10lAugust 2008 (C&Jg B8onasrnJ~10_11,mjl "Article 38.- for oil and gas activities no longer in usc and the 1. The Government shell pcrfcnn the unified environmental restoration according to law; state management of oil and gas activities. ff To permit the burning of associated gas; 2.The Ministry of Industry andTradeshalltake withdraw fields if contractors fail to develop fields responsibility before the Government for its state and exploit oil and gas according to schedules under approved field development plans; management of oil and gas activities prescribed below: gl To manage the training, retraining and development of human resources for oil and gas i.1ITu peonrulgaie according luiL:. competence activities; to formulate appropriate mechanisms or submit to competent state agencies for and policies to attract human resources for oil and promulgation legal documents, strategies, master plans and plans on development of the oil and gas gas activities; industry; hi To carry out international cooperation on oil andgas; bJ To essume the prime responsibility for submitting to the Prime Minister for aFProval oil if To propagate. disseminate and educate the and gas eentracts and oil and gas investment law on oil and gas; projectsaceording to theinvestmentlaw,reporting jI To examine, inspect, handle violations and on reserves. overall plans and plans on field settle complaints and denunciations about oil and development, resultsof oiland gaslotand contract gas activities; biddings and foreign cooperation schemes for oil kJ To perfonn other tasks regarding the state andgas activities in overlapping areas with foreign management of oil and gas activities according to countries.extending the oil and gas exploration and law. prospecting periods or the terms of oil and gas 3. Minislries and rrrinisterial-level agencies shall, contracts. and the time of suspension of oil and within the ambit of their tasks and rowers, perform gas contracts inJorcemajeure cirumstances and the state management of oil and gas activities special cases; according to law. cJToorganize the formulation of, and submit to 4. People's Committees of provinces and the Prime Minister for promulgation, lists of lots centrally run cities shall. within the ambit of their anddivisoes and adjustments of lot limits; tasks and powers, perform the state management df To review, monitor and report on the of oil and gas activities in theirlocalities according development and resultson exploration,prospecting, to law." exploitation and domestic sale and export of oil 19. To replace the phrase "Vietnam Oil and and gas; Gas Corporation" with the phrase "Vietnam OiJ eI To approve programs and plans on early and Gas Group" in Clause 5, Article 3; Clause 9, exploitation in areas under contract; to approve Article 15;Articles 10, 21, 22 and 25; and Clause plans on ande::\.ffinine- and hand\eviolationsin,the 6, Article 30 of the 1993 Petroleum Law, which clearing up of fixed works, equipment and means was amended and supplemented under Law No. e VIETNAM LAw & LEGAL FORUM Issue nos OS·10/August 2008 OFFICIAL GAZETTE 21 (GOng BaD nosfJ1>51MierAemberll, 2008) 19/2000/QH I0 Amending and Supplementing a Number of Articles of the Petroleum Law. 20.To annul Articles 33,34.35,36,37and39 of the 1993 Petroleum Law, which was amended and supplemented under Law No. 1912000/QIIIO Amending andSupplementingaNumber ofArticles of the Petroleum Law. Article 2.- This Law takes effect on January 1,2009, This Law was passed Oft June J, 2008, by the xu« National Assembly of the Socialist Republic of Vietnam at its 3msession. Chairman ofthe National Assembly NGUYEN PHU TRONG © VIETNAM LAW & LEGAL FORUM