Guidance on determining sources of outward investment capital in petroleum activities in Vietnam from December 5, 2024

Guidance on determining sources of outward investment capital in petroleum activities in Vietnam from December 5, 2024 (Image from Internet)

On October 15, 2024, the Government of Vietnam issued Decree 132/2024/ND-CP regulating outward investment in petroleum activities in Vietnam.

1. Guidance on determining sources of outward investment capital in petroleum activities in Vietnam from December 5, 2024

According to the provisions of Article 4 of Decree 132/2024/ND-CP, the outward investment capital in petroleum activities is determined as follows:

- The outward investment capital in petroleum activities includes money and other lawful assets of the investor, including equity capital, loans in Vietnam transferred overseas, recovery costs, profits, and shares from overseas petroleum projects retained for outward investment.

- Money and other lawful assets as prescribed in clause 1, Article 4 of Decree 132/2024/ND-CP include:

+ Foreign currency in authorized credit institution accounts or purchased from authorized credit institutions in accordance with the law;

+ Vietnamese Dong in accordance with the foreign exchange management laws of Vietnam;

+ Machinery, equipment, materials, raw materials, fuel, finished goods, semi-finished goods;

+ Value of intellectual property rights, technology, trademark, rights to assets;

+ Shares, capital contributions, investor's projects swapped at economic organizations in Vietnam and economic organizations abroad as stipulated in clause 4, Article 4 of Decree 132/2024/ND-CP;

+ Other lawful assets in accordance with civil law.

- outward investment capital is used for capital contribution, payment for share purchase, purchase of capital contributions, fulfilling guarantee obligations arising (if any) and other financial obligations of the investor in accordance with the laws of the host investment country, the petroleum contract, the license, and other related agreements to carry out petroleum activities, overseas petroleum projects from project formation until project completion and completion of all obligations as stipulated. Funds transferred abroad, upon recovery and repatriation, are not counted as already transferred abroad.

- Vietnamese investors can use shares, capital contributions, or their investment projects in Vietnam to pay or swap for the purchase of shares, capital contributions, or petroleum projects of foreign economic organizations. In this case, the Vietnamese investor issues an outward investment registration certificate first, then the foreign investor carries out the investment procedures in Vietnam in accordance with the law.

2. What is an petroleum Project? What Activities are Included in Overseas petroleum Activities in Vietnam?

An petroleum project is an investment project formed by one or more petroleum contracts or licenses to conduct overseas petroleum activities. (According to clause 1, Article 3 of Decree 132/2024/ND-CP)

Overseas petroleum activities include petroleum exploration, development of petroleum fields, petroleum exploitation, cleanup of petroleum works, and other related activities conducted abroad in accordance with the laws of the host investment country, the petroleum contract, or the license. (According to clause 3, Article 3 of Decree 132/2024/ND-CP)

More details can be found in Decree 132/2024/ND-CP which comes into force in Vietnam from December 5, 2024, replacing Decree 124/2017/ND-CP of the Government of Vietnam regulating outward investment in petroleum activities.

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