Finalization of costs for petroleum operations under petroleum contracts in Vietnam

Finalization of costs for petroleum operations under petroleum contracts in Vietnam (Internet image)

The Petroleum Law 2022 was approved by the National Assembly on November 14, 2022 at the 4th session, the XV National Assembly.

In particular, regulations on accounting, auditing and finalization for petroleum operations under petroleum contracts in Vietnam are as follows:

1. What is petroleum?

Pursuant to Clauses 1 and 4 of Article 3 the Petroleum Law 2022, petroleum and petroleum contract are defined as follows:

Petroleum means crude oil, natural gas and solid or semi-solid hydrocarbons in the natural state, unconventional oil. Unconventional oil refers to coal gas, oil shales, shale gas, natural gas hydrates, bitumen, or other possible forms.

Petroleum contract is a written agreement between Vietnam Oil and Gas Group (PetroVietnam - PVN) with a contractor for carrying out petroleum operations.

2. Accounting, auditing and finalization for petroleum operations under petroleum contracts in Vietnam

Pursuant to Article 56 of the Petroleum Law 2022, accounting, auditing and finalization for petroleum operations under petroleum contracts are as follows:

- Accounting, auditing and finalization for petroleum operations under a petroleum contract shall comply with the regulations of laws on accounting, auditing and finalization of Vietnam and must be conformable with international petroleum industry practices.

- Corporate income tax on petroleum operations shall be determined on the basis of petroleum contracts in accordance with the regulations of this Law and the Law on Corporate Income Tax, regardless of the production and business results (losses or profits) of enterprises participating in petroleum contracts.

- In case an oil and gas block consists of marginal fields belonging to oil and gas blocks with which a petroleum contract has been signed as prescribed at Point e Clause 1 and Point dd Clause 2 Article 53 of the Petroleum Law 2022, the accounting, auditing, declaration and payment of taxes shall be carried out for separate oil and gas fields and the petroleum contract.

3. Finalization of costs for petroleum operations under petroleum contracts in Vietnam

Pursuant to Article 57 of the Petroleum Law 2022 stipulates the settlement of oil and gas operation costs under the petroleum contract as follows:

- Finalization of oil and gas operation costs under the oil and gas contract shall be carried out by the contractor after completing the work for each item, item and stage in the oil and gas contract or at the end of the petroleum project or component project of the oil and gas project.

- The implementation of the finalization of expenses must ensure the principle that the finalization expenses reflect truthfully, fully, reasonably and validly in accordance with the provisions of Vietnamese law.

4. Prohibited acts in the process of performance of fundamental investigations of petroleum and its operations in Vietnam

Article 9 of the Petroleum Law 2022, prohibited acts in the process of performance of fundamental investigations of petroleum and its operations include:

- Carry out fundamental investigations of petroleum and its operations without permission of competent authorities.

- Take advantage of fundamental investigations of petroleum and its operations to affect national defense, security, national interests and legal interests of organizations and individuals; cause environmental pollution.

- Take advantage of fundamental investigations of petroleum and its operations to exploit other natural resources and minerals.

- Obstruct lawful activities in the process of performance of fundamental investigations of petroleum and its operations.

- Deliberately destroy assets, equipment and petroleum installations; destroy samples, information and data collected during the process of performance of fundamental investigations of petroleum and its operations.

- Illegally provide samples, information and data collected during the process of performance of fundamental investigations of petroleum and its operations.

- Be involved in corruption, cause losses and waste during the process of performance of fundamental investigations of petroleum and its operations.

Ngoc Nhi

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