Amending the Petroleum Law needs to clarify the ‘shoulder’ of PVN
The National Assembly Chairwoman said that the revised Law on Petroleum should clearly define and separate the roles of state management and as enterprises and contractors of PVN to avoid conflicts of interest.
On April 14, the National Assembly Standing Committee held its 10th session to give opinions on the revised Petroleum Law.
Minister of Industry and Trade Nguyen Hong Dien, who authorized the Prime Minister to submit the revised bill, said this time adding regulations related to oil and gas contracts, preferential policies in attracting investment in oil activities. gas, as well as the role of the Vietnam Oil and Gas Group (PVN).
Article 8 of the revised bill stipulates that PVN is a state-owned enterprise that is entitled to conduct basic investigations on oil and gas and oil and gas activities, as well as sign and manage oil and gas contracts with organizations and individuals to conduct fundamental investigations. oil and gas operations. PVN is authorized to approve the adjustment of the plan for early exploitation of oil and gas fields, oil and gas field development plans, and plans to clean up oil and gas works…
However, National Assembly Chairman Vuong Dinh Hue commented that the role and legal status of PVN are not clear at this time of amendment. “Previously, PVN was both an enterprise and a state manager of the oil and gas sector. Now there is the Ministry of Industry and Trade and the Committee for the Management of State Capital at Enterprises, what is the role and legal status of PVN? “, the National Assembly Chairman stated.
He said that it is necessary to clearly define and separate the roles of “state management” and “enterprises and contractors” to avoid conflicts of interest with other provisions in the draft law.
Reviewing the draft, Chairman of the Economic Committee Vu Hong Thanh also said that it is necessary to clarify the scope of rights associated with the obligations and responsibilities of PVN in each specific role as an independent oil and gas investor. oil and gas contracts and perform tasks authorized by the Government.
Specifically, according to Mr. Thanh, the revised Law project should clearly stipulate the responsibilities of PVN in signing with foreign investors, organizing the performance of oil and gas contracts, handling arising in the process of performing the role. authorized by the Government. This is to ensure transparency in the implementation process.
In addition, the Economic Committee also proposed to review regulations to ensure consistency and synchronization.
Agreeing, Deputy Finance Minister Tran Xuan Ha also suggested that PVN’s legal status should be clear in two aspects. Firstly, PVN, as an enterprise and investor, uses its legal capital to invest. This mechanism is implemented in accordance with Law 69.
Second, if PVN makes investment on behalf of the Government, that is, a party to sign a contract with a foreign partner, the mechanism needs to clearly state the investment decision-making authority, conditions and terms on product division. .
After giving his opinion, Mr. Le Manh Hung, General Director of PVN, also wanted the law to clearly and specifically define the legal status as well as the state management function of PVN so that “the corporation has a legal basis, easy to do the task”.
According to international practice, there are two models of oil and gas companies in the world. One is the national oil and gas company, implementing the objectives and strategies of the State. This is also the current operating model of PVN.
Second, the model of an international oil and gas company, whose main goal is business.
In this amendment, Mr. Hung suggested, clarifying the legal status of PVN as a national oil and gas company.
In fact, the state management of oil and gas is divided into 3 levels, from the Government, the Prime Minister, relevant ministries and branches and PVN. This group is still the organization tasked with directly managing oil and gas activities and submitting them to competent state management agencies. “But the clear legal status also helps clarify the state management function of the group,” said PVN’s General Director.
As for the function of oil and gas contractor, Mr. Hung said, the revised bill “just states that PVN makes investment in oil and gas activities like other oil and gas contractors”.
Concluding, Vice Chairman of the National Assembly Nguyen Duc Hai requested the Government to accept and complete the dossier of the law project. In which, clearly and specifically stipulates the state management role, legal position, rights associated with the obligations and responsibilities of PVN when being an independent oil and gas investor signing oil and gas contracts and when performing other activities. duties as authorized by the Government.
“Researching and decentralizing PVN in production and business investment activities is associated with a clear accountability mechanism,” said Mr. Hai.
The Government also needs to review and complete regulations on the authority and responsibility of the Prime Minister, the Ministry of Industry and Trade, and the Committee for the Management of State Capital at Enterprises.
At the discussion session, many comments were made on whether to “restore” the Oil and Gas Search, Exploration and Production Fund.
Previously, there was a Fund for Oil and Gas Search, Exploration and Production, so for unsuccessful exploration and production activities that do not switch to the development stage to recover, this fund will deduct a part to handle risks. However, when Law 69 was enacted, it was not allowed to set up special funds in enterprises, so the Fund for Oil and Gas Search, Exploration and Production ceased to exist.
According to National Assembly Chairwoman Vuong Dinh Hue, oil and gas exploration and production is risky, costing billions of dollars, but it is unlikely to get the desired results. Therefore, the handling of costs when unsuccessfully searching and exploiting oil and gas is a problem.
This is recognized by General Director of PVN Le Manh Hung as one of the current big problems of the oil and gas industry.
Mr. Hung said that recently Decree 36 on PVN’s financial regulations has solved this problem. Accordingly, by 2023, the group is allowed to use up the remaining fund and apply the allocation of costs for search and exploration unsuccessfully in production and business results in PVN’s after-tax profit for 5 years.
However, the General Director of PVN said that the group still wants in this amendment, “if possible, the law allows a fund for oil and gas search, exploration and production”. This, Mr. Hung said, is in line with international practices, the risky nature of oil and gas activities, and separates a stable source of capital for production and business activities such as charter capital or equity. would be better for the corporation.
The amendment of this law takes place in the context that many oil and gas fields have passed the peak exploitation stage and are in a rapid decline in production. Open oil and gas blocks have limited oil and gas potential, small reserves, are in deep water, offshore or have complex geology, combined with unpredictable oil price fluctuations, so the call for investment is very difficult. difficulty.
The current Petroleum Law has been revised 3 times, but recently there have been some problems that need to be improved. Moreover, there are many changes in the international and domestic context, which greatly affects the development of the oil and gas industry.
The revised draft Oil and Gas Law is expected to be submitted to the National Assembly for consideration at its meeting in May.
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