The Petroleum Law 2022, with many breakthrough contents, is the necessary legal basis for more effective exploitation of oil and gas resources. It is expected to create institutional motivation to help Vietnam’s oil and gas industry have new achievements. new development step.

One of the highlights of the Petroleum Law 2022 is the addition of special preferential policies applicable to oil and gas blocks and fields through oil and gas contracts to increase investment attraction in oil activities. gas, especially small and marginal mines.

In the context of oil and gas exploitation output gradually decreasing, Petrovietnam is actively implementing technical solutions and measures to put into operation “special” fields in deep water and offshore areas with favorable conditions. complex construction. Under the usual conditions that apply to current oil and gas projects, no small, marginal field projects can be implemented. Therefore, small and marginal mine projects need a mechanism to encourage investors to participate in implementation, to ensure maximum recoverable oil and gas resources and ensure revenue for the budget.

Current status of oil and gas fields

According to reports assessing the current situation, most of the major oil and gas fields are being exploited with a high level of output decline (Bach Ho, Su Tu field cluster, Te Giac Trang, Lan Tay…). Methods to enhance oil recovery coefficient have just begun to be tested and have not been widely deployed on a large scale due to technical difficulties and economic efficiency. The new mines expected to be introduced are mostly mines with complex structures, small reserves, and many difficulties in development and exploitation. Of the remaining on-site oil and gas resources, gas accounts for a larger proportion than oil, is unevenly distributed, concentrated in deep waters, offshore, has complex geological and technical conditions, and is difficult to exploit. difficult, challenging. The search and exploration work to increase reserves is increasingly difficult, the annual reserve compensation coefficient does not ensure compensation for exploited oil and gas output.

In fact, in recent years, the number of new oil and gas contracts signed has decreased sharply (from 2015 to 2019, each year there was only 01 oil and gas contract signed; in 2020 and 2021 there was no oil and gas contract). signed). The objective reason is that the new discoveries in Vietnam in recent times have mostly small reserves, the remaining open areas are assessed to have limited potential, mainly gas, concentrated in the area. areas subject to investment incentive policies according to the provisions of the Petroleum Law. Therefore, a correct assessment of the current status of the economic and commercial terms of oil and gas contracts and the system of legal documents compared to other countries in the region is extremely necessary to develop preferential policies. Investment incentives are appropriate to the current context, creating a competitive advantage for Vietnam’s oil and gas sector compared to other countries in the region.

New opportunities for “special” oil and gas fields

On the basis of creating new mechanisms and policies to open up investment opportunities in “special” oil and gas fields, the 2022 Petroleum Law stipulates the amendment and supplementation of regulations on principles for determining blocks Oil and gas are entitled to preferential investment policies and special investment incentives (the Law only states general principles and assigns the Government to regulate this content in detail or assigns the Prime Minister to promulgate a specific list), Specifically: identify plots eligible for investment incentives and special investment incentives (Articles 53&54).

For oil and gas blocks that enjoy investment incentives, the incentive levels will remain unchanged according to current regulations, specifically, the corporate income tax rate of 32% and the crude oil export tax rate will remain unchanged. is 10%, the cost recovery rate is 70% of the oil and gas output exploited in the year.

Prospects for the exploitation of small oil and gas fields and marginal fields

Check valves at the wellhead area of Hai Thach mine

For oil and gas blocks that enjoy special investment incentives, the Petroleum Law 2022 stipulates lower incentive levels to attract investment in oil and gas activities, specifically: corporate income tax rates. is 25% (the current Corporate Income Tax Law does not stipulate this tax rate), the crude oil export tax rate is 5% (within the prescribed export tax rate bracket) and the cost recovery rate is 5%. maximum 80% of oil and gas output exploited in the year (Clause 3, Article 54).

New features in the 2022 Petroleum Bill are a corporate income tax rate of 25% and a maximum cost recovery rate of 80% applied to oil and gas lots that enjoy special investment incentives. This content is proposed on the basis of research and reference to policies of a number of countries in the region with similar oil and gas activities to Vietnam. Specifically: the preferential corporate income tax rate of Thailand is 20%, Malaysia 25%, China 25%, Myanmar 30%; Malaysia’s (maximum) cost recovery level is 75%, Indonesia’s 90%.