‘Need a specific mechanism to attract investment in oil and gas exploitation and exploration’

On June 3, Minister of Industry and Trade Nguyen Hong Dien authorized the Government to submit the revised Oil and Gas Bill to the National Assembly.

Discussing in the group after that, Mr. Nguyen Lam Thanh, Vice Chairman of the Ethnic Council mentioned oil and gas investigation and exploration activities. “Exploration is very risky,” he said.

Article 56 of the draft revised law stipulates that PVN’s unsuccessful oil and gas search and exploration costs will be offset from the group’s annual after-tax profit and distributed for 5 years from the end date. projects, settlement of costs.

According to Mr. Thanh, each exploratory drill costs several million USD, but in exploration, drilling many drills and failing is normal. Therefore, the Vice Chairman of the Council for Ethnic Minorities said that there must be very specific regulations to ensure the mechanism of accounting, investment management and construction of oil and gas exploration activities. “If it is calculated according to the normal mechanism, it is very inadequate and difficult to account for,” he commented.

Agreeing, Mr. Hoang Anh Cong, a delegate from Thai Nguyen province, commented that this is a dare to think, dare to do, the revised bill needs to add binding regulations to avoid taking advantage of and causing loss of assets of enterprises. , government.

“If there is no clear regulation on the exclusion of responsibility for such risky cases, it will be difficult for the responsible person to decide whether to continue searching and exploring oil fields in offshore areas,” said Mr. stated.

Explaining at the group, Industry and Trade Minister Nguyen Hong Dien said that the scope of the law project is upstream activities, not downstream and midstream, due to the specific nature of exploration and exploitation.

“The process of basic investigation, exploration and exploitation is like “finding a needle in a haystack”, spending money and effort to search and explore at sea, no one knows yet. But without these According to the specific regulations of this activity, no one dares to spend money to do it,” said Mr. Dien.

For example, in the past, PVN has invested in overseas activities, spent a huge amount of money, but in the end it was not easy to get the data… That is, the regulation on the specificity of upstream activities in the Law Existing oil and gas is available but not clear enough, does not guarantee the safety factor.

Amending the law to increase capital attraction, remove ‘the subconscious of the oil and gas industry’

A new feature is the draft to introduce special investment incentives, not yet in the current law, to attract investment. Specifically, the corporate income tax rate is 25% (7% lower than the current one); crude oil export tax rate of 5% and cost recovery rate up to 80% of oil and gas output exploited in the year (higher than 10% of current incentives).

Minister of Industry and Trade Nguyen Hong Dien said that these incentives were given on the basis of research and reference to the policies of some countries in the region with similar oil and gas activities to Vietnam. For example, the preferential corporate income tax rate of Thailand is 20%, Malaysia 25%, China 25%, Myanmar 30%. The maximum cost recovery for Malaysia is 75%, Indonesia 90%.

“This incentive will open up opportunities to increase revenue for the state budget when expanding new contract signings and exploitation,” said the Minister of Industry and Trade.

Ms. Nguyen Thi Yen, Standing Deputy Secretary of the Provincial Party Committee, Head of the Ba Ria – Vung Tau delegation suggested to increase the priority mechanism for the development of supporting industries, heavy industry for the production of materials and high technology.. . serving the oil and gas industry.

This is to take the initiative, avoid having to import, depend on the outside, and remove the subconscious “just outsourcing, construction and manufacturing” of the oil and gas industry.

She analyzed that the capacity of Vietnamese contractors in the oil and gas field is still limited due to the lack of equipment and means for offshore work such as transportation, installation, pipe laying, requiring crane ships, specialized pipe laying ships. use. They also have to import most of the supplies, raw materials and equipment from abroad at high cost and time consuming.

Similarly, onshore industrial projects when bidding are carried out by foreign contractors, accounting for about 80% of the value and technology. Vietnamese contractors can only participate in low-value, labor-intensive construction works with little gray matter content.

Verification, Chairman of the Economic Committee of the National Assembly Vu Hong Thanh also acknowledged that, in addition to tax incentives, the Government should study other forms and mechanisms of investment incentives and the level of cost recovery to have higher international competitiveness.

In fact, Vietnam is facing the fact that the number of newly signed oil and gas contracts has dropped sharply recently. In the period 2009-2014, about 35 contracts were signed, but from 2015-2019 only 1 contract per year and no contract was signed in the last two years.

The objective reason is that new discoveries in Vietnam in recent years mostly have small reserves, mainly gas. The mines are being exploited in the end of the mine life, the output is decreasing. Some fields of revenue cannot cover costs and financial obligations to the state… Therefore, adding investment incentives will create a competitive advantage for Vietnam’s oil and gas activities compared to other fields. with other countries in the region.

Mr. Nguyen Ngoc Bao, Vice Chairman of the Economic Committee agreed that there should be a policy to support tax rates for crude oil and corporate income tax to attract investment, but he wondered about “the level of cost recovery”. up to 80% of the oil and gas output that can be exploited in the year”.

This is the policy applied to mines that were put into operation, but then ineffective and investors withdrew. To get more out of these fields, Mr. Bao said, it is necessary to have better preferential policies than usual so that the oil fields are not wasted.

Anh Minh – Hoang Thuy